The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) — which entered into force in late December with the completion of domestic procedures by Japan and five of the 11 members that sustained the deal following the withdrawal of the United States from the original pact two years ago — creates a free trade bloc with a combined population of 500 million that accounts for 13 percent of the world economy. In February, the economic partnership agreement between Japan and the European Union — with their combined share of the world's gross domestic product hitting 30 percent — will kick in. These developments herald a new stage in Japan's pursuit of multinational free trade regimes.
Free trade agreements are meant to expand trade opportunities among the participants by eliminating or reducing tariffs and other barriers to business, thereby benefiting consumers and producers in each country. Going forward, Japan needs to change its industrial structures in ways that make the most of the expanded business opportunities that these pacts provide. Free trade pacts often raise concerns about agriculture and other sectors that are expected to be hit by increased imports. Appropriate measures need to be introduced to alleviate the impact of increased competition in these sectors, but steps also need to be taken to make those sectors more competitive, such as by helping them start exploring demand in overseas markets.
Beefing up the multilateral free trade regimes is all the more important today as free trade comes under threat worldwide. Even though the the U.S. and China agreed last month on a 90-day "ceasefire" in their trade war, an exchange of retaliatory tariffs between the world's largest and second-largest economies cast dark clouds over the global economy's prospects.