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Monday, Nov. 7, 2011

Reconstruction and healing must precede entry into TPP


By MICHAEL SUTTON
Special to The Japan Times

The Trans-Pacific Partnership (TPP) is strategically significant for U.S. re-engagement with East Asia and is a concrete response to the perception of U.S. decline in the region in light of Chinese economic power and regional ambition.

For TPP members and potential members, the multilateral agreement reflects a consolidation of pre-existing economic ties, priorities and aspirations to promote freer trade in a dynamic region.

If new members truly adopt free trade, the TPP will be a diplomatic triumph for the United States and a courteous reminder to Beijing that the U.S. has no intention of leaving the Asia-Pacific.

The TPP exists officially at the edge of the Asia-Pacific Economic Cooperation (APEC) forum, established in 1989. The U.S. was responsible for transforming APEC from an obscure talk-fest to a critical regional forum in 1993 for the promotion of open trade and regional cooperation. By the end of the 1990s, APEC returned to its modest origins, subsequently overshadowed by impotent APEC-like imitations such as the ASEAN-plus-3 group and the East Asia Summit.

The TPP originated in the late 1990s when Chile, Singapore and New Zealand (among others) lost faith in the World Trade Organization and APEC and retreated to free trade agreements.

Some believe that the TPP represents the next step toward achieving the 1994 APEC goal of free trade and investment in the region by 2020. Like any FTA, there will be winners and losers. Jobs will be lost and gained across the Pacific.

One clear group to benefit will be the dozens of university-based scholars in the region who have made their careers around inventing, defending and promoting the illusion of an Asia Pacific trade bloc. The "Asia Pacific," "East Asia" and "Pacific" community myths date back to the establishment of the Pacific Economic Cooperation Council (PECC) in 1980. After PECC, it was APEC, then ASEAN-plus-3, then the East Asia Summit and now TPP.

For more than 30 years, several generations of "regionalists" have enjoyed and benefited from an increasing number of official and semi-official meetings, seminars, conferences, junkets and talk-fests. Regionalists speak a common but esoteric language, are baffled by the social, political and economic dynamics that shape the region, and are committed with cultic zeal to any arrangement that postpones real economic integration in the region. Regionalists have already begun to smother the TPP with obfuscation and affection.

On Oct. 29, Prime Minister Yoshihiko Noda of the Democratic Party of Japan (DJP) announced that Japan would participate in the TPP. This decision was unwise and naïve, suggesting an ignorance of pressing domestic concerns such as the social and economic effects of March 11.

Japan needs reconstruction and national healing. TPP members would excuse Japan for this reason and it is perfectly legitimate for Japan to postpone an application for membership. The original four nations (New Zealand, Chile, Singapore and Brunei) adopted the FTA in 2006. The next signatories are likely to be the U.S., Australia, Vietnam, Peru and Malaysia in 2011. Japan's participation in TPP will bring significant agricultural trade liberalization at the worst possible time.

The government is already hard pressed by the costs of reconstruction, and more funds will be required to minimize the employment and social effects as a result of liberalization. Japan has consistently opposed free trade in agriculture for decades. A few more years will make no difference. Japan can afford to wait.

More importantly, history has shown that governments that lack the will to negotiate can cause havoc in trade negotiations. One would hope this is not Japan's intention, but this may be the outcome.

It was Japan's indecision during 1997-98 that destroyed the last attempt at regional negotiations in APEC. At that time, Japan pledged to liberalize certain sectors and was officially committed to the APEC process, but at the last moment withdrew. Japan appeared to be nation largely responsible for wrecking APEC. Japan's response was to confirm this position by resisting agricultural liberalization in economic partnership agreements and at the WTO under the protectionist banner of "multifunctional agriculture."

How has Japan changed in the last few years? Has it undergone a paradigm shift toward agricultural protectionism? Will Japan open its highly protected rice market?

If the DJP is unwilling to make major concessions in agriculture, then Japan's presence in the TPP process is pointless. The purpose of the TPP is not to talk about community-building, but to actually negotiate liberalization. The horse has already bolted. Japan cannot influence the direction or character of the TPP.

If Japan decides to negotiate, no doubt the Ministry of Agriculture, Forestry and Fisheries and their friends in the Diet will do their best to derail the negotiations. Since this ministry is traditionally opposed to liberalization, it'll be like giving a pyromaniac a box of matches.

The TPP is also not without difficulties for the U.S. The U.S.-Korea FTA met stiff opposition in both nations. It would be very ambitious for President Barack Obama to pursue multilateral trade negotiations in the current economic climate and in the lead-up to the presidential election in 2012.

The absence of China in the TPP is unfortunate as is the fact that the TPP does not address many of the U.S. criticisms of the Chinese economy. That President Obama seems content to negotiate with Peru and Chile while sidestepping China and India will not go unnoticed by critics of U.S. trade policy.

Whatever the domestic and global challenges, the TPP is refreshingly ambitious. Without Japan, the TPP would consolidate a number of existing treaties and reinforce the U.S. presence in the region. In 1989, it was inconceivable that Japan would ever contemplate joining the U.S. in negotiations toward an FTA as it was America's main economic competitor. That is no longer the case. That position now rests with the People's Republic of China.

Japanese leadership of Asia in the TPP, APEC or even the WTO is now seriously in doubt. Japan's embrace of TPP in 2011 may be with the best intentions, but the absence of a consistent negotiating position will embarrass both Japan and the U.S.

Free trade agreements without free trade are not worth the paper they are written on.

Before taking away agricultural employment in rural areas, Tokyo should make every effort to pursue reconstruction in Tohoku and national healing. Reconstruction, not liberalization, is the most pressing moral imperative for Japan. This would mark true leadership and inspire the world.

Michael Sutton is a research fellow at the WTO Research Center at Aoyama Gakuin, Tokyo. He can be contacted at: eastasiandemography@gmail.com


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