US paves way for Japan to join talks on Pacific trade deal

The White House on Friday announced Japan’s entry into talks on an Asia-Pacific trade deal, another step in the U.S. strategy to boost exports to the Pacific Rim. 

Acting U.S. Trade Representative Demetrios Marantis said after more than a year of consultations with Tokyo, the two nations agreed to “robust package of actions and agreements with Japan in the automotive and insurance sectors, as well as other non-tariff measures” for Japan to join ongoing negotiations of the Trans-Pacific Partnership (TPP).

“As a result, we are pleased to welcome Japan’s participation in the TPP negotiations pending a consensus agreement among the current TPP members and the completion of our respective domestic processes,” he said in a statement.  

Japan’s admission into the TPP negotiations still requires the approval of the other 10 nations involved, and “the completion of our respective domestic processes,” according to the trade office.

Most of the other countries in the negotiations have expressed support for Japan’s entry into the talks. The aim is to complete negotiations this fall, although Japan probably won’t be able to formally participate until, at least, the July round in San Diego, adding more pressure to meet the already tight deadline. 

The talks between Washington and Tokyo will occur in parallel to the continued negotiations on the TPP and must be completed at the same time that the broader trade talks wrap up, Marantis said. 

Besides the United States, Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam, Mexico and Canada are all part of the talks. 

Michael Froman, the White House’s top adviser on trade, called the agreement an “important day in TPP negotiations and for U.S. strategic priorities” to be more engaged in the Asia-Pacific and the TPP is a “rebalancing tool” in those efforts that raises the bar in for the “multilateral trading system.

Japan in the world’s third-largest economy.

Marantis said after the bilateral talks, the United States had “become comfortable” with Japan joining the talks based on their commitment to make sweeping changes to their economy to accomodate the detailed provisions that are expected to emerge from an eventual trade deal. 

He said that extensive consultations with Congress and other U.S. stakeholders helped determine the issues — autos, insurance, non-tariff barriers such as intellectual property protection, and Japan’s readiness to join the talks.

The reaction from Capitol Hill was mixed, with several Michigan lawmakers expressing concern about Japan’s ability to open up its auto market to the satisfaction of U.S. automakers who have largely opposed Japan’s participation.  

House Ways and Means Chairman Dave Camp (R-Mich.) said he intends “to continue my intensive consultations with the administration on the TPP agreement” over Japan’s longstanding tariff and non-tariff barriers, specifically on autos, insurance and agriculture. 

“I will not support Japan’s entry into TPP unless we obtain airtight assurances that Japan’s participation in the TPP negotiations will neither diminish the comprehensive and ambitious nature of these negotiations nor delay the goal of concluding the negotiations this year.”

House Ways and Means Committee ranking member Sander Levin (D-Mich.) and Sen. Debbie Stabenow (D-Mich.), a member of the Senate Finance Committee, argued the agreement does not go far enough to open the country to U.S. exports, an issue that could jeopardize congressional approval. 

“The facts are clear that Japan’s market is closed, evidenced by the fact that imports account for just 6 percent of total sales in Japan, compared with nearly half of total sales in the United States and other major auto markets,” Levin said. 

But there is strong support for Japan’s addition to the talks. 

“This is an important and welcome development,” said Sen. Orrin Hatch (R-Utah), ranking member of the Senate Finance Committee.

“Japan’s entry into the Trans-Pacific Partnership is an historic opportunity to open up one of the world’s largest export markets to the benefit of both of our countries,” he said. 

Senate Finance Committee Chairman Max Baucus (D-Mont.)  said that Japan’s participation in the TPP talks presents “an extraordinary opportunity that could open up huge new markets to American goods and services.” 

But Japan must meet the high standards of the negotiations progress.  

“With Japan included, the TPP would account for nearly 40 percent of the global economy and provide a major shot in the arm to America’s manufacturing, business and agriculture industries,” he said.  

“By accepting more U.S. beef exports, Japan showed it is willing to take the kind of steps this agreement requires,” he said. 

Sen. Bob Corker (R-Tenn.), ranking member of the Senate Foreign Relations Committee, who recently met with Japanese Prime Minister Shinzo Abe in Tokyo, said Japan’s full participation in the negotiations would “hold great potential for expanding job and economic growth.”

“More work remains to be done before Japan’s full participation in these talks, but today’s announcement should lay the groundwork for the eventual addition of a strong U.S. ally, regional leader and one of the world’s largest economies to Trans-Pacific trade negotiations that hold great potential for expanding job and economic growth in the U.S.,” Corker said. 

Sen. Mike Johanns (R-Neb.) called the agreement an “important step in deepening our already strong trade and diplomatic relationships.” 

Japan recently removed some barriers to U.S. beef and he suggested that “we should build on that progress with a strong agreement that benefits our economy, farmers, and workers, as well as our negotiating partners.”

Business groups have gotten behind Tokyo joining the talks.