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Japan likely to welcome U.S. return to TPP, but time scale and route unclear

by Cory Baird

Staff Writer

President Donald Trump ordered U.S. trade negotiators to explore the possibility of restarting talks on joining the Trans-Pacific Partnership on Thursday, in a move likely to please Japanese diplomats who have invested heavily into bringing the U.S. back to the massive trade deal.

In addition to the clear economic benefits of including the world’s largest economy in TPP, U.S. participation in further negotiations could also relieve trade pressures currently building between the U.S. and the Asian region. “For Japan’s economic diplomacy getting America back to the table on TPP would be a huge win,” said Yorizumi Watanabe, professor of policy management at Tokyo’s Keio University.

“If America returns to the TPP it is a big plus for the Japanese economy. Rather than one specific industry it is good for the economic environment as a whole, and could help increase growth rates and investment,” said Watanabe in a phone interview.

An analysis by the Japanese Cabinet Office released in December 2017 showed that the original TPP deal would have pushed up long term real growth in gross domestic product by 2.59 percent, a significantly higher rate than the 1.49 percent expected under the TPP deal without the U.S. — which is now known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or TPP-11. In comparison, the Japan-EU trade deal concluded at the end of 2017 was expected to increase real term economic growth by 1 percent, according to the same government report.

Watanabe added that if the United States were to rejoin the pact there may be less of an appetite for demanding negotiations with Japan over a bilateral trade deal, an issue which has caused frictions between the two countries.

Trump’s latest comments in relation to the deal came on the heels of a increasingly tense trade environment in Asia, which has seen the U.S. slap steel and aluminum tariffs on many countries and threaten tariffs on tens of billions of dollars in Chinese goods.

Kenichi Kawasaki, a professor and senior fellow at the Tokyo-based National Graduate Institute for Policy Studies, believes that including the U.S. could help ratchet down trade tensions as a whole in Asia.

“The risks to the global trading system, and uncertainty for regional economic integration and trade liberalization, could be eased with the (U.S. TPP) deal,” said Kawasaki.

The order to look into negotiating entry back into the deal for the U.S. represents a stunning about-face for Trump, who in one of his first days in office signed an executive order to back out on the deal.

Despite the sudden change of tune, Trump’s comments are an encouraging and important step forward for prospects of the U.S. rejoining TPP, according to Wendy Cutler, a former high-level diplomat from the Office of the U.S. Trade Representative, who helped negotiate the original TPP deal under President Barack Obama.

Cutler, currently vice president and managing director of the Asia Society in Washington, believes the development also provides an opportunity for Prime Minister Shinzo Abe to raise the trade deal in discussions with Trump next week, when the two are set to meet in Washington.

Since officially backing away from the original TPP pact, Japanese diplomats have openly discussed welcoming the U.S. back to the deal. But now that TPP-11 has been renegotiated it is unclear how the U.S. could rejoin, and at what stage.

Although TPP-11 member countries signed an agreement in early March, six out of the eleven members must pass domestic legislation in order for the deal be implemented.

“While they have all expressed interest in welcoming back the United States, it is unlikely that they would want to have the United States rejoin before the CPTPP is finally implemented as it currently stands,” said Shihoko Goto, a senior associate for Northeast Asia at the Wilson Center in Washington.

Kawasaki agrees that readmitting the United States could be a messy procedure, despite the large economic benefits its participation would bring.

“From the Japanese perspective, having the U.S. in the deal would have a greater economic impact. That said, 11 TPP countries may not be ready to renegotiate the original deal,” Kawasaki said.