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Economy

Japan's TPP trade-off lets Chile star as signing host

Tokyo needed Santiago's help to bring Canada on board by early March

Chile's Foreign Minister Heraldo Munoz, left, shakes hands with Japanese counterpart Taro Kono in Tokyo on Feb. 23, as Chilean President Michelle Bachelet and Japanese Prime Minister Shinzo Abe look on.   © Reuters

TOKYO -- The 11 remaining members of the Trans-Pacific Partnership are set to sign their new pact in Chile on Thursday afternoon, local time, and Japan's diplomatic dealings were a decisive factor in the choice of venue.

Japan took up the torch for promoting a retooled TPP after U.S. President Donald Trump withdrew last year. It hosted four of five working-level negotiation sessions and was expected to host the signing ceremony as well, yet it let Chile have the honor instead. In exchange, Chile helped to convince a reluctant Canada to seal the deal by early March.

Time was running out for Japan to submit TPP legislation to its current Diet session for quick approval -- a move it hoped would spur other signatories to hurry as well. The pact would then have a good chance to take effect in 2019.

But Canada was dragging its feet and urging other members not to rush. Prime Minister Justin Trudeau may have been reluctant to finalize the pact in part because he did not want see the credit go to his predecessor, Stephen Harper.

So Japan enlisted Chile in the hope of "putting an end to the argument for postponement" led by Canada, as one Japanese government source put it.

Chile showed enthusiasm for the idea of hosting the signing and producing a win for the current government of President Michelle Bachelet, whose term expires on Saturday. Foreign Minister Heraldo Munoz expressed gratitude for the chance to host the ceremony, along with the attention the country will get from the worldwide media, during a Feb. 23 meeting with Toshimitsu Motegi, Japan's economic and fiscal policy minister. Motegi thanked Chile in turn for its commitment.

Japan had recognized that Chile was well-positioned to persuade Canada. Munoz, a veteran diplomat who once chaired the United Nations Security Council, is respected throughout the Americas. Both countries have liberal governments and Munoz has an understanding counterpart in Canada's Chrystia Freeland. When Motegi proposed the plan to Munoz in an early January phone call, the Chilean minister welcomed the offer and got on the phone with high-ranking Canadian officials.

Japan also sought Mexico's help to isolate Canada. In a meeting with Economy Minister Ildefonso Guajardo in Mexico in early January, Motegi asked the country to back Japan, arguing that Canada would simply continue to stall the process unless something was done.

While Mexico stands side by side with Canada against the U.S. when it comes to renegotiating the North American Free Trade Agreement, Guajardo promised to work with Tokyo on the TPP.

Canadian Prime Minister Justin Trudeau speaks during the APEC summit in Danang, Vietnam, last November. He caused a stir among TPP members a few days later by skipping a key meeting there.   © Reuters

Canada remained hesitant at a meeting of chief negotiators from the 11 members that began in Tokyo on Jan. 22. Japan applied pressure on Canada by proposing to decide a date for the signing the following day, without the holdout's input. Mexico kept its promise and sided with Japan, expressing its openness to a TPP without Canada. Forced to make a decision, Ottawa finally yielded.

By leading the negotiations, Japan was able to make the TPP a reality and gained a trump card in its economic strategy. Protectionist economic policies are taking root across much of the world, as illustrated by Trump's recent announcement on steel and aluminum import tariffs. In this climate, some see the TPP -- now called the Comprehensive and Progressive Agreement for Trans-Pacific Partnership -- as a beacon for the future of free trade.

Looking ahead, the 11 countries intend to craft a clear strategy for expanding the trade pact, rather than simply adding members. Japanese government officials suggest that welcoming South Korea and Taiwan into the fold, acting on their expressions of interest, would help counter China's ambition to establish a new economic order in Asia.

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