What policies the TPP 11 should pursue

It is significant that the 11 countries remaining in the Trans-Pacific Partnership pact after the withdrawal of the United States, including Japan, have agreed to push ahead with a revised deal. Although work remains before the revised pact can take effect among the 11 Pacific Rim economies pending a final agreement, a failure to reach an accord at the trade ministers’ meeting in Danang, Vietnam, on the sidelines of the Asia-Pacific Economic Cooperation summit last week could have drained the momentum for reviving the TPP without the U.S. as a bulwark of free trade against the rising protectionist tides.

The 11 countries should not be content with launching the free trade pact among themselves. Their ultimate goal should be to bring the U.S. back to the pact. Japan, which took the initiative for saving the pact from going adrift, needs to make more efforts to reverse the position of the U.S. administration of President Donald Trump, who pulled his country out of the free trade agreement that his predecessor endeavored to conclude.

That the planned meeting of top leaders of the TPP 11 nations was canceled at the last minute — after Canadian Prime Minister Justin Trudeau reportedly told Prime Minister Shinzo Abe that his country “was not at a stage to confirm the agreement” reached by the trade ministers — symbolizes the work that still needs to be completed before the countries can finalize the deal. Talks will continue on four issues that Canada has demanded. Differences remain on certain points of the negotiations. Japan hopes to sign the revised pact early next year, but how soon the pact will take effect — 60 days after it has been approved in domestic procedures in at least six countries — remains to be seen.

The 11 countries agreed to suspend 20 clauses in the original pact, including 11 on intellectual property — most of which had been inserted upon U.S. demands. The clauses are expected to be defrozen if the U.S. returns.

The TPP among 12 Pacific Rim countries including the U.S. was to create a free trade area that accounts for nearly 40 percent of the global economy. Its size in terms of the participants’ combined GDP shrank to a third of the original when the world’s largest economy withdrew. Given that the economic benefits for the remaining participants will be reduced, the absence of the U.S. could leave the TPP regime unattractive and unstable.

Japan hopes that solidarity among the TPP 11 countries to forge ahead with the pact will increase the chances of the U.S. changing its mind and returning to the deal because of the disadvantages it would face in trade terms otherwise. The U.S. Department of Agriculture has recently compiled a report that American pork exports to Japan could be disadvantaged if access to the Japanese market by participants in the TPP pact improves.

But the Trump administration has shown no signs that it is willing to consider a return to the TPP — the pullout from which was a campaign pledge that the U.S. president fulfilled nearly the moment he was sworn into office last January. In a speech during his visit to Danang for the APEC summit, Trump reiterated his “America first” agenda and said the U.S. will not join multinational free trade agreements — which he claims are unfair to the U.S. — but will pursue one-on-one trade deals with countries for fair and reciprocal trade. The administration is renegotiating the North American Free Trade Agreement with Canada and Mexico — both TPP participants — and the U.S. free trade pact with South Korea. It is bent on pursuing a bilateral trade deals with terms favorable to the U.S. in order to cut its trade deficits with the other countries.

It will not be easy to get Trump to change his mind on the TPP, but it may not be impossible — if a situation can be created in which his administration will have to review its policy. The assessment in the Agriculture Department report, for example, may prompt the Trump administration to seek better terms on pork exports to Japan through bilateral talks. Japan can then rebuff such a demand by saying that the U.S. should return to the TPP if it wants equal terms with participants in the pact in the access to the Japanese market. Other TPP participants should similarly rebuff U.S. demands for bilateral negotiations to set favorable terms for its exports by citing the TPP standards, to which Washington once agreed. These efforts may have a chance to lead the Trump administration to reconsider what path on trade talks will be in the best interests of the U.S.