TOKYO -- Japan and the U.S. should ratify the Trans-Pacific Partnership within 2016 to help create "a new and high-level Asian free trade system," Hiroyuki Ishige, chairman of the Japan External Trade Organization, said on Monday in Tokyo.
Speaking at the 22nd Future of Asia conference, Ishige said investment conditions in the Association of Southeast Asian Nations bloc will change dramatically, since four members are on board with the TPP. "For the four nations, access to markets in the U.S., Canada and Mexico will improve drastically," he said. "It is therefore normal to think that foreign investments will focus on those countries."
Regarding ASEAN members that are not participating in the TPP, Ishige said they could push for an early conclusion of the Regional Comprehensive Economic Partnership -- a proposed pact involving ASEAN states plus Australia, China, India, Japan, South Korea and New Zealand. But Ishige warned that having two major trade deals in one region could lead to regulatory entanglements, making life difficult for businesses.
"Either the TPP or RCEP can take the lead in integrating the rules," he said. "If you look at the example in Europe, such integration tends to be led by the one with the higher standard. In this case, that is the TPP."
If things play out that way, Ishige suggested Thailand, Indonesia, the Philippines, Taiwan and South Korea would likely seek TPP membership. "What will other ASEAN nations, as well as India and China do?" he said, hinting that the TPP would eventually become the single most powerful trade framework in Asia.
For the TPP to take effect, however, the deal needs to be ratified by at least six nations that account for 85% of the bloc's total gross domestic product. That, Ishige said, means the U.S. and Japan hold the key.
"I believe Japan and the U.S. should try to ratify the deal this year," he said. "The TPP will be the decisive card that will shape the future of Asia."