As participating countries failed to reconcile a variety of conflicts, including one between Japan and the United States, an accord on creating a new free trade zone in Asia and the Pacific region has been postponed till next year. A rough road lies ahead for the negotiations.

A ministerial meeting of the Trans-Pacific Partnership trade talks ended in Singapore on Tuesday.

Japan, the United States, Australia and nine other nations in the talks abandoned their goal of reaching an accord by the end of this year, which they originally hoped for. The countries will continue intensive discussions and hold a ministerial meeting again in January, they said in a joint statement issued after the meeting.

As the administration of U.S. President Barack Obama had given the highest priority to reaching a final accord within this year, U.S. Trade Representative Michael Froman continued pressing Japan and emerging countries on tariff elimination and market liberalization.

But it is difficult to settle negotiations on issues on which the participants’ interests are complexly tangled. It can be said the latest talks highlighted the reality that the talks will not proceed as Washington hoped.

In particular, the conflict between Japanese and U.S. interests became clear. There is no denying that the conflict between the two countries may have held up negotiations as a whole.

Sticking points

The Liberal Democratic Party has been asserting that rice, wheat and barley, and three other sensitive agricultural products should be regarded as “sanctuaries” exempt from tariff elimination. Bearing this in mind, Japan rejected the U.S. call for full tariff elimination, with no exceptions.

Instead, Japan reportedly proposed, as a concession, to the U.S. side that it would raise its liberalization rate—the percentage of trade items that will be tariff-free—to about 95 percent. But the United States reportedly rejected the proposal.

On the other hand, Washington, which aims at expanding sales of U.S. automobiles in Japan, called on Tokyo to ease regulations on vehicle safety and environmental standards. But Japan steadily refused.

With midterm elections slated for next November, the Obama administration, which wants to showcase a final TPP accord as its achievement, is not in a position to make easy compromises.

Yet Japan needs to proactively tap into the vitality of fast-growing Asian economies and fuel its own growth, rather than merely maintaining a defensive stance.

While trying to reinforce the international competitiveness of agriculture, a sector Japan has been called on to liberalize further, the government must make a strategic plan to promote free trade, centering around the TPP.

Fierce conflicts between the United States and such emerging economies as Malaysia and Vietnam over the protection of intellectual property rights and competition policies can also be cited as reasons why the participating countries gave up on the final accord in Singapore.

The conflicts among the 12 countries are deep-rooted, so there is little cause for optimism that they will be able to reach an accord at next month’s ministerial meeting. The major focus will be how flexibly the United States can respond to other countries’ assertions.

Meanwhile, South Korea’s next moves deserve close attention, as that country has made clear its intention to participate in the TPP.

For South Korea to join the negotiations, it needs to win the approval of the 12 participating countries. That could happen as early as the spring. Before that happens, Japan needs to take the lead in formulating the trade rules and aim to reach an early accord to best take advantage of having already been a member.

Japan must demonstrate tough bargaining power in pursuit of its national interests.

Source: Yomiuri Shimbun

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