The BBC recently published an article, in which it revealed that Japan had requested the opportunity to join on-going talks regarding the proposed Trans-Pacific Partnership, a free trade agreement being negotiated by 11 countries. The agreement itself is aimed at boosting trade ties in goods and services between its member states. Japan's economy is currently in a period of recovery, and its President, Shinzo Abe has said that "Emerging countries in Asia are shifting to an open economy one after another. If Japan alone remains an inward-looking economy, there would be not chance for growth," adding that if Japan refused to make the necessary steps to integrate further into the world economy, it "would be left behind."
Recently, in an effort to boost all-important exports, Japan announced that it was pursuing policy that would depreciate its currency. This announcement ignited fears that the Yen's depreciation could set of a competitive devaluation war with China, although almost every G20 announced that it would discourage such threats, as it could result in irreparable damage to Japan's recovery.
While Japan is doing its best to continue its rough recovery, there are domestic political constraints that could stand in the way of Japan's entry into the TPP. The trade pact is expected to lead to big reductions in tariffs on goods and services between member states, thereby boosting trade. However, while many of Japan's massive MNCs are seen as supporters of joining the group, Japan's agricultural sector has been vociferously voicing its objection to joining the TPP. The reduction of tariffs on imports would place drastically reduce the ability of its farmers to export goods. They are anxious to "win exemptions from the TPP’s “zero-tariff” principle. According to agricultural cooperative JA Group, the elimination of tariffs would threaten Japan’s $48 billion in agricultural produce, making nearly all Japanese wheat, sugar and beef uncompetitive and wiping out a quarter of all rice production."
Overall, it would be wise of Japan to avoid protectionist impulses from such pressure groups, and allow Japan to specialize its production patterns and do what it does best. This subject is a good example of our class discussions on domestic politics and their influence on international trade. Not only that, but here we can also see yet another FTA emerging, which, as we now know, are challenging to the influence and mission of the WTO. It will certainly be interesting to see where this situation will end up in the next few months.
The Trans-Pacific Partnership would be a great accomplishment for the US-Japanese trade relationship. However, there is a large trade deficit between America and Japan. The Japanese still have a significant number of tariffs against American products, which has strained the trade relationship more than one might think. A good example of this, as mentioned in the blog post, is agricultural products such as beef. Though the TPP agreements may help to ease this tension through trade negotiations, this will still not necessarily equal the playing field in trade between the countries. In all, the countries are strong allies without a doubt but still have issues to be taken care of in the future in terms of trade
ReplyDeleteThe main opposition to this trade agreement is that of Japanese farmers. This FPP would open up Japan to international markets and would endanger the highly protected agricultural sector. Rice farmers are currently protected by a 777.7% levy on imported rice and they make up a very powerful lobby that has had some sway with the Japanese people who believe that this agreement would have drastic consequences to farmers and to their way of life. Even though, it would benefit society with cheaper imports and cheaper food prices. "The Agricultural Ministry warns that if Japan were to join the proposed trade zone, 90 percent of the nation’s rice cultivation would disappear, and wheat, sugar, dairy and beef output would also be adversely affected — costing the country about 4 trillion yen, or $49 billion, in lost production and 3.4 million lost jobs." However, consumers would be benefited with cheaper imports and cheaper foods in a country who pays much higher prices for food than most other countries. It seems that most Japanese consumers realize this as "46.6 percent of respondents said Japan should join the Trans-Pacific Partnership, versus 38.6 percent who opposed it".
ReplyDeletehttp://www.nytimes.com/2010/11/12/business/global/12yen.html?pagewanted=all