Business / Economy

Abe hails TPP success but calls it 'just a start'

Staff Report, AP, Kyodo

A day after 12 Pacific Rim countries reached a deal on the contentious Trans-Pacific Partnership trade pact, Prime Minister Shinzo Abe hailed the agreement, touting its benefits not just for Japan but for the Asia-Pacific region as a whole.

“An unprecedented economic zone will be created, which will have a population of 800 million and account for nearly 40 percent of the global economy,” Abe told reporters Tuesday at the prime minister’s office.

Calling the TPP ” just a start,” he said it could be a stepping stone toward an even bigger free trade zone in the Asia-Pacific region and give momentum for Japan to conclude similar pacts with European countries.

After an arduous round of last-chance talks in Atlanta, the TPP member nations reached an agreement on the pact that cuts trade barriers, sets labor and environmental standards, and protects the intellectual property of multinational corporations.

The pact aims to encourage trade between the United States, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. Together, the countries account for more than 36 percent of world economic output. Trade unions and other critics of the deal say it will expose workers to more foreign competition and cost jobs.

The completion of the trade deal — the centerpiece of his international agenda — is also seen as a major victory for U.S. President Barack Obama.

“This partnership levels the playing field for our farmers, ranchers and manufacturers by eliminating more than 18,000 taxes that various countries put on our products,” Obama said in a statement Monday. “It includes the strongest commitments on labor and the environment of any trade agreement in history, and those commitments are enforceable.”

The deal had been negotiated for a decade and faced stiff opposition in many countries. It was deeply unpopular with protected industries such as textiles, agriculture and autos in Japan, the United States and other nations.

Medical groups were concerned by a U.S. push to extend the patents of drugs that would limit access to life-saving medicines in poor countries.

Opponents also feared that procedures for resolving disputes between corporations and governments could undermine the sovereignty of states.

Abe said his administration did not breach an earlier promise to protect domestic “sanctuaries” of five major agricultural products, most notably rice.

During 2012 Lower House elections, Abe’s ruling Liberal Democratic Party had promised to “oppose (Japan’s) participation in TPP talks” if “it is assumed that no sanctuaries will be left in abolishing custom duties.”

Many Japanese farmers felt betrayed when Abe announced that the nation would formally join the TPP talks in March 2013 because the negotiations were, as a general rule, designed to remove all the customs duties.

In April that year, the Diet adopted a resolution demanding the government protect domestic rice, wheat, beef, pork, sugar and dairy product industries and maintain customs duties on them.

At Tuesday’s news conference, Abe maintained that his government has observed the resolution by winning “a number of exemptions,” including those on imports of the five sensitive agricultural products.

Abe also said the government will create a task force to combat any negative fallout from a possible surge in agricultural imports once the TPP initiative takes effect. The envisaged body would involve all Cabinet members.

Abe said he will lead the task force to allay concerns about the future of the agriculture sector, given that under the accord Japan must cut tariffs on products such as beef and pork and raise an import quota for U.S. and Australian rice in the future.

Regarding the rice import quota, Abe said the government will take the necessary steps to curb an increase in the total volume of rice in the market, but he did not elaborate.

The TPP doesn’t include China and many observers have pointed out the conclusion will likely help Japan to maintain both diplomatic and economic initiatives in the Asia-Pacific region as Beijing seeks to expand its sphere of influence.

“The TPP has been created by countries that share a basic sense of values, namely liberal democracy, basic human rights and the rule of law,” Abe emphasized. “It will create a free, fair and open international economic system and predominantly strengthen rule of law in the economy.”

Abe didn’t give a direct answer when asked what political message the TPP’s conclusion would send to China, though he did allude to the possibility of Beijing joining the grouping in the future.

If China does someday join, “It would greatly contribute to the security of Japan and the stability of the Asia-Pacific region as well” because it would further deepen mutual dependency, Abe said.

In the U.S., Obama has pursued the pact against the objections of many lawmakers in his own Democratic Party and instead forged a rare consensus with Republicans.

Obama has cast the agreement as good for American workers and crucial to countering China and expanding U.S. influence in Asia.

The president must wait 90 days before signing the pact, and only then will Congress begin the process of voting on it. As a result, a vote likely will not happen until well into 2016, where it is likely to get snarled in the politics of a presidential election year. Congress can only give the deal an up-or-down vote. It cannot amend the agreement.

Critics are also worried the deal will enable multinational companies to challenge national laws in private tribunals on the grounds they inhibit trade, undermining public health and the environment.

The trade ministers who gathered in Atlanta, however, dismissed these concerns, saying the pact has safeguards that prevent “abusive and frivolous claims and ensure the right of governments to regulate in the public interest.”