Early ratification of TPP important for free trade and Japan’s future

17.10.2016

Japan’s parliament has started deliberations on whether to ratify the Trans-Pacific Partnership trade pact. As a trading nation, Japan has the potential to raise momentum for the TPP to come into force by taking the initiative in approving the trade pact

During a session of the House of Representatives’ special committee on the pact, TPP minister Nobuteru Ishihara underscored the significance of the agreement, saying: “We intend to create an enormous market to build an economic bloc. [The TPP] is expected to bring about new growth.” He also stressed, “The key is to create 21st-century trade rules.”

The TPP is not simply intended to scrap or cut tariffs. It aims for a wide range of trade deals, such as reinforcing the protection of intellectual property and reforming labor and environmental regulations. Some participating countries plan to ease restrictions on foreign investment in the convenience store and supermarket businesses. If the pact takes effect, such high-quality trade and investment rules are highly likely to become international standards for the next generation. We hope the TPP will help curb the surge of protectionism and promote free trade.

It should be noted that the TPP economic bloc could be expanded.

South Korean Trade, Industry and Energy Minister Joo Hyung Hwan expressed Seoul’s desire to participate in the TPP when he met with visiting members of the Japan Business Federation (Keidanren) on Monday. Other countries, including the Philippines, Indonesia and Thailand, have also shown interest in taking part in the pact. Foreign Minister Fumio Kishida said at the special committee’s session that such interest reflects “the TPP’s strategic value.” This view is reasonable.

In the future, the participating countries should convince China to join the new economic order and urge it to comply with international rules. To that end, putting the TPP into force early is essential.

Regarding an issue in which foreign rice was marketed at prices lower than government-set official prices, Agriculture, Forestry and Fisheries Minister Yuji Yamamoto said, “There is no impact on domestic rice prices.” The ministry has imposed a ban on kickbacks, called “adjustment fees,” which were paid by importers to wholesalers.

If the TPP enters into force, imports of foreign rice are expected to increase. It stands to reason that the government should correct murky trade practices that alarm farmers. However, the market for imported rice in the nation is extremely small compared with that for domestic rice. The opposition bloc appears to have gone too far by calling on the government to reassess the impact of the TPP on domestic rice. A proposal to approve the TPP was submitted to the Diet during the previous ordinary Diet session, and deliberations on the pact have been carried over to the current session. The ruling parties are aiming to pass it by the end of October. Treaties automatically come into force 30 days after the lower house approves them. This means the lower house’s approval of the TPP in October would ensure the pact’s ratification during the current Diet session, scheduled to end on November 30.

It is also reasonable for the government and ruling parties to push for the approval in order to press the United States, which faces growing scepticism toward the TPP, to ratify it. The Democratic Party has taken a negative stance on proceeding with the deliberations, citing reasons including the farm ministry’s insufficient probe into the distribution of foreign rice. However, if the government’s handling of the issue is problematic, the opposition party should grill members of the government at the special committee instead of delaying the deliberations.


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