According to news reports, the United States and Japan have again failed to reach a bilateral agreement on lowering import barriers, a necessary prerequisite to completion of the 12-member Trans-Pacific Partnership (TPP) trade agreement. U.S. negotiators and business interests are quick to blame Japan for being reluctant to eliminate tariffs on a handful of highly traded agricultural products. In truth, though, the Japanese government has shown much greater commitment to the TPP and more willingness to take political risk than the United States. If the TPP falls apart, the blame will not lie with the Japanese.
The tariffs in question are what trade negotiators refer to as “sensitivities.” For every country in any trade negotiation, there are some trade barriers that are very difficult to lower because of the domestic political power of the businesses and industries that benefit from them. In Japan’s case these are agricultural tariffs (on rice, wheat, sugar, meat, and dairy) that are the bread and butter of Japan’s politically powerful farmers. Getting rid of sensitive barriers can be done, but it requires greater political will from both local and foreign leaders. Politicians take great risks when they oppose the interests of a powerful lobby.
I’ve noted before that criticisms of Japan’s stance are inappropriately antagonistic in light of how beneficial tariff elimination would be to Japan itself. The Japanese government know this, too. Earlier this week, Japanese Prime Minister Shinzo Abe spoke about how eager his government is to use the TPP talks as a way to enact broad agricultural reforms:
I consider it is indispensable for the future of Japanese agriculture to promote the domestic and international reforms in an integrated way.
To be honest with you, it is indeed an enormous task to suppress the resistance from the people who have been protected by vested interest. However, there is no future for them if they are not exposed to competition.
Rather than sympathize with their Japanese counterparts, however, the U.S. Trade Representative’s office continues to accuse Japan of expecting special treatment when all other TPP members are committed to more ambitious liberalization.
This attitude is incredibly hypocritical, considering that U.S. sensitivities are considered so far out of bounds that they aren’t even being discussed. Issues like agriculture subsidies, maritime shipping, antidumping reform, and government procurement aren’t on the table at all. Their absence is further evidence that it is the United States that lacks interest in taking political risk to advance the TPP.
But even if the U.S. government gets a pass on excluding all those non-tariff issues, it’s still falling short of Japan’s level of commitment. Consider this report from Japan’s Kyodo News Agency:
The United States has told Japan during their recent ministerial talks it will keep tariffs on automotive parts under a Pacific Rim free trade initiative, retracting its previous plan to scrap them immediately, negotiation sources said Thursday.
... The move is apparently out of consideration for the U.S. auto industry, which is a strong political support base for President Barack Obama's Democratic Party, before U.S. midterm elections in November.
The United States is right to ask a lot from the other 11 countries in the TPP negotiations. But completing the agreement (not to mention getting it passed in Congress) is going to require the Obama administration to step on the toes of particular business groups and explain why the deal is good for the country as a whole. They could learn how it's done by watching their Japanese counterparts.