Ahead of APEC, Japan debates Pacific trade bloc
TOKYO, Japan — Japan’s ruling party is debating whether the country should join negotiations for a sprawling, US-backed Pacific free trade zone that big exporters insist is vital to keeping Japan competitive — but that farmers fear will ruin them.
Top government officials have signalled that Prime Minister Yoshihiko Noda plans to make a decision before he leaves for the annual Asia-Pacific Economic Co-operation (APEC) summit in Hawaii, where President Barack Obama and 20 other regional leaders will gather this weekend.
Several Cabinet ministers and business leaders have spoken out strongly in favour of joining the Trans-Pacific Partnership, a free trade bloc made up of four small economies — Chile, New Zealand, Brunei and Singapore. The US, Australia, Vietnam, Malaysia and Peru are already in talks to join.
Some APEC member economies see the Pacific trade pact as a building block for a free trade area that encompasses all of Asia and the Pacific, covering half the world’s commerce and two-fifths of its trade.
Media reports say Noda plans to explain to the public why Japan, the world’s third-biggest economy, should join the Pacific pact at a press conference tomorrow. The ruling party is split over the issue, with a vocal ex-agricultural minister and others actively campaigning against it. Introducing more competition just as Japan is trying to recover from the March tsunami disaster and nuclear power plant crisis is bad timing, critics say.
Joining the so-called TPP would mean eliminating tariffs on imports into all member economies — a move that Japan’s major manufacturers say will improve access to foreign markets, enhance regional trade and investment and keep Japan from falling behind regional trading rivals.
Only 16 per cent of Japan’s trade is covered by free trade agreements, compared with 71 per cent for Singapore and 36 per cent for South Korea — if the Korean legislature approves a free-trade deal with the US that was ratified by Congress last month.
Proponents say expanding free trade will breathe new life into Japan’s sagging economy, burdened by a surging yen and shrinking population, and allow companies to better tap into Asia’s rapid growth. Yet if Japan joins negotiations it could still be several years before any agreement to reduce tariffs comes into effect.
“It is crucial for Japan to capitalise on Asia’s economic growth,” said Takeshi Niinami, CEO of Lawson Inc, a Japanese convenience store chain.
Joining negotiations now would also allow Japan to help shape the deal, argues Trade Minister Yukio Edano.
“Time is running out,” Edano said at a recent debate. “We are already losing out quite a bit in the rule-making process. There is no doubt about that. We must decide whether to join while there still is a room for us to have a say or just accept what’s already made.”
Farmers — who have an outsized influence in Parliament despite accounting for just 1.5 per cent of the economy — say they will be destroyed if protective tariffs on rice and other agricultural goods are cut. They say they can’t compete with huge farms in the US and Australia.
“I’m probably going to go bankrupt” if Japan joins the free trade zone, said Masashi Yonebayashi, a 61-year-old rice and wheat farmer in Shinshinotsu, on the northern island of Hokkaido. “Newspapers around here are saying incomes will fall by 60 and 70 per cent, but in actuality it’ll be hard to sell anything.”
At a rally Saturday in downtown Tokyo, former Agriculture Minister Masahiko Yamada said the trade pact is not a threat only to Japan’s farmers, but it could also take away jobs and weaken food safety and quality standards.