April 26, 2014 6:19 am JST

Japan, US mustn't cast TPP adrift

YASUHIKO OTA, Nikkei senior staff writer

Beef has proven one of the toughest issues to chew in the TPP talks.

TOKYO -- The disappointment over the lack of a grand bargain on the Trans-Pacific Partnership here this week was felt far and wide.

     A crestfallen ethnic-Chinese entrepreneur hoping for market and structural reforms in Malaysia lamented that the failure would embolden opponents of the free trade initiative.

     Of the dozen countries negotiating the TPP, Malaysia has been the slowest to open itself up. Opposition to U.S. badgering for change is strong in Prime Minister Najib Razak's mostly Malay cabinet. Trade Minister Mustapa Mohamed has called reforming state-owned enterprises a "red line" for Malaysia.

     U.S. President Barack Obama had probably hoped to have a deal with Japan in hand upon arriving in Malaysia on Saturday for what stands to be the most demanding stop on his Asian tour.

     The TPP is now in danger of losing its way. Ministers from the 12 countries failed to reach an agreement in Singapore late last year and again in February. Unless Japan and the U.S., which account for around 80% of the group's economic output, can unite and move forward, the others are hardly going to follow.

     In Tokyo, the rhetoric was lofty. Japan and the U.S. share the goal of "promoting peace and economic prosperity in the Asia-Pacific," they declared in a joint statement. Obama and Japanese Prime Minister Shinzo Abe affirmed that they wanted to bring the TPP to fruition, and then ordered their deputies to make an effort.

     Yet a deal on tariffs proved elusive, for reasons to be found on both sides. As the back-and-forth dragged on into the small hours Friday, U.S. Trade Representative Michael Froman's team in Tokyo was keeping close contact with powerful congressional staffers in Washington.

     The Obama administration has not won so-called fast-track negotiating authority from Congress, so lawmakers could reopen any trade deal that the USTR wraps up. Kept on such a short leash, Froman can hardly show much flexibility in tough areas like agricultural goods and cars. The bargaining in Washington is arguably harder than what he faced here.

     Abe's government cannot ignore the legislative branch either, given a Diet resolution drawing red lines around politically sensitive farm products. Should he be too easy with concessions, he would incur a backlash from members of his own Liberal Democratic Party beholden to the farm lobby.

     In essence, the TPP seeks to be the defining standard for new rules of international trade, with the goal of keeping China and other rising economic powers from each pursuing their own gain. It is not only about reconciling domestic interests.

     Japan and the U.S. were supposed to lead this experiment in 21st-century negotiating but have let domestic politics drag them into a tariff fight better suited to the previous century. China is probably taking secret pleasure in this, given its fear of the TPP and efforts to sap emerging markets' will for reform.

     Japan and the U.S. came close in Tokyo but ran out of time. Whether they can take the final step and use this experience to save the TPP from failure will prove a test of their leaders' commitment to peace and prosperity in Asia.