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  • Aug 21, 2014
  • Updated: 5:20pm
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TRADE

Japanese PM Abe snubs critics to pursue US-led trade accord

Japanese PM risks alienating farmers by joining free-trade talks in bid to deregulate economy

PUBLISHED : Saturday, 16 March, 2013, 12:00am
UPDATED : Saturday, 16 March, 2013, 2:39am

Prime Minister Shinzo Abe says Japan will join negotiations on an American-led regional trade accord opposed by some of his core supporters as he seeks to boost growth and strengthen ties with the US.

"We are watching the birth of an economic zone that will account for about a third of the world's economy," Abe said in Tokyo yesterday. "If Japan alone remains inward-looking, it will have no opportunities for growth. Companies will not remain here and talented people will not want to work here."

If Japan alone remains inward-looking, it will have no opportunities for growth. Companies will not remain here and talented people will not want to work here

Abe's decision, four months before elections to the upper house, risks alienating farmers who have traditionally backed his Liberal Democratic Party and fear being harmed by a free-trade deal. Abe is pursuing deregulation to help boost Japan's international competitiveness, and the trade pact may help companies like Nissan compete with rivals from South Korea, which already has a free-trade deal with the US.

"Abe wants to use these talks to promote structural reform in Japan, help exporters and boost domestic productivity, but it's a risky move because he is taking on a powerful interest group," said Jeff Kingston, director of Asian Studies at Temple University in Tokyo. "But with 70 per cent approval ratings he has leverage to twist arms in the LDP."

Japan's participation would boost its gross domestic product by 0.66 percentage point or 3.2 trillion yen (HK$256 billion) if it abolished all tariffs, according to a government statement.

Abe's move comes less than a month after he and US President Barack Obama agreed that pledging to abandon all tariffs was not a precondition to joining the talks. Obama has been pressing successive Japanese governments to join the 11-nation talks that aim to lower tariffs, strengthen patent protection and improve access to government contracts. At the same time, US carmakers have opposed Japan's participation unless it eases market barriers they say restrict American sales.

Japan imposes tariffs of 778 per cent on rice imports, 328 per cent on sugar and 218 per cent on powdered milk.

Abe came to office in December pledging to revive the world's third-largest economy through aggressive monetary and fiscal stimulus to end deflation. Another component is reducing regulations to increase corporate investment and hiring, and joining the Trans-Pacific Partnership could aid these aims, analyst Jun Okumura said.

Japan may not join the talks immediately as it took Mexico and Canada a year to gain permission from existing members after announcing they wanted to be part of the TPP negotiations. The other countries are the US, Australia, New Zealand, Vietnam, Singapore, Malaysia, Brunei, Peru and Chile.

Abe's immediate predecessors, Yoshihiko Noda and Naoto Kan, failed to push through a decision to take part in the negotiations, due to opposition from their Democratic Party of Japan. Abe also faces opposition inside his own party. Abe said this week he was confident he could overcome dissent within his party, which holds its annual convention from tomorrow.

Abe said the accord was not just about the economic effects. "Japan will form a new economic zone with its ally, the US and the countries that join will share the values of freedom, democracy, basic human rights and the rule of law," he said.

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