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Japan should make use of IPEF: former chief TPP negotiator

By Tsuruoka Koji, former chief negotiator for the government’s task force for the Trans-Pacific Partnership (TPP) agreement

(Interviewed by Hiratsuka Yusuke)

 

U.S. President Biden is expected to announce the launch of the Indo-Pacific Economic Framework (IPEF), a new U.S.-led economic vision, during his visit to Japan. While the details have not yet been confirmed, it is clear that IPEF will not be free trade pact like the TPP which is designed to make the U.S. market more accessible to other countries.

 

The United States’ wariness about China is what lies behind this vision. Dealing with China will become a major issue from the standpoint of national security and economic development.

 

China is the largest trading partner of many countries. The United States is becoming increasingly alarmed by these countries’ growing dependency on China from the perspective of national security. It believes that the diversification of supply chains must be promoted and that building a community in the region is essential for economic development. This approach was made clear by the ASEAN summit that the U.S. government hosted for the first time in Washington, DC, on May 12-13.

 

What kind of community will be built in this region? The United States initially took the initiative in the TPP and led the negotiations for it but later withdrew. Given that, for the United States, returning to the TPP could be the easiest choice. But realistically this is not a viable option because Congress has authority over trade negotiations and does not favor a free trade agreement.

 

That’s why the United States is seeking to strengthen cooperation with other nations through IPEF, which is not centered on trade agreements. Its objective is to overcome economic vulnerabilities in cooperation with like-minded nations by building stable supply chains, protecting intellectual property, and promoting anti-terrorism measures that include combating money laundering.

 

In that sense, the vision of IPEF is to build a foundation for strengthening cooperation with like-minded nations. Its lack of specifics is probably due to the government’s intention not to give Congress any cause for concern ahead of the midterm election in November.  

 

Building a common foundation with like-minded nations will also benefit Japan. The international situation has changed since the TPP was created. Now the Western bloc has united to impose sanctions on Russia in response to its invasion of Ukraine. Meanwhile, Japan has enacted economic security legislation but wants to avoid situations that could cause its own security to be undermined due to its ties with China.

 

Supply chains are a critical issue. Since Japan has promoted overseas investment, many Japanese companies have now relocated their production to China. If they cannot procure parts from China for political reasons, they will have to halt their production in Japan. That would mean no cars would be made in Japan, for example. Thus, it is necessary to build a system that can ensure stable production beyond national borders.

 

The vision for IPEF is still abstract and has not yet taken concrete shape. Since there will be opportunities to draw up the blueprint for it, Japan should actively participate in the process. Japan and the United States should take the initiative in creating a framework that will strengthen economic cooperation.

 

As for Japan, it will need to build a mechanism that can consider how to deal with IPEF. The government has addressed cross-governmental issues that require a comprehensive approach by setting up a taskforce that includes people from various ministries and agencies. But this mechanism is not sufficient to deal with contemporary and difficult challenges. There is no decision-maker and it is not sufficiently staffed.

 

During times of turbulence in the international situation, it is important to build a foundation that is future-oriented. IPEF may cover a broader area. Japan should set up a control tower within the government and build a mechanism that can put IPEF into motion.

 

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