Skip to main content
Menu

Main navigation

  • About
    • Annual Reports
    • Leadership
    • Jobs
    • Student Programs
    • Media Information
    • Store
    • Contact
    LOADING...
  • Experts
    • Policy Scholars
    • Adjunct Scholars
    • Fellows
  • Events
    • Upcoming
    • Past
    • Event FAQs
    • Sphere Summit
    LOADING...
  • Publications
    • Studies
    • Commentary
    • Books
    • Reviews and Journals
    • Public Filings
    LOADING...
  • Blog
  • Donate
    • Sponsorship Benefits
    • Ways to Give
    • Planned Giving

Issues

  • Constitution and Law
    • Constitutional Law
    • Criminal Justice
    • Free Speech and Civil Liberties
  • Economics
    • Banking and Finance
    • Monetary Policy
    • Regulation
    • Tax and Budget Policy
  • Politics and Society
    • Education
    • Government and Politics
    • Health Care
    • Poverty and Social Welfare
    • Technology and Privacy
  • International
    • Defense and Foreign Policy
    • Global Freedom
    • Immigration
    • Trade Policy
Live Now

Blog


  • Blog Home
  • RSS

Email Signup

Sign up to have blog posts delivered straight to your inbox!

Topics
  • Banking and Finance
  • Constitutional Law
  • Criminal Justice
  • Defense and Foreign Policy
  • Education
  • Free Speech and Civil Liberties
  • Global Freedom
  • Government and Politics
  • Health Care
  • Immigration
  • Monetary Policy
  • Poverty and Social Welfare
  • Regulation
  • Tax and Budget Policy
  • Technology and Privacy
  • Trade Policy
Archives
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • October 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012
  • April 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • November 2011
  • October 2011
  • September 2011
  • August 2011
  • July 2011
  • June 2011
  • May 2011
  • April 2011
  • March 2011
  • February 2011
  • January 2011
  • December 2010
  • November 2010
  • October 2010
  • September 2010
  • August 2010
  • July 2010
  • June 2010
  • May 2010
  • April 2010
  • March 2010
  • February 2010
  • January 2010
  • December 2009
  • November 2009
  • October 2009
  • September 2009
  • August 2009
  • July 2009
  • June 2009
  • May 2009
  • April 2009
  • March 2009
  • February 2009
  • January 2009
  • December 2008
  • November 2008
  • October 2008
  • September 2008
  • August 2008
  • July 2008
  • June 2008
  • May 2008
  • April 2008
  • March 2008
  • February 2008
  • January 2008
  • December 2007
  • November 2007
  • October 2007
  • September 2007
  • August 2007
  • July 2007
  • June 2007
  • May 2007
  • April 2007
  • March 2007
  • February 2007
  • January 2007
  • December 2006
  • November 2006
  • October 2006
  • September 2006
  • August 2006
  • July 2006
  • June 2006
  • May 2006
  • April 2006
  • Show More
May 10, 2012 4:07PM

The TPP Trade Negotiations Need More Japan and Less Detroit

By Daniel J. Ikenson

SHARE

If you harbor any doubts that the parameters of U.S. trade policy are defined by a few politically-important domestic industries, take a look at the debate over whether Japan should be allowed to join the Trans-Pacific Partnership trade negotiations.

Did you miss it?  That’s because there really hasn’t been much debate; there has been near-unanimous support for the idea in the United States.

In December 2011, the Office of the U.S. Trade Representative requested comments from the public about Japan’s expression of interest in joining the TPP talks.  In response, 115 submissions were filed on behalf of various U.S. interests (small to large companies, trade associations, unions, and other NGOs).  Five of the responses flat out rejected the idea of Japan’s participation; five expressed a willingness to support Japan’s participation with conditions, and 105 expressed no-strings-attached support for Japan joining the talks.  In other words, 91 percent of the respondents were unequivocally in favor of Japan’s participation in the negotiations.

Yet, four months after reviewing those comments, the Obama administration is equivocal about the matter.

With 91 percent in favor, the only formula that could produce executive equivocation is one that weights extremely heavily the views of those expressing opposition to Japan’s participation.  Which of these five dissenters’ views are likely to be getting extra special consideration from the administration on this matter: Humane Society International, the National Marine Manufacturers Association, the Maine Citizen Trade Policy Commission, the Central Union of Agricultural Cooperatives, or the American Automotive Policy Council (hint: the lobbying arm of the “Detroit 3” – Ford, GM, and Chrysler)?

Yes, the same GM that American taxpayers bailed out and are still involuntarily vested in to the tune of $27 billion has interest in seeing those same taxpayers denied the enormous benefits of liberalizing trade with the world’s third largest economy.  And yes, this is the same Chrysler that masquerades as an American company (remember the Clint Eastwood Super Bowl ad), but is owned by the Italian automaker Fiat. Add that little detail to the fact that GM produces more cars in China than it does in the United States and one has to question how, exactly, the process of U.S. trade policy formulation is reality-based.

There is nothing wrong with companies investing across borders and producing wherever they can to serve demand across the globe.  Indeed, freedom of capital, trade, and labor should be the rule, not the exception that it is today.  Likewise, it is to be expected that companies will respond to incentives and if policy is perceived as malleable, the incentive to influence favorable outcomes will motivate companies to lobby.  And as entities beholden to the fiduciary duty to maximize profits for shareholders, these companies try to influence the rules to their own advantages.  But who’s watching over the hen-house here?  Policymakers have a responsibility to the public interest, not to specific industries or companies.

What is proper, democratic, or civic-minded about U.S. policy formulated with the views of a few politically-favored companies – companies that are lobbying foreign governments on some of the very same issues – trumping the opinions of a diverse 91 percent of respondent interests?  If the goal of trade policy is to deliver the benefits of trade liberalization to a broad cross-section of Americans, then why is there this egregious imbalance of influence on the process? What is the point of collecting comments from the public on such matters, if not just to create the illusions of policy accessibility and transparency?  The whole exercise renders trade policy indistinguishable from corporate welfare and gives trade a bad name.

Consider the realpolitik of the matter.  The Chinese government sees the TPP negotiations as a U.S.-led effort to counter China’s growing influence, a perception the administration has not been shy about helping to cultivate.  Presumably, the Chinese government would like to see those efforts fail, and one way to undermine the TPP is to ensure that Japan stays out.  How might China accomplish that?  GM and Ford have big and growing stakes in a Chinese auto market that has been subject to various regulations to control rapid demand growth and stifling traffic congestion.  Might GM’s and Ford’s adamant opposition to Japan’s joining the TPP negotiations be animated by these considerations?  The argument put forward by the American Automotive Policy Council that Japan should be excluded from even negotiating because it has allegedly impermeable non-tariff barriers seems to miss the whole point that negotiations are where those barriers are discussed and, ultimately, dismantled.  It’s like disqualifying someone for a haircut because he wears his hair too long.  To my mind (and I neither offer nor have any proof), the adamancy of AAPC’s opposition whiffs of their trying to uphold their end of a bargain with Beijing.

Another explanation put forth for official U.S. equivocation over Japan is that the administration wants to proceed quickly, but the Japanese government itself has not decided whether it even wants to join the negotiations.  Even if Japan were entirely committed to the negotiations and had no domestic opposition to overcome, the process would be slower.  But there is domestic opposition in Japan, so, in fairness, the Obama administration's concern for Detroit's feelings doesn’t present the only obstacle.

Getting the deal done quickly is a valid reason to oppose Japan’s participation if the administration sees the TPP only as a means to a political end: having a deal – a relatively minor one, no doubt – to tout before November.  But this isn’t going to be done before November 2013, let alone November 2012.  And the economics of a Japan-less deal are, frankly, underwhelming.

Japan is the world’s third largest economy and the fourth largest trading partner of the United States.  The $6 trillion Japanese economy is more than double the size of the economies of the eight current U.S. negotiating partners combined.  The $200 billion in two-way trade between the United States and Japan equals that of trade between the United States and all of the eight current negotiating partners combined – and the United States already has free trade agreements with four of them.  If there are good reasons for pursuing a trade agreement with the eight, the reasons are much stronger if Japan is included.


Just a few short weeks ago, U.S. Trade Representative Ron Kirk waxed in the Wall Street Journal about the importance of the U.S. services sector industries.  In a piece titled “Rethinking ‘Made in America’,” Ambassador Kirk made the point that the United States is a services-exporting powerhouse and that industries in those sectors would drive growth and job creation in the 21st century. He wrote:

A commitment to services exports is why services and investment are a [sic] cornerstone of the current nine-country Trans-Pacific Partnership negotiations, in which the U.S. is seeking broad, nondiscriminatory market access for a wide range of services.

There isn’t a bigger ready-market for U.S. services in the world than Japan’s, but as of this moment an icon of the 20th century’s manufacturing economy is in the driver’s seat of this 21st century agreement.

Those who claim to want to move fast assert that Japan can always accede to the agreement at a later date – when it is good and certain that it wants to join.  But there are no guarantees that Japan would want to get into the club on terms undoubtedly less favorable than those it could secure as a charter member.  Rather than view the TPP as a model for the region, Japan, Korea, Indonesia, Canada, Mexico, China and even Europe might create their own alternative.  If the TPP is to have guaranteed drawing power, it needs the anchor of a large Asian economy.  And adding Canada and Mexico makes the endeavor all the more worthwhile.

Related Tags
Trade Policy, Herbert A. Stiefel Center for Trade Policy Studies

Stay Connected to Cato

Sign up for the newsletter to receive periodic updates on Cato research, events, and publications.

View All Newsletters

1000 Massachusetts Ave, NW,
Washington, DC 20001-5403
(202) 842-0200
Contact Us
Privacy

Footer 1

  • About
    • Annual Reports
    • Leadership
    • Jobs
    • Student Programs
    • Media Information
    • Store
    • Contact

Footer 2

  • Experts
    • Policy Scholars
    • Adjunct Scholars
    • Fellows
  • Events
    • Upcoming
    • Past
    • Event FAQs
    • Sphere Summit

Footer 3

  • Publications
    • Books
    • Cato Journal
    • Regulation
    • Cato Policy Report
    • Cato Supreme Court Review
    • Cato’s Letter
    • Human Freedom Index
    • Economic Freedom of the World
    • Cato Handbook for Policymakers

Footer 4

  • Blog
  • Donate
    • Sponsorship Benefits
    • Ways to Give
    • Planned Giving
Also from Cato Institute:
Libertarianism.org
|
Humanprogress.org
|
Downsizinggovernment.org