Japan makes a brave move toward free trade

JAPAN HAS ALWAYS faced the outside world with ambivalence — eager for access to technology and resources, jealous of its own culture and industry. Forced open by a U.S. naval fleet in 1853, Japan rose in Asia over the next 80 years, only to see its attempt at imperial domination end in the catastrophe of World War II. Under the postwar U.S. security umbrella, Japan tried a different tack: mercantilism, which permitted the country to prosper economically while limiting foreign impact on domestic values, institutions and markets — all deemed essential.

That export-led strategy worked brilliantly until it collapsed in 1989. Japan has been adrift ever since. With an aging population and stagnating economy, and still reeling from March’s devastating disasters, the country needs structural change, including in its economic relationship with the rest of the world. A more open Japan would also benefit the United States, which has long sought greater access to a market that remains the third-largest in the world.

And so Prime Minister Yoshihiko Noda’s decision to join talks on establishing the Trans-Pacific Partnership (TPP), a broad, U.S.-backed ­Asia-Pacific free trade agreement, represents not only a potentially historic change in Japan’s global role but also a promising development in U.S.-Japan relations.

Yes, it is easy — and far from inaccurate — to characterize Mr. Noda’s decision as a tentative one, easily thwarted or undone. Negotiating the elimination of tariffs between the United States, Japan and other potential TPP countries, such as Australia, New Zealand, Vietnam, South Korea and Chile, will be complex — more complex with Japan involved. Though Japan’s exporters see TPP as an opportunity they cannot afford to miss, Mr. Noda faces resistance from the powerful lobby representing Japan’s protected, inefficient farm sector.

This is why U.S. Trade Representative Ron Kirk emphasized that Japan must be prepared to meet “high standards” of liberalization and to address U.S. concerns over non-tariff barriers. Domestic U.S. automakers are already sounding some of the same alarms about Japanese protectionism that they raised over the South Korea free trade agreement.

But the United States will have to give as well as take, because a successful TPP negotiation promises huge economic benefits, of which increased exports to Japan is only one. TPP is not some sort of anti-China trade bloc. One of its potential advantages, however, is to knit the United States together with the Asian market according to rules the United States helps to set, as opposed to rules China seems increasingly determined to impose. The hope is that the sheer competitive mass of the TPP would eventually induce China to loosen its policies, lest it lose trade.

For too many years, Japanese governments have hesitated to risk any sort of confrontation with the country’s entrenched interests, even in the pursuit of clearly necessary policies. Now, in Mr. Noda, the country has a prime minister willing to do things differently, and it is very much in the interest of both Japan and the United States that he succeed.

November 12, 2011

Source: The Washington Post