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Cautions Before Joining TPP(Trans-Pacific Partnership)

Prime Minister Yoshihiko Noda seems to have determined in his mind to declare in the forthcoming APEC meeting in Hawaii scheduled on November 12 and 13 to join the negotiation process of the TPP.

TPP is an endeavor to try to promote an international free trade arrangement. I am of the opinion that the free trade arrangement should be promoted to the extent it helps to increase the benefit of people of the countries involved interns of say, their income levels, by increasing the efficiency of their economies. In this sense, the objectives and the basic concept of the TPP is welcomed.

The TPP has been initiated by four of relatively small countries, quoted as P4, in the rim of Pacific Basin, Singapore, NZ, Chile, Brunei, in 2006. The agreement of P4 is open to other APEC members, and they solicited other countries to join the agreement. In 2010, the United States, Australia, Vietnam and Peru joined the agreement and have enlarged the scheme to P8. In October 2010, Malaysia joined as a late comer.

The agreement stipulates on the one hand to try in principle to abolish custom duties imposed on tradable goods immediately or by steps, and on the other,try to make a comprehensive agreement to liberate regulations on service trade, government appropriation, competition, intellectual properties, labor mobility etc.

Japan was solicited to join the agreement for the last few years, and prime minister Naoto Kan declared that Japan will consider positively to join the agreement in APEC meeting in Yokohama. Problems with Japan was that Japan did not take any substantive actions concerning this matter except prime minister's abrupt statement, did not collect information about this international arrangement, nor study carefully about what this would mean to Japanese economy and industries except a sketchy and unwarranted "assessment" by such ministries as Ministry of Agriculture, Forestry and Fishery and Ministry of Economy and Industry.

In the last few years, under the umbrella of the TPP, 24 task forces have been established in charge of each important economic or industrial areas, and intensive discussions were held already several times among the participating countries such as January, October, December of 2010, and February 2011 in Chile, March in Singapore, June in Vietnam, September in United States, October in Peru. The United States expects to reach a general agreement taking advantage of the forthcoming APEC summit meeting in Hawaii.

Under these circumstances, I would like to call attention of Japanese public and political leaders to have special cautions to deal with this matter at this stage for the following reasons.

(1) Much of the contents and presumed rules of the agreement have been already agreed upon by already participating 8 or 9 countries, and Japan, a major economic player not only in the Pacific region but also in the global market, has only very little information about the scheme. This is said to be due to the fact that Japan has not joined the TPP yet. However, given the size and importance of the issues, it is queer that a possible major player is not given necessary information for its leaders and the public to consider sufficiently to make adequate decisions.

(2) Among the 9 member countries, the United States occupies the overwhelming presence in terms of GNP, and for the urgent need of the Obama government to promote the US exports to the Pacific region, Japan will be an outstandingly important target for them, as an another major market other than the US.

(3) To facilitate such far-fetching objectives as comprehensive liberalization of trade of tradable goods and comprehensive harmonization of rules on services, government procurements, intellectual property rights and labor mobility, the pace of rule making is too hasty and incredibly non-transparent or exclusive even against a conceivable major partner such as Japan. The rule making process is in fact upside down. These major issues would take much more time in sharing information, mutual understanding and preparing for necessary changes even in bi-lateral talks of trade agreement. In a larger international negotiations such as GATT and WTO agreements, it is natural that it took years to reach any substantive agreements. It is quite queer that the TPP, a multi-country agreement scheme, seems to rush much faster than the bi-lateral agreement.

(4) From the view point of Japan, the whole approach by the US seems incomprehensive. Very little or even none of necessary information about the contents and rules has been provided to Japan for a queer reason that Japan did not declare to participate, and yet the US seems to force Japan to commit quickly to participate. For the Obama government, given the disastrous domestic economic conditions, the need to increase export and investment into growth areas of Asia may be a prime strategic agendum. But this is primarily a domestic matter of the US. We of course understand the difficulty, and wish to work together to improve the situation by reasonable international cooperation. But the imposing an abrupt pressure to join the TPP without necessary information and time to think and prepare for it seems not adequate or fair.

(5) Under the strange circumstances where we are asked to make decision to join the negotiation without relevant information, Mr. Seiji Maehara and some other politicians commented several days ago that there might be an option to resign from the scheme depending upon the content of the negotiation. This is a reasonable comment under a strange circumstance of non-transparency of information. Responding immediately against this comment a high rank US official reportedly said that they are willing to welcome only a serious participant. This is a strange pressure possibly stemming from an invisible reason to have to hasten the game.

Given these factors, even if prime minister Yoshihiko Noda declares to participate to the negotiation process of the TPP, he needs to be specially prepared to proceed the steps of negotiation effectively for Japan's national interest. Most notably, he should make at most effort to minimize or eliminate the "negative asset" of the lack of necessary information and the narrowed span of negotiation which has been "accumulated" during the period that Japan refrained from making clear decisions about TPP.

In case, it looks difficult to obtain sufficient information to cement the past gap and to have a free hand to negotiate relevant items without constraints, there might be an option for Japan not to join the TPP negotiation process at this state. Japan may learn from the careful attitude of Canada in this respect.

Those who argue that Japan should join the negotiation process as soon as possible point to several reasons such as: (1) Japan should cooperate with the most important ally, the United States, (2) the sooner the joining, the less the loss of information and discretionary areas, (3) multi-national scheme is beneficial than a bi-lateral negotiation with the US in the sense that more leeways could be resorted, (4) development of multi-national arrangement would be more conducive for China to join. Though reason (1) is apparent, other reasons are debatable and not so much warranted. It appears that for a major economic power like Japan the straightforward negotiation with the US aiming at a bi-lateral free trade agreement is more meaningful and workable. In this respect, Japan should learn from Korean wisdom.

Prime minister Yoshihiko Noda should be strongly aware that the participation to the negotiation process must be carefully managed for Japan to minimize the information gap and maximize the discretion of the negotiation to secure the national interest and to contribute to the international interest. He should argue strongly to pursue this mission having in mind alternative choices such as not to join the TPP negotiation at this time or to seek Japan-US bi-lateral free trade agreement for the future.

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