Japan is cool to the notion of inviting China to join the Trans-Pacific Partnership (TPP) trade pact abandoned by US President Donald Trump, fearing such a step would boost Beijing’s clout and water down what was meant to be the “gold standard” for rules of trade.
Nor are government officials eager to begin two-way trade talks with Washington, despite Trump’s stated preference for bilateral deals as part of his “America First” economic plans, although some said such negotiations could not be ruled out.
For now, that has left Japanese Prime Minister Shinzo Abe in the unenviable position of pledging yet again to persuade Trump that the TPP is in the interests of both the US and the global economy.
Photo: EPA
Trump on Monday signed an executive order withdrawing from the TPP.
“The free-trade system based on free and fair common rules is the source of growth for the world economy,” Abe told the Japanese parliament’s upper house yesterday. “I think President Trump also understands the importance of free and fair trade, and I want to steadfastly seek his understanding of the strategic and economic significance of the TPP agreement.”
Asked about talks on a US-Japan trade deal, Abe said he would refrain from speculating about Trump’s trade policy until his Cabinet line-up was approved and policies became clearer.
Australia and New Zealand on Tuesday said they hoped to salvage the TPP by encouraging China and other Asian countries to join.
Chile has invited ministers from other TPP countries and China and South Korea to a summit in March to discuss how to proceed.
The TPP cannot take effect without US participation unless rules are changed, so the deal is now in deep freeze.
Japan had hoped the TPP would help anchor its security ally Washington in Asia and create a rules-based regime that would eventually draw in China.
Abe also touted the 12-nation pact as an engine of domestic economic reform and growth.
However, inviting China to the TPP table now risks boosting Beijing’s clout while weakening the partnership’s rules of trade on matters from intellectual property protection and principles for currency management to support for state-owned enterprises.
China has not made clear whether it would be interested in joining the TPP. However, Beijing is pushing a proposed 16-nation Regional Comprehensive Economic Partnership that has less ambitious goals on trade rules. Progress so far has been slow.
“If TPP is diluted by bringing in China, it will not be worth while investing energy to achieve that,” said a Japanese source familiar with government thinking. “Negotiating with China with possibility of changing what was signed is not wise. It will take years and the result may be watering down of ambitions.”
Su Xiaohui (蘇曉暉), a senior researcher at tje Chinese Ministry of Foreign Affairs-backed China Institute of International Studies, wrote in an article published yesterday in the People’s Daily overseas edition that Abe was still “unable to accept reality” even after Trump’s executive order.
“The reason Abe is unable to accept the current situation is because the TPP is of excessive strategic importance to Japan. From Japan’s perspective, the TPP is a key part of the Japan-US alliance,” Su wrote. “Seeing the disputes surrounding the TPP from the US and Japan, China is even more determined to participate and promote integration in the Asia-Pacific region.”
China also supports a separate Asia-Pacific pact promoted by Southeast Asian nations.
Trump has made clear he favors bilateral trade deals over multilateral ones, although a Republican-dominated US Congress might be able to muster the votes to approve the TPP if Trump were to have a change of heart.
Trump has also attacked Japan’s auto market as closed in an echo of criticism heard decades ago.
Japanese Minister of Economy, Trade and Industry Hiroshige Seko this week rejected that criticism, saying that Japan does not impose tariffs on US auto imports nor put up discriminatory non-tariff barriers.
Bilateral talks “are possible,” said another source familiar with Japanese government thinking. “But I think if negotiations began, they’d be very difficult and take a very long time.”
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