Ok, there's a bit more background to this that explains American frustration. Again, sorry for the lack of links, as I am on a mobile device.
1). Japan knew going into the TPP that its agricultural tariffs would no longer be sustainable, so this pressure to eliminate tariffs is not a surprise. In his March 15, 2013 speech announcing Japan's entry into the TPP, Abe acknowledged this.
2). Japan has also been protecting its insurance market through subsidies and favorable regulation for Japan Post. This area is of special interest to the US, given our strength in financial services. Along with autos/auto parts, it is possible that the US stance is simply a hardball negotiating tactic, or an attempt at horse trading to gain advantage in these other two areas (note in your article the use of auto tariffs as a weapon). Remember, the US needs some political wins if this trade agreement has any hope of making it through Congress.
3). This issue with agricultural tariffs also concerns New Zealand and Australia. Since the US was not part of the original TPP grouping, but joined later an essentially took it over, it is under pressure from the other TPP members to look out for their interests.
4). There is a long-running bitterness in the US about the tactics that other countries have used (especially Europe and Japan) to exclude America's highly competitive agricultural exports. Example: back in the 1980s, during previous negotiations to allow more market access to beef, the Japanese trade negotiator claimed that Japanese intestines were different, and so Japanese consumers would not be able to digest American beef (I kid you not, google "Japan rice imports intestines" and the first hit will be a NYT article about this from 1988!). This was also used to block American pharmaceuticals ("you tested it on Americans, but Japanese are different, so we cannot accept your data to approve the drugs"). Americans have a sneaking suspicion, from previous experience in many other industries, that whatever advantages they gain in tariffs will be diminished by the use of non-tariff barriers, like the ridiculous ones above. Even today, more than a decade after the BSE scare, Japan still does not allow full market access to American beef. And Japan proposes that it will only reduce tariffs if it is allowed to reintroduce the tariffs should imports exceed a certain low threshold? How could the US (and Australia and New Zealand) accept that?
5). I know that the US has had a bad history of bullying Japan in regard to certain trade issues, but our relationship is a complex one. Remember as well the issue of gaiatsu (for other readers here, outside pressure) that Japan has used as a mechanism for internal reform. The Japanese agriculture industry is a basket-case, fragmented, inefficient, and uncompetitive. While this may enter tinfoil hat territory, it is possible that the tensions we are seeing are theatrics meant to enable Abe to overcome internal opposition from the agricultural lobby, and use the TPP as a lever to reform Japan's industry. I will feel vindicated in this position if the ultimate compromise is to reduce agricultural tariffs over a similarly long timeframe that the US has proposed to reduce its auto import tariffs. Alternatively, Japan may come back and demand that the US reduce subsidies to its own agribusinesses, which would help us reform as well, and provide Japan something it could take back as a win to convince its own agriculture industry.
6). India already destroyed the WTO talks by refusing to include agricultural issues, so the parties in the TPP are already agitated about the possibility of a repeat with Japan.
In any case, all countries have their favorite industries that they would like to protect, but the price of free trade is the sacrifice of those protections. In the end, consumers will benefit through lower prices, but we have to get it past the vested interest groups to make that happen. While I am certain that the simplistic common media portrayal of "it's all Japan's fault" is wrong, it is somewhat disconcerting that the other side of the story hasn't made it out there. It's possible that the US media is biased in this, and not exploring the issue sufficiently in order to explain Japan's position, but then why isn't Japan bypassing the US media to proactively explain?
What is the Japanese side to this story?
Sir @
LeveragedBuyout ,
Very well written points , again, I thank you for your your well worded answers to all my inquiry. You go above and beyond my expectation explaining issues , and your mastery of economics and markets never ceases to amaze me. I had just read this now and have been waiting to reply because I wanted to research really the etiology for the almost tepid behavior of not only Japanese Government , but also the Japanese Media, in regards to the TPP talks.
As you and I know, the remarkable progress in the Trans-Pacific Partnership has been realized and only recently has the negotiation experienced a stall; due in part to Japan and the United States’ differences in basic trade agreements. The Liberal Democratic Party’s Chairman of the TPP Affairs Committee, Nishikawa Koya, recently had explained that it is the strategy of government to secure measures for sugar, wheat, rice and then to maintain the advantage within the negotations for dairy products, pork and beef. According to the TPP Affairs Committee , they wish to secure acceptable numbers that shall enable Japanese lawmakers’ promise to the people, which is to protect some farm products .
I’m sure you may already see that Japanese media have attempted to ascertain the nature of the disagreement. Some media sources have even assumed and have circulated that Japanese Government was considering special quota of imports wherein American rice imports would be given prioritization over the rice imports of other countries, some media sources have even tried to say that United States was making demands that Japan could not accept, one example was the effective exclusion of cars by taking more than 30 years to abolish tariffs on car imports.
It is understandable that the Japanese Media would correlate the issue of
Gaiatsu, which basically means “Outside Pressure”, in context to the United States. The reason for this is because throughout the bilateral relations between Japan and the United States, the latter has always tried to implement
Gaiatsu on Japan in order to prying open Japanese markets in bilateral and multilateral trade negotiations. In fact, in earlier times, the issue of Gaiatsu was a reality because it was used by progressive leaders especially when Japan was considered an industrial threat to the United States during the 1970s, 1980s. During earlier decades of bilateral trade friction, resolving dispute with the United States was the most important driver of Japanese trade policy; even multilateral negotiations under the GATT were accompanied by bilateral Japan – US discussions on the side. One then is left wondering, “If Gaiatsu worked so well in the past, then why is it not working so well now in the present time period?”
The answer to this is: WTO. Since Japan was part of the WTO, one method of handling any trade friction with the United States was through the WTO’s Enhanced Dispute Settlement Mechanism. By utilizing the legalized multilateral framework of the WTO, this had strengthened Japan’s bargaining leverage and bargaining power over time and had effectively weakened the US Pressure on Japan regarding any issues of trade.
A second point that I want to emphasize is that Japan no longer is considered a threat, specifically, an Industrial competitor to the United States as it once was during the 1980s. Besides the concept of
Ishitsuron no longer influences negotiators from the United States.
A third issue that I want to mention is that from preliminary experience, any notion of tough stance is not taken seriously. As you remember during the preliminary consultation about Japan possibly joining the TPP negotiations in 2012, it was the United States that had announced a policy of not approving Japan’s participation in TPP talks unless all items, particularly rice and other agrarian goods were put on the negotiation table for tariff elimination. Then what happened? It then later backed off.
Japan places a significant premium on its participation on these TPP negotiations: in both strategic and trade terms. The participation of Japan only amplifies both the strategic and economic importance of the TPP for the United States. With the participation of Japan and its involvement in TPP, this enables the TPP to effectively compete with any of the China-led regional comprehensive economic partnerships that are already around, which, ironically, also involves Japan but not the United States. Absent of Japan, the TPP becomes a sideshow in the US strategic game against China and hardly the vehicle to facilitate the US rebalancing to Asia that America would like it to be. Hence, the threats to expel Japan from the TPP negotiations carry little weight. Besides, Japanese Government understands and is verily aware of the fact that TPP is hostage to any instance of discord in politics in Washington. Unless the Obama Administration has any fast-track authority from Congress, which from our understanding of the Democrats’ decreasing influence and the rising clout of Republicans in Congress and Senate, this is by no means assured. So, in our vantage point, American has to compromise , as we are willing to compromise.
Best,
@
Nihonjin1051
Goods 2012)
