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Inside Japanese politics

Japan cautiously explores possibility of US returning to TPP

Experts say trade pact can anchor Biden's Asia-Pacific strategy

Yoshihide Suga wanted to discuss the possibility of the U.S. returning to the TPP when he met Joe Biden in April.   © Reuters

TOKYO -- When Japanese Prime Minister Yoshihide Suga met with U.S. President Joe Biden at the White House in April, there was one topic he wished to broach even though it would be in vain, the possibility of the U.S. returning to the Trans-Pacific Partnership.

Suga intended to sound out Washington's stance on the issue by saying Japan wants the U.S. to rejoin the trade accord sooner or later.

The U.S. seems to remain affected by skepticism spread about economic globalization during the era of Biden's predecessor, Donald Trump. Biden has said his administration will not conclude new trade agreements until other countries increase their investments in the U.S. In his address to a joint session of Congress on April 28, Biden did not refer to free trade. Instead he emphasized domestic employment of middle-class and other workers.

Suga understands it will be difficult for the U.S. administration to make a policy shift in favor of free trade even if the Biden-led Democrats win midterm elections in the autumn of 2022.

Nevertheless, Suga wanted to broach the subject as Japanese government officials concluded through behind-the-scenes negotiations with the U.S. before the summit that the Biden administration does not rule out the U.S.'s eventual return to the TPP.

The premier was told by the officials that the Biden administration in its heart wants the U.S. to return to the TPP at some stage but officially cannot decide to do so anytime soon.

The Suga-Biden meeting, which lasted two and a half hours, focused on pressing issues, such as China policy and climate change, and left little time to discuss the TPP.

The pact's framework was agreed on in principle by 12 countries, including the U.S., in 2015, when Biden was serving as vice president under Barack Obama. But it never took effect. Trump withdrew the U.S. from the pact in one of his first acts as president, fulfilling a major campaign promise.

Under Suga's predecessor, Shinzo Abe, the Japanese government was greatly disappointed. Japan's participation was realized through strenuous efforts to persuade agricultural and other organizations that opposed the TPP. Suga has a strong sense of attachment to the TPP due to his own experience of negotiating with the U.S. as chief cabinet secretary. He believes the TPP can serve as the foundation of establishing an economic order based on free and fair rules in the Asia-Pacific region.

Without the U.S., the TPP forms an economic bloc accounting for a little more than 10% of global gross domestic product. That rises to 40% if the U.S. comes aboard.

The necessity of countering China's growing hegemony has never been greater, and this sense of crisis is shared by the U.S. administration.

As attempting to gain U.S. participation in the TPP is an "unavoidable assignment" for Japan, Suga will "surely" propose it to Biden sooner or later, a senior Japanese government official said.

China is also playing politics with the TPP. In November, President Xi Jinping said China would seriously consider participating in the bloc. His remark came around the time that the Regional Comprehensive Economic Partnership free trade agreement was signed by 15 countries, including China. The statement was evidently made to check Biden following his electoral victory over Trump.

It is not yet known how serious China is about participating in the TPP. Ke Long, a senior fellow at the Tokyo Foundation for Policy Research, said any such move would "probably be aimed at blocking Taiwan's participation because the isolation of Taiwan in the world is the Chinese leadership's top priority issue."

The Japanese government and ruling Liberal Democratic Party have strong expectations that Taiwan will join the bloc.

"China runs counter to the principle of the TPP as it is strengthening the involvement of the state in economic activity," said Akira Amari, a veteran LDP lawmaker who served as the cabinet minister in charge of the TPP. China's "participation is unrealistic."

Amari cited a TPP pillar that prohibits governments from distorting competition by subsidizing state-owned enterprises.

The 2016 Study Group on Japan-U.S. Economy, a panel of experts set up by the Japanese Ministry of Foreign Affairs, in 2016 compiled a package of recommendations that holds clues about what should be done today.

"Japan should proactively promote and support the participation of important partners including Taiwan, South Korea, Thailand, Indonesia, and the Philippines who share our common strategic interests in the TPP Agreement," the panel's report says. "Through such an 'open-door policy' concerning the TPP Agreement, it is expected that the Agreement will also become established as an important platform for the U.S. regional strategy in the Asia-Pacific."

At the time, the proposal was intended to stimulate China and encourage domestic reforms by putting Taiwan at the top of a list, hoping to encourage a recurrence of efforts to reform state-owned enterprises made by China before it joined the World Trade Organization in 2001.

Those expectations were not met.

Eight years have passed since Japan declared it would participate in the TPP as a long-term policy goal.  A government official close to Suga says Japan has no other choice but to raise the value of the TPP by paving the way for the U.S.'s return and luring friends such as Britain, which earlier this year applied for TPP membership.

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