Japan should use TPP, RCEP talks to improve its global trade position

In addition to the ongoing U.S.-led Trans-Pacific Partnership talks, negotiations for the formation of a huge new free trade framework in Asia have also got moving.

To pursue national interests, Japan must bolster a strategy to promote the two sets of negotiations simultaneously.

The first meeting of the Regional Comprehensive Economic Partnership (RCEP), consisting of 16 countries, began Thursday in Brunei. The 16 members are Japan, China, South Korea, Australia, New Zealand and India, plus the 10 members of the Association of Southeast Asian Nations.

The RCEP would be a free trade framework covering almost all of Asia. Its members' gross domestic products total 20 trillion dollars, accounting for 30 percent of the world's total.

The 16 nations will hold negotiations on a wide field of issues, including lowering tariffs and reducing investment barriers, as they try to reach agreement by the end of 2015. It is very significant to establish an Asian free trade agreement involving China and India.

U.S.-China rivalry

China, which is not taking part in the TPP talks, has a strong sense of crisis over the idea that it will be left out in the cold in forming trade rules in Asia. China's active participation in the RCEP framework indicates its intention to compete with the United States.

Compared with the TPP, which will call for abolishing tariffs in 10 years in principle, the RCEP seeks a milder level of liberalization.

Nevertheless, once the RCEP framework is formed, it will make it easier for Japan to arrange a supply chain to link production bases in Asia. It will also help expand Japan's exports, thereby giving momentum to the country's growth strategy of tapping into overseas demand.

On the issue of lowering tariffs, Japan aims to reach an accord next year, one year earlier than scheduled. We hope Japan will exercise leadership to establish a free trade zone that will have a deeper degree of cooperation.

The RCEP talks are expected to favorably affect the TPP negotiations, which are entering a final stage.

The United States and 10 other countries are holding talks with the aim of reaching an agreement before the end of this year. Japan is likely to take its place at the negotiating table around July. Undeniably, Japan as a latecomer is in a disadvantageous position.

Tough negotiations lie ahead for Japan, which wants to have five agricultural products, including rice and wheat, exempted from tariff abolition.

Advantages of entry in 2 talks

We want Japan to take advantage of its position as a participant in both the RCEP, from which the United States is absent, and the TPP, from which China is absent.

It is essential for Japan to promote TPP and RCEP negotiations for its own advantage by winning concession from the United States, which is cautious about Chinese moves, while also calling for China to open its market wider by using the TPP as leverage.

Japan must make all-out efforts to have its opinions reflected in the formulation of rules.

RCEP and the TPP will serve as the initial framework of the Free Trade Area of the Asia-Pacific which Asia-Pacific Economic Cooperation members, including Japan, China and the United States, seek to establish.

Japan must display its bargaining power in both sets of trade negotiations to open up the vision for a future strategy.

May 12, 2013

Source: Yomiuri Shimbun