Bloomberg News

Japan Reaches Deal With U.S. on Joining TPP Trade Talks

April 12, 2013

Japan's Prime Minister Shinzo Abe

Shinzo Abe, Japan's prime minister, answers a question beside a map of the Trans-Pacific Partnership (TPP) participating countries during a press conference at his official residence in Tokyo on March 15, 2013. Photographer: Toshifumi Kitamura/AFP/Getty Images

Japan reached a deal with the U.S. on bilateral trade issues that clears the way for the world’s third-largest economy to join talks for the Trans-Pacific Partnership trade agreement as soon as July.

Prime Minister Shinzo Abe told his Cabinet at a meeting today in Tokyo that an agreement had been reached, after Mexico said April 8 it will support Japan’s entry into negotiations on an accord that would lower tariffs in countries that account for 40 percent of global trade.

Japan is pushing to gain the necessary approval from all 11 governments in the talks, with Canada, Australia, New Zealand and Peru yet to give consent. Abe has said the accord is necessary for the nation’s economic future, while vowing to shield farmers, who have been protected by a 778 percent tariff on rice and traditionally have backed his Liberal Democratic Party.

“The real battle to realize our national interests starts now,” Abe told his ministers. “I want to join the TPP talks as soon as possible and lead the negotiations.”

The Japan-U.S. agreement includes measures to lower trade barriers in the automotive and insurance sectors, as well as non-tariff issues, according to a fact sheet from the U.S. Trade Representative’s office today.

‘Economic Benefits’

“Japan’s entry into this important initiative for the Asia-Pacific region will help it to deliver significant economic benefits to the United States, Japan and the Asia-Pacific region,” acting U.S. Trade Representative Demetrios Marantis said today in a statement welcoming the two-nation agreement.

House Ways and Means Committee Chairman Dave Camp, a Michigan Republican whose panel reviews trade accords, said his support for Japan’s role relied on swift completion of the broader talks.

“I will not support Japan’s entry into TPP unless we obtain airtight assurances that Japan’s participation in the TPP negotiations will neither diminish the comprehensive and ambitious nature of these negotiations nor delay the goal of concluding the negotiations this year,” Camp said in a statement.

The regional negotiations are aimed at boosting trade by lowering tariffs and also at strengthening patent protection and improving access to government contracts. U.S. automakers have opposed Japan’s participation unless the nation eases market barriers that they say restrict American sales.

Automaker Caution

“We don’t believe, based on experience, that Japan will truly open its market,” Matt Blunt, a former Missouri governor and president of the American Automotive Policy Council, said in a phone interview yesterday. The group represents American automakers including Ford Motor Co. (F:US) and General Motors Co. (GM:US)

“We’re strong supporters of the TPP,” Blunt said. “If you add Japan you really undermine the quality of the agreement itself and certainly delay its completion.”

The U.S. and Japan agreed to conduct negotiations on the automobile trade in parallel with TPP talks, according to a statement released by the Japanese government.

Both governments confirmed that as part of the TPP negotiations, U.S. tariffs on cars will be abolished through gradual reductions over the longest possible period of time. This process will take more time than agreed to in the U.S.- Korea free-trade agreement, according to Japanese Economy Minister Akira Amari.

The two nations also agreed to discuss non-tariff barriers in areas including insurance and sanitary and phytosanitary measures, in parallel with the TPP talks, according to the statement.

Joining the TPP would boost Japan’s gross domestic product by 3.2 trillion yen ($32.3 billion) while cutting farm and marine production by 3 trillion yen, according to a government estimate.

The other members of the talks are Australia, Canada, New Zealand, Singapore, Brunei, Malaysia, Vietnam, Peru and Chile.

To contact the reporters on this story: Isabel Reynolds in Tokyo at ireynolds1@bloomberg.net; Takashi Hirokawa in Tokyo at thirokawa@bloomberg.net

To contact the editor responsible for this story: Rosalind Mathieson at rmathieson3@bloomberg.net


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