TPP大筋合意 巨大貿易圏で成長底上げ図れ

The Yomiuri Shimbun
Boost economic growth in giant TPP free trade zone
TPP大筋合意 巨大貿易圏で成長底上げ図れ


A new trade and investment framework that will drive the global economy will be born in the Asia-Pacific region.

A broad agreement has been reached during ministerial talks on the Trans-Pacific Partnership free trade pact.

The creation of a giant free trade zone, which accounts for about 40 percent of the world’s gross domestic product today, is expected to vitalize the flow of people, goods and funds and propel economic growth.

The TPP negotiations, which have continued for 5½ years, experienced rough going until the end, but we welcome that the 12 participating countries — industrialized countries and emerging economies — have overcome many conflicts of interest despite their varying circumstances.

Sense of urgency

The negotiations were finally concluded after extending the schedule by four days. This is because talks over issues such as the data protection period for newly developed drugs remained intractable to the last.

The United States insisted the data protection period should be 12 years, while Australia and other countries advocated a period of five years. Japan’s proposal to set it at effectively eight years was reportedly adopted.

It is significant that Japan played a role as a go-between to a certain extent.

Differences were also resolved in opinions over the “rule of origin,” or the percentage of the parts of a car made within the TPP region that should be used for the vehicles to be eligible for favorable treatment such as a tariff cut.

Japan insisted on 40 percent, while countries including Mexico called for more than 60 percent, but a compromise was reportedly reached at around 50 percent.

Agreement was also reached on an issue in which New Zealand pressed the United States, Japan and other countries to increase their imports of dairy products.

It is commendable that countries fiercely at odds with each other reached compromises from a broader perspective.

The participating countries turned to concessions on many outstanding issues probably because they were able to share a sense of urgency that the negotiations could drift if the talks broke down again this time.

In the United States, it has been pointed out that momentum toward an agreement on the TPP talks could fade away as the Democrats and Republicans may become increasingly confrontational as their focus shifts toward the presidential election in autumn next year.

U.S. Trade Representative Michael Froman, who chaired the TPP talks, stressed the achievements of the negotiations, saying at a press conference that it is an “ambitious” and “high standard” agreement.

The TPP free trade pact promises, among other things, to abolish tariffs or carry out regulatory reforms in 31 areas. If it becomes effective, tariffs on many agricultural and industrial products will be lowered, and fair, highly transparent and comprehensive rules on trade and investment will be created.

This will raise the degree of freedom in economic activities and TPP member countries will likely receive various benefits, including expansion of production and job creation.

It is important for each participating country to win its legislature’s approval of a final agreement promptly, leading to effectuation of the accord.

The government needs to explain to the public in detail the possible benefits to be gained and the pains to bear through the participation in the TPP.

Prime Minister Shinzo Abe’s administration considers Japan’s participation in the TPP scheme as one of the central pillars of its growth strategy.

The TPP is a framework deemed vital for the Japanese economy to take in a growing market of Asia as its domestic market is expected to shrink due to a population decline.

Checking China

With the member countries abiding by the rules set within the TPP accord, risks such as unexpected changes to trade rules will be lowered, facilitating the expansion of companies into the markets of other countries.

Participation will also provide a nice tailwind for Japan to promote exports of infrastructure development such as roads and railways. Should a large number of import duties, including those on beef and pork, be reduced, the benefits for Japanese consumers will be substantial.

Abe welcomed the broad agreement as “a farsighted state policy to build a free and fair economic zone among countries that share the same values.”

We should not allow to pass unnoted the possible effect of both Japan and the United States, which lead the TPP talks, banding together and deepening the alliance. Such an effect will restrain China, a country that has been escalating its hegemonic activities lately.

The principles of TPP, the world’s largest economic accord, will become “international standards.” It is desirable to urge China to reform itself, to abide by fair and transparent rules and to have the world’s second largest economic power contribute to the prosperity of the global community.

Measures to tackle possible side effects of the TPP deal are also essential. There are many who are worried that domestic farmers, in particular, will be hit hard as they will face fierce competition from foreign products on which import duties will be lowered. There may be no time to waste in strengthening the mold for the country’s farming sector.

End handout policy

It could be a good idea for Japan to seize the TPP deal as a chance for it to build an agriculture sector of the future, rather than considering the pact as bringing only negative effects.

The government should focus on projects such as enhancing productivity by adopting information technology and by promoting large-scale farming, and raising the earning power of the farming sector by promoting exports strategically.

Following the Uruguay Round agreement reached in 1993, under which Japan partially opened its market to rice imports, the government injected funding worth ¥6 trillion over eight years to assist farmers. But this ended up being mostly spent on public works such as land improvement, and were said to have little effect on enhancing international competitiveness. The same mistake should not be made.

With the House of Councillors election, scheduled for next summer, in mind, there are some within the Liberal Democratic Party calling for a large increase in agriculture-related budgets, under the pretext of measures to deal with the TPP accord.

The government will be tested on whether it can allocate budgets by prioritizing those projects that will help reinvigorate the nation’s farming sector, while eliminating the policy of handouts for farmers.

(From The Yomiuri Shimbun, Oct. 6, 2015)

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