Fitting the Trans-Pacific Partnership within Japanese National Interest

[SvenSvensonov]

Mulgan misunderstands the power dynamics at play in the TPP negotiations. It is Japan that thinks that Japan is vital to the TPP, not the US. Why?

1). The US continues to grow significantly faster than Japan, TPP or not.
2). The vast majority of growth in Asia (excluding China and India) will come from the TPP block. Japan may be the heavyweight today, but not so in 20 years.
3). Gaiatsu was never a unilateral US tactic, it was always a combination of the correction of trade distortions (e.g. Japanese mercantilism) and cover for the reform efforts of Japanese leaders.
4). Other than autos, nearly all the benefits that would accrue to Japan due to the free trade enabled by the TPP would benefit the US as well (e.g. IP protection, trade in services), but not vice-versa (I.e. the US has many cost advantages over Japan, such as in agriculture). Japan thus has no leverage.
5). Using RCEP as a threat against the US is the equivalent of saying that if the US doesn't fold, Japan will bind itself to China. That is not a serious threat, because total dependence on China for trade is the last thing Japanese nationalists like Abe want.

I am convinced that the TPP will happen, with or without Japan. Japan underestimates the US emphasis on "high standards" in pushing the TPP (the very reason why China was excluded), and risks missing out on a trade agreement where it is a great power with corresponding negotiating power (TPP), leaving it at the mercy of China in the alternatives (RCEP, CJK, etc.)

Holy crap!!! Haven't seen you here for a while - if you've been around I must have missed it! I do agree with your sentiment though, the TTP will most likely happen, and if it doesn't something similar will take its place. Like the F-35, too many nations are invested in the TTP to see it fail into obscurity or have it watered down to the point that is is comparable with normal trade. Too much money, too much time, too many nations, you can't let a project like that fail to materialize.

I do have one problem with it though. As always, adding more and more voices has compromised the ease at which the project can be implemented. It's a high-risk, higher-reward type system. You let more nations have a say, more wrenches to throw into the negotiations and the result is the lag we see, but if it all can be pulled off the benefits are very, very strong.

With the Asia-Pacific being the engine of growth for much of the time going forwards, this is an investment that is worth the wait, though we can't and wont wait forever. Japan, for all its bickering and issues with the negotiations, needs this. It just can't afford to let the opportunity slip away. This will benefit all involved nations greatly and open a new door for US-Asian cooperation and relations. This is our Maritime Silk Road - to use a Chinese term, especially as Europe falters and Africa and South America go through some growing pains, but I hope that it isn't and doesn't become a new form of competition with China, rather, perhaps it can be used to entice them into a better relation with their region in return for more favorable trade ties. Sure beats the massive tariffs we already slap on their goods.

Their participation might not be possible, or wanted right now, but I would be in favor of China joining the partnership once negotiations are concluded. Right now there are too many voices and too much time being used to negotiate, we just don't need another voice right now. Perhaps in the future, but not at the moment.

Hope it gets done this year.

@Nihonjin1051 - I have only two things to say. 1. nice article. 2. I'm all for the TTP!

 

[Gufi]

Truly, my friend, balancing the diplomatic play in this region (East Asia) is like an art ! I do wish we could get the best of both worlds ; greater economic cooperation with the United States and China, bot of which are the two largest trading partners of Japan. The trade between Japan and the United States has already hit over $290 Billion this past fiscal year, whereas trade between Japan and China (+Hong Kong) is almost $400 Billion. The level of trade between Japan and China --- already approaching half a Trillion Dollars' Worth --- is so pivotal. This is one of the reasons why the Government in Tokyo is weary in adopting any policies that may disturb the trade level with China.

with China making inroads into central Asia and Africa there is a unique chance to use relations with China to boost trade with many countries. America is also a strong ally but they are direct competitors in high end goods such as cars and hi tech goods. Plus Japan can soon benefit from Chinese aging and wealthy population with its experience in geriatric medicine which will turn into a huge market with goods catered to older people being an expertise in Japan.
The main issue between China and Japan is history which i see as a major hurdle and the ties need to be made on strong bonds which include military pacts. America needs to work hard to prove that it considers Japan an equal and needs to get China on board any pacts for the region. I think that the only one really gaining from the TPP will be America.

 

[LeveragedBuyout]

Why is Vietnam included then....Because of the high standards?

Vietnam will agree to the standards dictated by the US, and has shown a relatively solid respect for IP rights, and Vietnam is not an IP competitor, so that won't harm Vietnam. On the other hand, Vietnam has much to gain from an agricultural agreement (as do many other TPP participants), which further puts Japan in the minority.

 

[Aepsilons]

Mulgan misunderstands the power dynamics at play in the TPP negotiations. It is Japan that thinks that Japan is vital to the TPP, not the US. Why?

1). The US continues to grow significantly faster than Japan, TPP or not.
2). The vast majority of growth in Asia (excluding China and India) will come from the TPP block. Japan may be the heavyweight today, but not so in 20 years.
3). Gaiatsu was never a unilateral US tactic, it was always a combination of the correction of trade distortions (e.g. Japanese mercantilism) and cover for the reform efforts of Japanese leaders.
4). Other than autos, nearly all the benefits that would accrue to Japan due to the free trade enabled by the TPP would benefit the US as well (e.g. IP protection, trade in services), but not vice-versa (I.e. the US has many cost advantages over Japan, such as in agriculture). Japan thus has no leverage.
5). Using RCEP as a threat against the US is the equivalent of saying that if the US doesn't fold, Japan will bind itself to China. That is not a serious threat, because total dependence on China for trade is the last thing Japanese nationalists like Abe want.

I am convinced that the TPP will happen, with or without Japan. Japan underestimates the US emphasis on "high standards" in pushing the TPP (the very reason why China was excluded), and risks missing out on a trade agreement where it is a great power with corresponding negotiating power (TPP), leaving it at the mercy of China in the alternatives (RCEP, CJK, etc.)

Sir,


I understand that the Trans Pacific Partnership will have some negative effects on some parts of the economies of its signatories, but – it is assumed that – the gains will be substantial. One thing is evident is that there are some protectionist lobbying groups that are against this Trade Agreement. Secondly, how will the TPP affect Japan’s trade with China ? What are the political implications – given the warming of relations with China and Japan ? All of these are something that many of us want to know and hope to ascertain.

 

[Hamartia Antidote]

BTW, Toyota and Lexus is still the go to car for Chinese in China and abroad, and me as well.

Here's the top selling cars in the US. Japanese cars dominate:
Team USA | Page 80

6 of the top 10

What does the Chinese list look like...not even close I bet.

 

[Aepsilons]

Vietnam will agree to the standards dictated by the US, and has shown a relatively solid respect for IP rights, and Vietnam is not an IP competitor, so that won't harm Vietnam. On the other hand, Vietnam has much to gain from an agricultural agreement (as do many other TPP participants), which further puts Japan in the minority.

This is the major reason why the small interest groups in Japan are somewhat ambivalent to approving the TPP agreement as it compromises the farming and agricultural market of the country. It is estimated that there will be a loss of some 3 Trillion JPY in the agricultural sector of Japan. That's around $25.5 Billion USD loss. Let me provide reference:

 

[LeveragedBuyout]

@SvenSvensonov always good to see you, buddy. I try not to post on PDF at all anymore, but @Nihonjin1051 is one of the handful for whom I will break that rule.

Sir,


I understand that the Trans Pacific Partnership will have some negative effects on some parts of the economies of its signatories, but – it is assumed that – the gains will be substantial. One thing is evident is that there are some protectionist lobbying groups that are against this Trade Agreement. Secondly, how will the TPP affect Japan’s trade with China ? What are the political implications – given the warming of relations with China and Japan ? All of these are something that many of us want to know and hope to ascertain.

Interestingly, despite all the talk of TPP as a political tool, I think it will have de minimis effects on Chinese trade with the TPP members, because the TPP members are not substitutes for China. Looking at it from another angle, none of the trends that are happening now will be changed by TPP (e.g. Gradual shift of low value manufacturing away from China, increasing Chinese trade share in Asia), but new trade will be introduced by TPP that were not possible before (e.g. Cross-border trade in services, especially life sciences and finance).

I can't think of any outright losers from TPP other than Taiwan and SK, which we have previously discussed. But they are not in TPP, and China doesn't care about their welfare, either. That's why the logic of TPP is unstoppable.

 

[Aepsilons]

With the Asia-Pacific being the engine of growth for much of the time going forwards, this is an investment that is worth the wait, though we can't and wont wait forever. Japan, for all its bickering and issues with the negotiations, needs this. It just can't afford to let the opportunity slip away. This will benefit all involved nations greatly and open a new door for US-Asian cooperation and relations. This is our Maritime Silk Road - to use a Chinese term, especially as Europe falters and Africa and South America go through some growing pains, but I hope that it isn't and doesn't become a new form of competition with China, rather, perhaps it can be used to entice them into a better relation with their region in return for more favorable trade ties. Sure beats the massive tariffs we already slap on their goods.

I am for the TPP , but at the same time I see the benefits, but I also see the deficits. What i'm concerned about is how this trade pact will affect Japan's trade levels with China and since it places preference for members of this trade pact, I want to know -- as how this will cause any dramatic changes to the Sino-Japanese trade level , which is already reaching close to $400 Billion per annum.

At the same time I'm cautiously optimistic since , hey even Australia and Japan recently signed an FTA that took into effect this week. Who knows, perhaps China can join the TPP in the future ? Possibility? Sir @LeveragedBuyout ?

 

[LeveragedBuyout]

This is the major reason why the small interest groups in Japan are somewhat ambivalent to approving the TPP agreement as it compromises the farming and agricultural market of the country. It is estimated that there will be a loss of some 3 Trillion JPY in the agricultural sector of Japan. That's around $25.5 Billion USD loss. Let me provide reference:

Looks like a huge net positive to me. The other benefit is increased living standards for Japanese citizens (lower cost imports, more export earnings), even if it comes at a cost to the agriculture industry.

Every government must weigh what is best for its security and prosperity, so I don't blame Japan, even if it drops out. I do think TPP would be tremendously beneficial to Japan even if it cannot achieve its agriculture carve-outs. But Mulgan pointed the way forward: US drops auto protection in exchange for Japan dropping agricultural protection.

 

[Genesis]

Sir,


I understand that the Trans Pacific Partnership will have some negative effects on some parts of the economies of its signatories, but – it is assumed that – the gains will be substantial. One thing is evident is that there are some protectionist lobbying groups that are against this Trade Agreement. Secondly, how will the TPP affect Japan’s trade with China ? What are the political implications – given the warming of relations with China and Japan ? All of these are something that many of us want to know and hope to ascertain.

It won't affect it much. We are nothing if not progress driven, as proven by our history. Money is money, it's dirty either way.

Vietnam will agree to the standards dictated by the US, and has shown a relatively solid respect for IP rights, and Vietnam is not an IP competitor, so that won't harm Vietnam. On the other hand, Vietnam has much to gain from an agricultural agreement (as do many other TPP participants), which further puts Japan in the minority.

That doesn't really help with US' IP problem now does it, if IP is a major driving force to this, I'm assuming excluding China is the way to go. However, seeing as even with a trade deficit China is still one of the biggest partners of the US, and the world, I doubt you can do so.

If by your estimation, Vietnam is in fact a IP protector, then it's really just a free trade agreement and nothing else. Not a particularly effective one at that, as none of the countries listed can compete with China on manufacturing bases or even close, and we are about a decade or two away from full on competition with Japan and the US on high tech and other high end fields.

So by bring IP up as a huge factor, would you say the ultimate goal, or for it to have any effect, China would have to be excluded somehow.

However like you said, none of the countries can replace China, or even be foolish enough to try, what can the TPP bring other than a small gain.

 

[LeveragedBuyout]

I am for the TPP , but at the same time I see the benefits, but I also see the deficits. What i'm concerned about is how this trade pact will affect Japan's trade levels with China and since it places preference for members of this trade pact, I want to know -- as how this will cause any dramatic changes to the Sino-Japanese trade level , which is already reaching close to $400 Billion per annum.

At the same time I'm cautiously optimistic since , hey even Australia and Japan recently signed an FTA that took into effect this week. Who knows, perhaps China can join the TPP in the future ? Possibility? Sir @LeveragedBuyout ?

I think China could join, but it won't, because the objectives in place for TPP do not serve China's interests (at least, not for now). When China becomes interested in protecting IP, then its interests will be aligned with TPP.

It's not either-or with TPP. I am certain more free trade agreements will be signed, either on a multilateral or bilateral basis, so CJK or RCEP can still happen even after TPP is concluded.

It won't affect it much. We are nothing if not progress driven, as proven by our history. Money is money, it's dirty either way.



That doesn't really help with US' IP problem now does it, if IP is a major driving force to this, I'm assuming excluding China is the way to go. However, seeing as even with a trade deficit China is still one of the biggest partners of the US, and the world, I doubt you can do so.

If by your estimation, Vietnam is in fact a IP protector, then it's really just a free trade agreement and nothing else. Not a particularly effective one at that, as none of the countries listed can compete with China on manufacturing bases or even close, and we are about a decade or two away from full on competition with Japan and the US on high tech and other high end fields.

So by bring IP up as a huge factor, would you say the ultimate goal, or for it to have any effect, China would have to be excluded somehow.

However like you said, none of the countries can replace China, or even be foolish enough to try, what can the TPP bring other than a small gain.

In a word: agreed.

 

[Aepsilons]

But Mulgan pointed the way forward: US drops auto protection in exchange for Japan dropping agricultural protection.

This is definitely a handsome prospect. Well, the only hopes is that if the Ministry of Agriculture and Fisheries under -- Mr. Hayashi Yoshimasa -- can provide some subsidies to Japanese agricultural businesses -- in the even the TPP is ratified. This is the only way to satisfy the agricultural special interest groups in the country.

That said, Best of Luck to us all !

It won't affect it much. We are nothing if not progress driven, as proven by our history. Money is money, it's dirty either way.

Your avatar picture is affecting my concentration, lol

On a serious note; I think the only way to bridge the gap after ratifying the TPP is by initiating a China-Korea-Japan FTA trilateral partnership. Talk about excessive club memberships, eh? lol

 

[Genesis]

Your avatar picture is affecting my concentration, lol

How else can I get more likes than you lol. What's a woman for if not to use them to make the competitor take their eyes off you. Unless they are gay in which case, I'm good enough, lol.

On a serious note; I think the only way to bridge the gap after ratifying the TPP is by initiating a China-Korea-Japan FTA trilateral partnership. Talk about excessive club memberships, eh? lol

I thought we were in the discussion for that already, I do have more than 5 credit cards already, though god knows I only need one, so what's a few more groupings, more chances for us to see each other, thank god we live in countries that can afford to host these meetings all the time about nothing, or else this might seem like a total waste of time.

 

[terranMarine]

How else can I get more likes than you lol. What's a woman for if not to use them to make the competitor take their eyes off you. Unless they are gay in which case, I'm good enough, lol.
.

Art of deception , Sun Tzu would agree

 

[CHN Bamboo]

@terranMarine 我看不懂他说的是什么啊…能给我翻译一下吗【跪