Japan Works Way into TPP with Two North American Powers' Blessings

On the heels of Mexico doing the same, the United States has come to an agreement with Japan clearing the road for the Asian nation to join the ranks of the Trans-Pacific Partnership, a key cornerstone of several nations’ respective trade agendas.

Still under negotiation, the TPP represents a greater interest in the "Pivot to Asia" in the southeast part of the continent that includes emerging economies like Vietnam, Singapore and Malaysia on the part of the three major North American powers as well as others like Peru and Australia. Nearly half of the upwards of $22 trillion in global economic growth between now and 2020 is expected to be forged in this region. A lack of FTAs is a part of the problem of why imports from North America and other participants in places like Chile and New Zealand have been dropping off there.

For the U.S.’s part, the agreement to allow Japan TPP entry includes, at least temporarily, it maintaining tariffs on Japanese vehicles – while a small percentage is levied on cars, trucks carry a penalty of up to 25% in part because of U.S. lobbies. There are also potential battles brewing between Japan and other nations because of perceptions that it is highly protectionist in certain industries, notably agriculture. In short, the inclusion of Japan in the TPP doesn’t necessarily raise the likelihood of easy adoption of the multilateral trade pact. To wit, several nations including Canada and Australia have yet to support Japan’s inclusion at this time, and its trade officials have voiced what they see as significant concerns.

-Brian Shappell, CBA, NACM staff writer

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