TOKYO: Prime Minister Shinzo Abe hailed the hard-won Trans Pacific Partnership trade deal Tuesday, saying it would help raise stubbornly anemic growth at home but also boost the entire Asia-Pacific region.
The 12-nation Pacific Rim free trade pact, agreed Monday after eight years of negotiations, will incorporate nearly 40 per cent of the global economy, including the biggest and third biggest, the United States and Japan.
"This is the beginning of a new century of the Asia-Pacific," Abe said in a televised press conference Tuesday morning. ""It will create a vast economic zone of an unprecedented size ... and Japan will be there as as a central player."
The deal still has to be ratified in the Diet, Japan's parliament, as well as by the other countries' legislatures.
When he returned to power at the end of 2012, Abe laid out an ambitious plan to drag the Japanese economy out of two decades of deflation and insipid growth.
The first two "arrows" of his plan involved flooding the economy with money but the third, and most important part, called for wide-ranging structural reforms.
So far, his "Abenomics" plan has little to show for itself.
Although corporate profits are at sky-high levels, growth remains weak and the economy appears to be tipping back into its second recession in two years. After passing controversial security legislation last month, Abe has said he will turn his focus back to the economy, vowing to boost Japan's output by 20 percent by 2020.
For that reason, Abe needs to fire the third "arrow" with force - and he had portrayed TPP as part of the way to do it, even though a 2013 government study estimated that the deal would boost Japanese GDP by 0.66 percentage points.
"We will prepare well so that companies in our country can take a full advantage of the TPP agreement and so TPP can truly lead to economic recovery for our country," the prime minister said.
But analysts said the deal is not the magic bullet Abe was hoping for.
"I think it's a positive. I just don't think it's an enormous one," said Nicholas Smith of brokerage CLSA. "If he had managed to win big concessions from the U.S., that would have been fantastic, but they have not managed to do that."
Most of the deal's main provisions will be slow to take effect.
While agriculture accounts for just 1.2 percent of the Japanese economy and half of farmers are aged 70 or over, farm products were a key sticking point during the negotiations. Japan's farmers are heavily subsidized and rice imports carry a 778 percent tariff.
Japan budged only a little on rice, conceding a duty-free quota of 50,000 tons for U.S. imports, rising to 70,000 tons over 13 years. Tariffs on beef imports to Japan will fall from 38.5 percent now to 9 percent, but it will take 15 years.
Japan Agriculture, the powerful lobby group, said the deal needed further consideration, while farmers were not happy about the changes.
"The government said they would make domestic agriculture a growth sector but it was a lie," Makio Suzuki, a 66-year-old rice grower from the northern region of Akita, told Japan's Mainichi newspaper. "There are still some procedures remaining, like ratification in the Diet, so I will raise my voice and protest."
Meanwhile, Japanese automakers will not feel any benefit for decades. U.S. tariffs on imports - currently 2.5 percent on cars and 25 percent on trucks - will take 30 years to be eliminated.
But one area where Japan could feel an impact is healthcare - no small consideration for a country with a rapidly aging population. Forty percent of Japan's population is forecast to be over the age of 65 by 2050.
Under the deal, patent-style protections on pharmaceutical drugs will be phased out after five years, rather than the U.S.'s current 12 years. "This could help push down healthcare costs," said Smith of CLSA.
While the deal provides a much-needed economic component for President Barack Obama's "pivot to Asia," it is notable that China, the world's second largest economy, is not included. China is instead promoting its own "Regional Comprehensive Economic Partnership" that excludes the U.S.
But Abe said Tuesday he encouraged China to consider joining TPP. "It would be extremely meaningful and would contribute to the security and the stability of the Asia Pacific region if China would join the system in the future," he said.
China's government officially welcomed the TPP agreement, saying it was open to any deals that promoted regional economic integration. But the government has in the past repeatedly raised questions about the transparency of the negotiating process.
China has recently signed free trade deals with South Korea and Australia, and has also proposed its own Free Trade Area of the Asia-Pacific, but a successful TPP deal could undermine that effort.
China had reportedly been invited to join the TPP negotiations, but was reluctant to meet some of the proposed rules. Some experts repeated Beijing's concerns that the deal was a part of a U.S.-led effort to contain China's rise. Others regretted the fact that China was not involved at the outset in negotiations to shape a new regional trading pact.
"It is about forming a new set of rules in a new trade system which is led by the U.S.," said Shi Yinhong, professor of international relations and director of the Center for American Studies at Renmin University of China in Beijing. "That will create historical difficulties for China in a long run. The U.S. pressed China to follow a set of rules which was made by a group of U.S.-led economies.
"The key is whether China can successfully complete the comprehensively deepening reform, as China is far from reaching the various high standards of the TPP," he said. "On the other hand, even if China had managed to comprehensively deepen reform and met the standards for joining TPP, China has already lost the chance to participate or lead the process of rule making but only to follow the rules." Shi said this would create less favorable conditions for China's economic development in the longer term.
On social media, others repeated similar nationalist arguments about containment, although some expressed concerns that China could be left behind.
"The TPP is an institutional arrangement to safeguard the old order - the purpose is to contain China's ability to challenge the old order," one person using the name Dong Zhichuang wrote on Sina Weibo. "Why should China join? Will India or the Philippines become developed countries by joining TPP?"
"Excluding a market as big as China, it is just their own wishful thinking," a commenter using the handle Mencius wrote on The Paper smartphone news app.
The Washington Post
