The Diet's ratification last week of the Trans-Pacific Partnership pact, touted as a free trade deal encompassing economies that together account for 40 percent of the world's gross domestic product, will end up as an exercise in futility unless the agreement takes effect — which now seems doomed with U.S. President-elect Donald Trump's repeated vow to pull his country out of the deal. If the administration of Prime Minister Shinzo Abe genuinely believes in the TPP's benefits to spur the Japanese economy, he needs to explore a Plan B to pursue what the pact is supposed to achieve.
In fact, the government's estimate that the TPP would push Japan's GDP upward by more than 2 percent in real terms in 10 to 20 years is reputed to be based on rosy scenarios that everything will go just as hoped. Its forecast that the deal would add ¥13.6 trillion to the economy and generate nearly 800,000 new jobs is widely seen as overblown, while the expected damage to domestic agriculture output due to increased cheap farm imports — in the range of ¥130 billion to ¥210 billion — is viewed as underestimated.
But even assuming that the government's estimates of the TPP's benefits are reasonable, they will come to nothing if the pact does not enter into force. The agreement among 12 Pacific Rim countries is to take effect when it's been ratified by at least six members that together account for 85 percent or more of the GDP of the signatories combined. In other words, the deal needs to be ratified by both the U.S. and Japan — by far the two largest economies involved.