Japan's TPP flip-flop likely to draw harsh reprisals

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Japan's TPP flip-flop likely to draw harsh reprisals

By Jon Day (Xinhua) 19:27, October 09, 2013

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TOKYO, Oct. 9 -- Japan, as one of the countries involved in the Trans-Pacific Partnership (TPP) free trade negotiations, decided along with other member nations that a conclusive deal will be struck before the end of the year, but for Japan such compliance has led to a powerful backlash from certain factions here.

The latest TPP summit concluded on Tuesday in Bali, Indonesia and pundits here believe that the broad agreement, reached by the 12 countries including Japan to expedite the process, may have been impacted by the absence of U.S. President Barack Obama who opted to skip the talks due to a budged standoff in Washington.

Obama was scheduled to chair the key U.S.-led TPP talks and his last minute withdrawal from the negotiations, to address the stalled passage of the federal budget in Congress which has led to some U.S. government functions being shutdown, cast something of a dark shadow over the proceedings, at a time when a number of issues remain unresolved between developed and emerging economies.

"Obama's unexpected absence most likely impacted the negotiations, but the TPP-member nations apparently laid out a broad consensus as to how moves will shape up before the year-end, " Laurent Sinclair, a Japan-based pacific affairs research analyst, told Xinhua on Wednesday.

"What remains to be seen, but what is likely the case, is that a clear roadmap to reaching a definitive conclusion on many of the outstanding issues may have been put off for now, meaning the U.S. target for a deal by the end of the year, may be a hard deadline to hit," Sinclair said.

Sinclair went on to say that Obama's presence alone may have been enough to smooth over some of the differences between the United States and emerging nations, where his proxy, U.S. Secretary of State John Kerry, may not have garnered the same support.

Specifically, Sinclair was talking about a standoff regarding intellectual property rights for new pharmaceutical patents that countries like Malaysia, who rely heavily on generic replicas produced after the patents, want the United States to rethink it.

Despite the 12 countries issuing a joint statement declaring that progress towards a final deal has been achieved and Japan's Economy Minister and senior TPP negotiator Akira Amari reiterating this, other countries, it would seem, beg to differ, with Malaysian Prime Minister Najib Razak stating that due to a number of ongoing logjams between countries, negotiations would likely not be concluded this year.

Amari said that ministerial meetings will be held again between the member nations prior to the end of the year with the aim of ironing out certain contentious tariff eliminations, but pundits attest that despite Washington urging the process to move forward at a quicker pace, without the cooperation of all participants, negotiations will likely continue to lag.

The summit in Bali marked the 20th round of official talks between the member nations, with Japan being the last country to join in late July. Talks were held at a ministerial level in Bali in a bid to resolving some intractable issues, but many agreements remain outstanding on the most sensitive products in the tariff negotiations, according to the TPP ministers' report to the leaders, issued at the same time as the leaders' statement.

"It would seem that once again the TPP negotiation process is not moving at a pace the U.S. would hope for, but this doesn't necessarily mean the U.S. is losing its grip on the talks in its bid to consolidate a wider free trade area in the Asia-Pacific region. It just means the process has become protracted," Sinclair said.

"This will be a headache for Washington who wants the deal wrapped up swiftly, but for emerging economies the fact that the rate of economic development is being taken into consideration in the talks is good news for smaller economies, previously at risk of being browbeaten by the U.S. and larger economies," he said.

Many analysts had predicted that Japan, with its seemingly inflexible stance on some of its sensitive sectors, would be one of the biggest drags on talks moving forward, however, somewhat surprisingly, this was not the case.

Japan has, since it entered the talks, sought to protect its fragile rice industry, which sees tariffs of more than 700 percent imposed on foreign imports to protect the sector. Along with its rice industry, Japan has also been looking to safeguard its wheat, beef, pork, dairy products and sugar industries, which has, previously, drawn the ire of other TPP-member countries and led to protracted negotiations.

However, in a stark turnaround and despite Japan's Prime Minister and leader of the ruling Liberal Democratic Party (LDP) Shinzo Abe repeatedly stating that he would protect Japan's national interests or "sanctuaries," Japan has agreed to make some concessions that will likely upset some very powerful agricultural lobbies and politicians here, whose support for the LDP was premised on the fact that Abe and his TPP negotiators would protect these "sanctuaries".

Koya Nishikawa, the chairman of Japan's TPP negotiating committee, stated that tariffs could indeed be abolished on some of the five sacred sectors. His sentiments were echoed by Amari and Shigeru Ishiba, the LDP's secretary-general at the TPP summit in Bali.

"This was somewhat surprising as Japan has so ardently tried to protect its sensitive sectors and has been looking to the United States for exemptions to made, but what we're seeing now is far more compliance from Japan, which is good news for the TPP process, but will likely be met with a lot of resistance from certain factions here," Sinclair said.

Pundits believe that Japan's shifting TPP stance has been dictated by Abe who sees the TPP deal as central to his aggressive "Abenomics" economic policy agenda aimed at reversing decades of deflation, increasing sales tax and, ultimately, rescuing the nation from its economic malaise.

However, the apparent flip-flop has opened up the LDP for attack from a number of fronts. Firstly, Japan's Central Union of Agricultural Co-operatives, which has significant political clout here, will be up in arms about the turnaround.

Toshio Yamada, an LDP upper house member, who previously worked for the agricultural co-op, suggested that there would be a harsh backlash from the union and along with LDP lawmakers who won their seats in rural constituencies based on their anti-TPP promises, will likely be gearing up for a showdown with Abe, who could be facing a significant domestic political firestorm.

"Prior to July's upper house election, the LDP stated unequivocally that unless its five sensitive sectors were protected, Japan would not hesitate to withdraw from the negotiations," Philip McNeil, an author and commentator on Japanese sociopolitical issues, told Xinhua

"What we're seeing now is how fervently Mr. Abe is conducting his economic policy. Even to the extent that his party could be accused of misrepresenting, or to put it bluntly, lying to some constituencies and powerful farm lobbies. It could be a rocky road ahead for Mr. Abe and Thursday's TPP committee meeting will likely see some harsh reprisals," McNeil said.