Too Late to Catch the TPP Train?

Last June, during the G20 Leaders' Summit in Los Cabos, Mexico, the international community learned that Mexico and Canada had received official approval to enter into negotiations for the Trans-Pacific Partnership, an initiative for a high-standard Asia-Pacific free trade agreement. Although overshadowed in Japan by the political wrangling over the government's consumption-tax bill, it was a development with important ramifications for the emerging Asia-Pacific economic order—and for Japan's future role in that order.

Eight months earlier, prior to the November 2011 APEC (Asia-Pacific Economic Cooperation) summit in Honolulu, Prime Minister Yoshihiko Noda grabbed the TPP spotlight by announcing that the Japanese government would "enter into discussions with the negotiating parties with a view to participating in the TPP talks." At the time, the international community greeted the statement as a de facto announcement that Japan desired to join the negotiations, and Mexico and Canada wasted no time using the APEC meeting as an opportunity to announce their own ambitions in that direction. Media commentators observed that Japan's decision carried considerable weight—enough to tip the scales where other countries were concerned.

How did it come about, then, that Canada and Mexico were accepted before Japan was? How were we left at the station by the very countries that supposedly followed us there?

More than Meets the Eye

The general assumption has been that the delay is just another case of the weak leadership and partisan gridlock afflicting Japanese politics nowadays. The government needed to get the nation's political and economic leaders on board before it could officially announce its "candidacy," and it failed to do so in time, partly because the debate over the consumption tax pushed other issues to the back burner. While this is true as far as it goes, it is certainly not the whole story.

Any new participant in the TPP negotiations must receive the endorsement of all nine currently participating countries. [1] Accordingly, soon after the November 2011 APEC summit, Japan, Mexico, and Canada set out to secure that endorsement. Japan conducted extensive pre-negotiations with each government, beginning with Brunei in January 2012. Moreover, it was widely reported that Tokyo had secured the informal approval of six countries—all but the United States, Australia, and New Zealand.

Each of the applicants naturally put top priority on winning the approval of the United States, the leader of the TPP effort, and the Office of the US Trade Representative has stated that approval or denial will hinge on whether an applicant demonstrates a readiness to commit to the high standard of liberalization Washington envisions for the TPP. In the case of Mexico, this entailed confidence-building measures in the form of specific steps to strengthen protection of intellectual property rights, including the signing of the Anti-Counterfeiting Trade Agreement and ratification of the Madrid Protocol on international trademark registration.

Canada was told that its copyright laws and its practice of supply management in the dairy and chicken industries could be impediments to participation. (Canada was already refused admission to the TPP negotiations once, in October 2010, primarily because the nine negotiating countries—particularly the United States, Australian and New Zealand—objected to its intransigence on protection of the domestic dairy and poultry markets.)

In the wake of pre-negotiation talks with the United States, the Mexican government moved quickly to gain its legislature's support for measures to strengthen intellectual property rights. Before long it had cleared two key hurdles: ratification of the Madrid Protocol and adoption of stronger protection for intellectual property rights in pharmaceuticals. [2] These steps, along with vigorous lobbying of the US Congress, secured Mexico the official nod on June 18 this year.

Canadian Prime Minister Stephen Harper responded to such concerns in his own fashion. He fought off direct pressure to open up the Canadian dairy and poultry markets, insisting that, while the government was eager to join the TPP negotiations to promote the national interest, he would not do so at the expense of individual domestic industries. At the same time, he made it clear that Canada was willing to "put everything on the table" if it joined the TPP negotiations. [3] After addressing another objection by amending the nation's copyright laws in June this year, Canada got the green light on June 19, a day after Mexico was welcomed into the negotiations.

In the wake of these developments, New Zealand Trader Minister Tim Groser spoke to the issue of Japan's participation, saying, "We look forward to welcoming Japan to the negotiations once Japan is ready and we have established procedures for their entry that are acceptable to their government and to ours." [4] The official position, in short, was that the ball was in Japan's court.

The implication is that Japan need only reiterate its intention to participate in order to sit alongside Mexico and Canada in the upcoming round of TPP negotiations. But this ignores the fact that Japan's entry into the talks requires the approval of US politicians. The fact is that the US automobile industry is opposed to Japan's inclusion in the talks, and the political support of the United Auto Workers is critically important to a substantial number of Democratic politicians—including President Barack Obama—particularly with an election coming up in November. This may help explain why, just this past July, 10 Democratic senators signed a letter to President Obama opposing Japan's participation in the TPP negotiations, citing Japan's closed automobile market.

In this sense, Mexico and Canada faced relatively few domestic hurdles to approval, since they were already members of the North American Free Trade Agreement. To be sure, the AFL-CIO, America's largest trade union federation and a major supporter of the Democrats, was extremely critical of NAFTA's insufficient labor protections, but Obama is said to view Mexico and Canada's participation in the TPP negotiations as a step toward responding to such criticism and "upgrading" NAFTA, as he pledged to do in the 2008 election. [5]

All of this suggests that it is simplistic to blame Japan's current position vis-à-vis the TPP solely on Noda's failure to act decisively. A more astute interpretation would be that the forces that oppose Japan's involvement in the TPP process have taken advantage of the (in part, deliberately) vague language of Noda's November statement to make the case that Japan lacks the will—thereby justifying their own obstruction.

A Question of Timing

Although Mexico and Canada were officially admitted into the process in June, they are not expected to join in actual TPP negotiations until the fifteenth session begins in December. Until recently, some well-placed sources were suggesting that Japan could still join Mexico and Canada at the table this year as long as it officially announced its intention to participate by the end of August. Others were pointing to September, when Noda is scheduled be in the United States for the UN General Assembly. But pressing Congress to make a decision on trade issues involving Japan in the highly charged political atmosphere prior to the November elections seems like a perilous strategy. All in all, Japan's chances would doubtless have been better had its application been considered at the same time as Canada's and Mexico's.

No Meaningful TPP without Japan

While it is certainly an oversimplification to assign the Noda cabinet sole responsibility for Japan's failure to keep pace with Canada and Mexico, the fact remains that this delay has, at the very least, limited Japan's opportunity to take part in and shape the TPP process. Latecomers are always at a disadvantage when it comes to multilateral frameworks and negotiations.

Japan struggled mightily after World War II to gain admittance into the United Nations and other international organizations and take its place at the bargaining table in international negotiations. Britain, France, and other nations strenuously opposed Japan's membership in the General Agreement on Tariffs and Trade, arguing that it was too far outside the economic and cultural mainstream to be a constructive partner in such a framework. It was only thanks to the vigorous support of the United States that Japan was finally admitted in 1955.

Diplomacy has been called a "two-level game," a delicate process requiring simultaneous progress on the international and domestic levels. [6] Rather than assume that domestic circumstances determine the outcome of international negotiations, or conversely that international negotiations unilaterally circumscribe domestic policy, this model posits a dynamic process in which domestic and diplomatic developments can impact one another and potentially yield new options.

If we review the events of recent months with this notion of dynamic complexity in mind, we recognize that some among the nine negotiating countries are eager to smooth the way for Japan's participation. For example, during Japan-US talks last February, the Americans were at pains to dispel rumors that Washington was seeking a trade framework that would require member countries to dismantle their public health insurance systems or open their doors to unskilled immigrants. It has also been reported that some US officials opposed placing preconditions on Mexico's participation, lest doing so undercut the Japanese government's efforts to build a domestic consensus for participation. [7]

This attitude stems from a pragmatic recognition of Japan's importance as an advanced economic power and the impossibility of building a meaningful trans-Pacific FTA without the participation of such a key player. The current nine negotiating countries account for less than a third of the global economy. With Canada, Mexico, and Japan, that share would rise to 40%. Japan should take advantage of its leverage as an economic power and negotiate a trade agreement that it can live with.

But Japan's posture in such negotiations should be aligned with basic government policy regarding FTAs. The government has been criticized domestically for providing insufficient information on the TPP. But the kind of information we need now is qualitative, not quantitative. By this I mean not merely a statement on whether or not Japan should participate in the negotiations but an explanation of how Japan proposes to make use of the TPP—as a means, rather than an end in itself—to further the nation's long-term interests. This would allow the public to grasp the TPP's significance in a larger context, while giving officials the means of responding quickly and flexibly at the negotiating table on the basis of Japan's ultimate objectives.

What we do not need, clearly, is trade policy debates based on inaccurate information or "pie in the sky" promises about the good things to come once Japan joins a trans-Pacific agreement. The time has come to craft a comprehensive trade and commerce policy backed by a clear and sound vision of the future.


[1] Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, the United States, and Vietnam.

[2] On June 22, the Mexican government signed ACTA as well.

[3] By contrast, Noda came under sharp criticism in Japan after the Honolulu APEC meeting by those who charged he had committed Japan to negotiate the liberalization of trade in all goods and services.

[4] National Business Review , June 20, 2012, http://www.nbr.co.nz/article/pressure-japan-canada-joins-tpp-talks-groser-wb-121652

[5] “USTR: Canada and Mexico Joining TPP Allows Obama to Fulfill Promise,” Inside U.S. Trade , June 22, 2012.

[6] Robert Putnam, “Diplomacy and Domestic Politics: The Logic of Two-Level Games Diplomacy,” International Organization , vol. 42, no. 3 (Summer, 1988), pp. 427-60.

[7] Ministry of Foreign Affairs, Results of discussions with relevant countries on participation in TPP negotiations—US (in Japanese), February 7, 2012, http://www.mofa.go.jp/mofaj/gaiko/tpp/pdfs/tpp01_11.pdf (accessed July 23, 2012).

Takaaki Asano

  • Research Fellow