Thursday, March 21, 2013

Abe’s Bold Decision on TPP Wins Public Approval

On March 15, Prime Minister Shinzo Abe formally announced that Japan would join the Trans-Pacific Partnership (TPP) negotiations. He had promised as much to President Barack Obama at their February summit. This bold decision, which many critics thought would be delayed by internal political feuding—the kind that blocked earlier attempts by Abe’s DPJ predecessors Naoto Kan and Yasuhiko Noda—is not without political risk.

Abe successfully argued to his party and coalition partners that joining the TPP can open the door to 3.2 trillion yen in much needed GDP growth. With Japan’s entry, the TPP comprises 12 nations, accounting for 40% of world GDP, making it the largest regional trading bloc. TPP is also seen as a means for Japan to reduce its economic dependency on the China market. Abe stressed that joining now was “so that the world’s third largest economy can take the lead in rule-making” before TPP talks wrap up late this year. Otherwise, he believes that Japan would be left behind and internationally disadvantaged.

Abe received grudging acceptance from anti-TPP elements in the ruling Liberal Democratic Party (LDP) by saying that he would protect Japan’s agriculture sector and public health insurance system during negotiations. In theory, TPP members had agreed beforehand to abolish all tariffs without exception. The expectation is that his government will make Japan’s interests reflected in the final set of rules, as well as to gain exemptions from zero-tariffs for certain politically-sensitive agricultural products such as rice and sugar.

With about half of the LDP lawmakers in the Diet opposing TPP, Abe’s strategy is a gamble. All could backfire on him if negotiations with the U.S., which include the knotty side issues of auto trade and government-backed insurance, fail. In particular, if Japan cannot obtain the minimal exceptions on “sacred” agricultural areas it seeks, the party expects it to pull out of the talks. This would be a political disaster and would cost Abe his premiership. On the other hand, if Japan is seen in the U.S. – read the Congress – as receiving special exemptions on key items, the backlash could even jeopardize the passage of the TPP treaty.

Before his statement, the ruling LDP's panel on the TPP passed a resolution that:

-- seeks the premier's crucial decision based on a century-long nation-building plan.
-- urges maintaining tariffs on certain farm products, with rice and others in mind, as well as protection of Japan's universal health insurance system.
-- suggests Japanese negotiators should withdraw from talks if national interests are threatened.
-- notes concerns that Japan will not benefit from growth in the Asia-Pacific region if it does not take part in TPP talks.
-- calls for close communication between the government and the LDP once Japan joins the TPP talks.

Abe is operating with both party and constituent restraints. He is counting on other TPP members, including the U.S., to seek to retain vestiges of its protected trading areas in order to sell the resulting treaty to domestic constituencies and legislative bodies. Abe seems convinced that the TPP goal of 100% zero-based tariffs will have to be eased to reflect domestic political realities. He may be right; it would seem that the U.S. Congress in the end would try to keep protective tariffs on such sensitive products as sugar.

Public Gives Abe High Marks 

The general public appears to support Abe’s gamble. , In the latest opinion surveys released by three major dailies on March 18: the Asahi poll found 71% of the public giving the Prime Minister high marks for his decision to join TPP talks, and 53% would approve Japan actually joining the free trade agreement; a poll by the Yomiuri found 60% of the public supporting entry into the TPP talks, and one by the Mainichi placed such support at a lofty 63%.

Moreover, the popularity of the Abe Cabinet remains strong. The Asahi found the cabinet support rate up three points from the February survey to 63% -- a record high for it in that newspaper. The Yomiuri poll put the cabinet approval rate at a heady 72%, up slightly, and the rate soared 7 points in the Mainichi survey to 70%. For the Japanese people, already pleased with Abe’s brash economic-stimulus policies, dubbed “Abenomics”, the Prime Minister at this juncture can do no wrong.

In response to the public’s positive reaction, the LDP has turned surprisingly supportive of Abe’s TPP strategy. The party members are apparently satisfied that it will do little or no harm to lawmakers running in the Upper House this July. After all, the results of the TPP talks will not be known until around October. Abe in a meeting at LDP headquarters on March 16 asked local party officials gathered from all over the country to “place your trust in me” on TPP matters, and they seemed to agree.

The party will campaign for the July election on a platform that includes measures to bolster the agricultural sector, which is in serious decline. Party Secretary General Shigeru Ishiba added at the LDP’s plenary meeting that the party will seriously debate what to do next to rescue the farm sector and safeguard its base in the nation’s economy. Already, party officials are making the rounds of rural areas likely to be affected by TPP liberalization, to convince them that their interests will not be sacrificed.

Junjiro Koizumi, the son of former Prime Minister Junichiro Koizumi, who took his father’s place in the Diet, even entered the lion’s den. He visited a small island near Okinawa where the only cash crop for the 1,300 inhabitants is sugar cane. This constituency is “absolutely opposed to TPP.” The move was good publicity, producing a photo in a major magazine.

China Syndrome 

As with all of Abe’s strategies affecting external relations, there is a security aspect that even anti-TPP diehards in the LDP have had to acknowledge: the China factor. The media has already picked up this issue, with some analysts seeing Japan’s decision to enter TPP talks as a clear message to China. They say that Japan is now linked more closely to the U.S. in both security and economic terms.

The Senkaku row with China and other regional factors has drawn Japan and the U.S. closer, while the free-trade agreement can bring many other advantages, including access to cheap shale gas. And as the regional bloc grows, China will find itself increasingly left out in the cold – encircled strategically and isolated economically. The analysts note that South Korea is already showing signs of interest in joining TPP, as well, adding to the regional pool.

TPP, in the words of one analyst (Nikkei, March 17), is “a tool that has enhanced the U.S.’s political influence” in the region. There is no doubt in this analyst’s view that for China, the U.S.-Japan condominium has become a potential “major threat” to its interests. China fears that as TPP membership grows, it will see the new trade rules become the new global standard that it will eventually have to accept. Japan seems to playing this China card for all that its worth.

Prime Minister Abe said he “has been tasked” with realizing the promise of TPP’s benefits to Japan. He has also pledged to do his “best to protect Japan's agriculture and food" as it represents Japan’s tradition and culture. For now, he has the support of his party and the electorate as he tries to stitch together Japan’s various definitions of national and economic security.

By William Brooks,
APP Senior Fellow and Adjunct Professor SAIS 

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