U.S. Perspectives on the Trans-Pacific Partnership & Japan

April 17, 2012

Wendy Cutler, Assistant U.S. Trade Representative for Japan, Korea and APEC Affairs

Merit Janow, Professor, Columbia University School of International and Public Affairs and Columbia Law School; Member, Board of Directors of Japan Society

Wendy Cutler, Assistant U.S. Trade Representative for Japan, Korea and APEC Affairs, visited Japan Society to discuss Japan's potential entry into the Trans-Pacific Partnership negotiations.

Since Prime Minister Noda's announcement in November that Japan wanted to explore joining the TPP, "I have been working with my Japanese colleagues nonstop," Ms. Cutler said. In the lead-up to the Obama administration's decision to have the U.S. become a member, "there was an extensive debate in the United States on the merits of joining this negotiation," whose original members were Singapore, Chile, New Zealand and Brunei.

"For TPP membership to work for Japan, it is important that both countries do what we call their due diligence and that they’re fully aware of each other’s expectations, priorities and concerns, as well as they both consult widely at home to build the necessary domestic support for this endeavor. And that is what we are doing now," she said.

"If you know nothing else about the TPP, what your takeaway from this lunch should be, that the members of TPP are seeking to negotiate a high-standards trade agreement," she said. It's also an "open platform agreement," which means that the current nine members—the original four plus Australia, Malaysia, Peru, the U.S. and Vietnam—are "opening up the negotiation to participation by other Asia-Pacific economies also committed to a high-standards agreement."

"This is a clear break from what we used to call the spaghetti or noodle bowl web of agreements toward a more integrated approach in the region, and frankly a more business-friendly approach as we gain a better understanding of how business is actually conducted in the region."

The term "high standards" refers to "comprehensive tariff elimination" together with an array of nontariff measures, including "strong intellectual property protection and enforcement, provisions and commitments on services and investment, disciplines on labor, the environment and other areas. And, furthermore, it addresses pressing new issues facing our respective economies in the Asia-Pacific that to date have not been addressed in a binding trade agreement."

The benefits for Japan of joining the TPP agreement would be wide-ranging, including "extensive commercial benefits for Japanese businesses, workers and consumers as tariff and non-tariff barriers are reduced throughout the Asia-Pacific region." Membership would increase the competitiveness of Japan's manufacturing industries as well as its services sector, "and even potentially agriculture."

Yet "having said all this, the U.S. is not putting pressure on Japan to join TPP. We have been clear from day one that this is Japan’s decision. Japan needs to undertake its own debate. Japan needs to work through its concerns," Ms. Cutler continued.

As the third-largest economy in the world, Japan's GDP is greater than the other eight TPP partners, excluding the U.S., by about two-and-a-half times. Japan already has extensive trade ties with other TPP partners. And two-way trade between the U.S. and Japan now is over $250 billion, which is greater than our two-way trade with the other eight TPP partners combined.

The U.S. due diligence effort aims at understanding Japan's readiness to carry out a high-standards trade agreement in broad terms, Ms. Cutler said—a process that's also going on with Canada and Mexico, which expressed interest in joining TPP just after Prime Minister Noda's announcement in November.

The United States is also seeking to assess Japan's readiness "to address specific issues and areas of concern raised by our Congress and stakeholders," including concerns relating to the automotive, insurance and agriculture sectors. "This is important, because by clearing and resolving or agreeing on a path toward resolution for longstanding bilateral trade issues, we can free up the negotiating agenda to focus on the other issues. At the same time, it demonstrates a country’s determination, political will and commitment to tackle thorny issues, something that’s absolutely needed in trade negotiations," she said.

"The process we went through with Korea in 2009 with respect to the U.S.-Korea FTA showed us that by taking the time now and working with our stakeholders and Congress and our trading partner, understanding the concerns and working through the concerns would pay off in the long run." In October, Congress passed the U.S.-Korea FTA "with very strong bipartisan support. And the FTA, as many of you know, went into effect on March 15, a little over a month ago."

Close consultations between the U.S. and Japan are going on at many levels, including a meeting in Washington the previous week between Ambassador Ron Kirk, the U.S. Trade Representative, and Foreign Minister Koichiro Gemba, Ms. Cutler noted. "In terms of Japan joining the TPP, like any potential TPP member, it’s not just a decision for the United States to take. It needs to be reached by consensus by all current TPP members, and, like us, our TPP partners are also seriously considering Japan’s bid."

"The prospect of Japan joining the TPP—it’s important, it’s historic, to some it’s unsettling because it’s talking about change, it’s talking about reform, and it’s talking about—I’m quoting Prime Minister Noda—'not settling for the status quo,'" Ms. Cutler concluded. "But, that said, it presents real challenges as well not only for Japan, but for the United States and other TPP members. We need to be prepared to address these challenges head on, and by doing so we have the opportunity to have Japan as a close partner to help shape and define how economic integration will occur going forward in the dynamic Asia-Pacific region."

—Katherine Hyde

Topics:  Business, Policy

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