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ECONOMY > Trade

Editorial: Japan must update its bilateral EPAs for 21st-century trade

  • February 15, 2018
  • , Nikkei Asian Review , 10:00 a.m.
  • English Press
  • , , ,

Japan can draw some satisfaction from its success in keeping alive the Trans-Pacific Partnership after U.S. President Donald Trump pulled out of the pact. The agreement of the 11 remaining countries is a strong symbol of the power of multilateral economic action at a time when such cooperation is coming under intense pressure.

 

But Tokyo must not rest on its laurels. There is much left to do, not least in Asia.

 

Talks for the Regional Comprehensive Economic Partnership remain at an impasse, with negotiators from the 16 member countries — the 10 Association of Southeast Asian Nations members, plus Japan, China, South Korea, India, Australia and New Zealand — failing to find common ground in their latest meeting in Yogyakarta in early February. We hope that Japan will work hard to persuade China and India, among others, ti agree on high-standard rules for trade liberalization.

 

Japan currently has bilateral economic partnership agreements with seven ASEAN members. We suggest that for the present the Japanese government renegotiate these individual EPAs to reframe them as 21-century trade agreements that provide for high-level trade and investment liberalization.

 

Japan has inked a series of bilateral EPAs, mainly in Asia, starting with the accord with Singapore, which entered into force in 2002. But these EPAs, which Japan clinched earlier than those with nations in other regions, are now outdated in many ways.

 

For example, Japan’s EPAs with the seven ASEAN members contain none of the labor and environmental rules that are included in the retooled TPP. The biggest problem with these EPAs, however, is that they lack rules regarding e-commerce.

 

The TPP ensures the free transfer of information across borders and forbids countries from requiring foreign companies to keep computer servers within their borders. Such provisions are vital for e-commerce and must be added to the existing EPAs.

 

Meanwhile, Beijing prohibits foreign companies from transmitting any of the data and information collected in China out of the country. In the 21st century, the free and open flow of data and information is a source of growth for the global economy. To prevent what could be described as China’s “digital protectionism” from spreading across Asia, Japan needs to take the initiative by revising its existing bilateral EPAs.

 

To this end, Tokyo should start with its agreements with Thailand, Indonesia and the Philippines, none of which are TPP participants. If Japan can incorporate a set of higher-standard trade and investment rules into its EPAs with these three ASEAN members, it might be easier to encourage them to join the TPP.

 

Revising such agreements could also help tackle the acute labor shortages plaguing Japan. Under EPA-based arrangements, Tokyo currently allows a certain number of Indonesian, Philippine and Vietnamese nationals to come to Japan for the purpose of obtaining national qualifications to work as nurses or certified care workers. If necessary, Japan should consider raising the maximum number of such candidates it accepts.

 

The administration of U.S. President Donald Trump is leaning toward protectionism, and China’s leaders are aiming to expand the country’s economic hegemony. Under these circumstances, Japan must maintain its drive in trade diplomacy and not allow itself to become complacent following such recent achievements as the “TPP 11” agreement and the successful talks on an EPA with the European Union.

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