April 15, 2017 4:20 am JST

Japan looks to revive moribund TPP, sans US

11-member pact would give Tokyo lead on Asian trade

AKIO FUJII, Nikkei senior editorial writer; RYOHEI YASOSHIMA and SHUNSUKE SHIGETA, Nikkei staff writers

TOKYO -- Japan is mobilizing the remaining members of the Trans-Pacific Partnership trade pact to resurrect the agreement without the United States, seeking a path forward for free trade in Asia with Tokyo as the senior partner.

U.S. President Donald Trump announced America's withdrawal from the TPP on Jan. 23 as one of his first acts in office. But during a conference in Japan in early April, Hiroshige Seko, the minister of economy, trade and industry, approached his counterparts from the Association of Southeast Asian Nations with an alternate plan: Cutting the U.S. out of the deal to form an 11-nation pact.

Until now, Tokyo has maintained that "a TPP without the U.S. would be meaningless," as Prime Minister Shinzo Abe said last November. But that calculus has apparently shifted.

One reason is that it has become clear the Trump administration would not object to such a deal. Abe and Trump agreed during talks in February to explore how best to promote trade and economic growth in the Asia-Pacific region now that the U.S. has pulled out of the pact. According to a joint statement released after the pair's meeting, this will include "Japan continuing to advance regional progress on the basis of existing initiatives."

"Japan has confirmed with the U.S. that this covers an 11-member TPP," a Japanese government source said.

Step up

Many expect Japan to spearhead the effort. According to a Singaporean diplomat, no headway will be made unless this country, now the largest economy affiliated with the pact, takes action. Even some American experts and lawmakers are in favor of Japan taking over from the U.S. to advance free trade in Asia. This comes amid concerns that the U.S. withdrawal from the TPP, a cornerstone of the previous administration's Asia-heavy foreign policy, could help China gain greater control over the region.

As a first step, Tokyo aims to have TPP ministers meeting in Vietnam in late May instruct working-level staff in a joint statement to consider ways an 11-member pact could be brought into force. Doing so would require those members to settle on a revision to exclude the U.S.

Members such as Japan and Australia seem willing, but will need to bring Vietnam and Malaysia on board. Those countries made various concessions on the assumption that the U.S. would be involved, and see little appeal in participating without access to that massive export market.

For these or other countries to demand the removal of provisions agreed to under American pressure would open the door to a full-fledged renegotiation. Convincing all involved to accept the pact's conditions as they are is a critical, if formidable, task.

Leader of the cause

Tokyo's pursuit of a reconstituted TPP serves in part as a rebuke to Washington's turn toward bilateral deals as a mainstay of trade policy. The U.S. is expected to press Japan for talks aimed at reducing their trade imbalance during the first round of a U.S.-Japan economic dialogue on Tuesday. Trump and Chinese President Xi Jinping agreed to a 100-day plan for such talks in a meeting last week -- a sign that Washington wants results fast.

The Trump administration has taken a fairly short-term approach to trade, showing little interest in creating rules for free trade under multilateral framework -- the founding principle of the TPP. Japan's plan of advancing that cause with other nations and dealing with the U.S. one-on-one for now leaves room for an American return to the framework in the future. "The U.S.-Japan economic dialogue and the 11-member TPP plan are two sides of the same coin," an official in Japan's Foreign Ministry said.

To be sure, a revamped TPP presents tough questions for Japan, such as what to do with import quotas for rice and milk that were set with 11 trading partners, including the U.S., in mind. Tokyo will also face the challenge of responding to Washington's requests one-on-one for greater market liberalization than the TPP would have provided.

But pressing forward would be meaningful nonetheless. The 11-member pact would boost Japan's real gross domestic product 1.11%, according to Kenichi Kawasaki, a professor and senior fellow at the National Graduate Institute for Policy Studies. This is only slightly less than the 1.37% boost the 12-member pact would have provided. Protecting the TPP could also stem the anti-globalist tide that has swept the world in the form of Trump's ascent and the U.K.'s move to leave the European Union.

Now that Japan's ruling party has extended the term limit for its leader, Abe could stay on as prime minister as long as until September 2021 -- eight months after Trump's current term expires. Guiding the TPP into effect, even without the U.S., would be a fine legacy item indeed.

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