As TPP takes effect, take new steps to reinforce multilateral free trade
The Trans-Pacific Partnership free trade agreement, with 11 participating countries including Japan and Australia, has come into force with the six countries that have completed procedures.
In addition to the abolition of tariffs, rules such as on trade, investment and intellectual property rights have been put in place. It is significant that goods and money will flow smoothly in the rapidly growing Asia-Pacific region.
Under the TPP deal, Japanese consumers and companies will gain a number of benefits. Japan’s tariff on imported beef has been lowered from 38.5 percent to 27.5 percent. It will be cut to 9 percent in the 16th year. A tariff on Japanese passenger cars to be exported to Canada will be abolished in the fifth year.
In February, an economic partnership agreement (EPA) between Japan and the European Union will also take effect. It is crucial for companies and producers to draw up highly viable investment plans and sales strategies by taking the TPP and EPA as a good opportunity to expand their exports and imports.
Touting America First policies, the administration of U.S. President Donald Trump pulled the United States out of the TPP. The administration has continued to take selfish actions, such as imposing punitive duties unilaterally. It is unacceptable to be so dismissive of free trade.
Seeing other countries receive the benefits of free trade by participating in the TPP would put pressure on the United States, which has pushed a protectionist policy.
The TPP also has a role in putting a brake on China, which has attempted to attain both economic and military supremacy in the region.
The TPP agreement has included provisions such as those to prevent infringement of intellectual property rights, apparently with China in mind. If the TPP rules become international standards in the future, China would find it difficult to continue such acts.
Leave door open to U.S.
To spread the TPP rules to the world, it is imperative to expand its membership.
The 11 countries are scheduled to begin talks on new accession next month. Many countries, such as Thailand and Britain, have shown their interest in the TPP.
Japan led TPP negotiations after the United States withdrew. Tokyo is urged to take the initiative in the accession talks as well.
It is also an important task for Japan to focus on establishing other economic zones and reinforce the free trade system.
Efforts must be accelerated to conclude negotiations on the Regional Comprehensive Economic Partnership, in which China and India take part.
Japan plans to start negotiations on a trade agreement on goods (TAG) with the United States as early as next month. Washington would possibly try to achieve more than under the TPP, such as liberalizing Japan’s agricultural market and introducing a currency provision that would limit currency devaluations.
The TPP agreement is the result of fragile compromises the participating countries reached after long years of negotiations. Concessions going beyond those under the TPP must be avoided.
If the bilateral TAG results in a deal with standards similar to TPP’s, that could also prepare the ground for the United States to return to the TPP in the future.