Japan is still “hopeful” that the all-but-buried Trans-Pacific Partnership (TPP) will survive the Trump administration, an adviser revealed. Japan is one of America’s strongest allies in the Asia-Pacific, but there is one critical issue still casting uncertainty over the relationship.
“The TPP agreement is the most important issue affecting U.S.-Japanese relations,” Dr. Yorizumi Watanabe, a member of the prestigious Study Group on Japan-US Economy, which recently advised Tokyo on cooperation during the Trump administration, told The Daily Caller News Foundation.
Japan is a latecomer to the TPP, but it is one of the most active supporters. Japanese Prime Minister Shinzo Abe won parliamentary approval Friday to ratify the 12-nation free trade agreement.
“We want to carry this out and expect others will follow suit,” Abe said recently.
Japan hopes that the U.S. will maintain its position as the TPP flag bearer, even though Trump has promised to withdraw from the pact.
The TPP was intended to counter China’s economic rise in Asia and give the U.S. the ability to write the rules for global trade. The president-elect, however, claims that it will cost American jobs.
“I believe Trump may be misinformed on the TPP,” Watanabe explained to TheDCNF, “I doubt that any one on Trump’s transition team has read the TPP…After all, it’s as thick as a phone directory.”
Watanabe said that some of Trump’s protectionist policies may be fighting natural economic processes.
He suggested that while the U.S. has lost its comparative advantage in certain industries, the U.S. excels in others, particularly services. The example Watanabe gave was the textile industry.
He noted that while the U.S. once had a strong comparative advantage in textiles, the U.S. later lost it to Japan, which then lost it to other countries. In this situation, both the U.S. and Japan later developed the comparative advantage in other areas.
“Trump runs the risk of turning the U.S. into a subsidies state,” Watanabe explained. He argued that the TPP stands to make poorer countries richer, while simultaneously contributing to the advancement of leading powers, specifically the U.S.
Just as many Americans are concerned that the TPP will eliminate domestic jobs, so were many Japanese agricultural workers worried that they would encounter rising unemployment. Watanabe was involved in convincing them of the benefits of the TPP. Japan values the TPP as a kind of “economic security pact” to accompany the existing U.S.-Japanese security agreement already in place.
The Japanese economy may encounter setbacks if the TPP falls through, Watanabe commented.
Japan would likely continue to embrace existing bilateral trade agreements, possibly even establish new ones, to account for the loss. Japan would probably also continue to contribute to negotiations on the Regional Comprehensive Economic Partnership (RCEP) being promoted by China.
Watanabe explained that the RCEP is based on a concept originally put forward by Japan to counter China’s Association of Southeast Asian Nations (ASEAN) + 3 structure.
Japan is more interested in seeing a breakthrough on the TPP than it is the RCEP though. Negotiations on the former are much more mature.
No matter the ultimate fate of the TPP, Japan intends to continue to stand by the U.S. as a strong partner, Watanabe said.
After Abe met Trump in New York, he remarked that Trump is a president in whom “he can have confidence.”
Watanabe stressed that Trump should continue to focus on economic cooperation, especially bilateral investments. He said that the recent agreement with Japan’s SoftBank, which is expected to bring $50 billion into the U.S. and create 50,000 new jobs, is a step in the right direction.
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