Noda Hastens Japanese Decision On TPP

Following the approval by the United States of its free trade agreement (FTA) with South Korea, Prime Minister Yoshihiko Noda is attempting to accelerate a decision by Japan on whether to join the Trans-Pacific Partnership (TPP).

Japan’s decision on whether to join the TPP was delayed beyond its June deadline this year, due to the government’s need to concentrate on reconstruction following the earthquake and tsunami in March, despite the priority given to trade liberalization by Naoto Kan’s previous government. Until March, the government had been fully expected to decide to enter into the on-going negotiations to expand the TPP between the United States, Australia, Peru, Vietnam, Malaysia and its original signatories - New Zealand, Chile, Singapore and Brunei.

However, the impending completion of the US-South Korea FTA is being seen by the Japanese government as a serious threat to the competitiveness of Japanese products, from unequal tariffs and investment barriers, as would a TPP which, without Japan, included even more countries from the Asia-Pacific region, as is sought for by the US.

It has always been recognized there would be substantial opposition to a Japanese participation in the TPP (as in other proposed trade treaties) from its agricultural sector, as there would be no tariff exemptions allowed for sensitive products. For that reason, Noda is now making it clear that the government would be open to putting together a package of measures to support farmers against any influx of cheaper agricultural imports resulting from any such trade treaty participation.

It has been reported that those measures could include the provision of benefits for young people joining the farming sector, and an encouragement to the consolidation of farms into larger units through financial support for purchase or leases. It is, however, apparent that any package would involve substantial funds from a government that is currently grappling with reconstruction costs and the need to reduce Japan’s fiscal deficits.

Nevertheless, despite continuing opposition also from his colleagues within the governing Democratic Party of Japan, Noda still hopes that a positive Japanese decision on the TPP can be made by the time that the current negotiating countries plan to announce the TPP’s overall structure at the Asia-Pacific Economic Cooperation summit meeting in the US in mid-November this year.

October 26, 2011

Source: Tax News