Although Prime Minister Shinzo Abe wants to clinch large-scale free trade agreements with a range of countries to help spur economic growth, negotiations have stalled over the extent of trade liberalization those countries expect.
Abe hopes to leverage anticipated progress in talks on the Trans-Pacific Partnership free trade bloc, where a deal seems possible this spring, to help resolve such deadlocks.
Large-scale FTA negotiations accelerated in 2013, when Japan joined the TPP talks. The group of 12 countries accounts for some 40 percent of global nominal gross domestic product.
Around the time it joined the TPP talks, Japan also entered Regional Comprehensive Economic Partnership (RCEP) negotiations with 15 other Asia-Pacific countries, which include China, South Korea and India. Talks on a planned trilateral Japan-China-South Korea free trade agreement also kicked off the same year.
Japan initially aimed for deals in 2015 on the RCEP and the Japan-China-South Korea talks, but both are now stalled.
Clashes of opinion were especially notable in the RCEP negotiations, with China and South Korea starting to insist last month that they wanted the minimum level of trade liberalization to be set at about half of the originally envisaged 80 percent.
Japan locked horns with China and South Korea over trade liberalization rates in negotiations over the proposed trilateral trade agreement between those countries.
China and South Korea also apparently teamed up to challenge the Japan-U.S. initiative for high-level trade and investment liberalization within the TPP framework.
“It is now uncertain whether Japan can reach accords in 2015” in the RCEP and Japan-China-South Korea talks, said a source with access to the negotiations.
The Abe administration has set a goal of lifting the share of Japan’s trade with free trade agreement partners to 70 percent of the value of its total trade from the current 20 percent.
To achieve this goal, “Japan needs something extra besides the TPP deal,” said a senior Foreign Ministry official.
Therefore, Japan hopes that having high-level trade rules in place from a TPP deal will give momentum to negotiations on other free trade agreements.
In early January, Japan and the United States will resume their bilateral trade talks, which are widely seen as pivotal to determining the fate of the overall TPP negotiations. The two countries hope to narrow their differences over tariffs on agricultural products and vehicles.
Apparently mindful of the U.S. presidential election campaign, which gets into full swing this fall, Akira Amari, minister in charge of TPP talks, said: “On procedural grounds, we’ll be in a tough situation if we don’t reach an overall accord by early spring.”
U.S. President Barack Obama faces the task of winning trade promotion authority from Congress before election campaigning begins, giving him full power to negotiate trade agreements with other countries. This is viewed as essential for early U.S. ratification of a TPP deal.
Other participating countries in the TPP talks are keenly aware of the importance of trade promotion authority, and hope to conclude their negotiations in time for its enactment in the United States.
All eyes are now on the course of TPP negotiations, which are may be in their final stages. Success or failure is widely expected to provide a marker for the future of other large-scale free trade talks.