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  June 19th, 2017 | Written by

Japan to US: Return to TPP

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  • Japan wants to keep TPP together in the hopes the US will to rejoin.
  • Hiroyuki Ishige, CEO of JETRO: “We are hoping the United States will return to the TPP.”
  • “The United States should be the guardian of the rules of a liberal international trade order.”

In early May, trade officials from every signatory country of the Trans-Pacific Partnership—other than the United States, the so-called TPP11—met in Toronto to discuss the future of the international trade accord. Do the remaining countries want to proceed with TPP absent the US?

It’s possible the TPP could come into force even though President Donald Trump withdrew the US from the agreement in the early days of his administration because there is a sufficient number of signatories that have ratified the accord.

But the real purpose of the Toronto meeting now comes to light: it’s to keep the group together in the hopes that the United States will opt to rejoin. That, at least, is the strongly-held position of a high-level Japanese government official.

“Japan and the others want to realize TPP as soon as possible,” said Hiroyuki Ishige, CEO of the Japan External Trade Organization (JETRO), at a conference held last week in Washington by the Center for Strategic and International Studies (CSIS). “We are hoping the United States will return to the TPP.”

That may seem wishful thinking in light of Trump’s action on the agreement and the administration’s oft-stated preference for bilateral, as opposed to multilateral, trade deals. One thing the US sacrificed when it withdrew from TPP was its leadership position in Asia-Pacific trade.

“The United States should be the guardian of the rules of a liberal international trade order,” said Akio Takahara, a professor of law at the University of Tokyo. “The best way is to come back to the TPP.”

While some have advocated negotiating a bilateral US-Japan free trade agreement, Michael Green, senior vice president for Asia and Japan chair at CSIS, argued that it’s “not practical to initiate a US-Japan FTA” for no other reason than the administration’s stated trade priority of first renegotiating NAFTA, which is likely to be a long and arduous process.

Besides, noted Tami Overby, senior vice president for Asia at the US Chamber of Commerce, “I don’t see lots of countries lining up to do a bilateral agreement” with the US. In the meantime, some US multinational companies, banks such as Citi and JP Morgan, for example, are considered to be Japanese banks under the TPP, noted Scott Miller, a senior adviser at CSIS, so that they will have play by those rules anyway.

But “manufacturers and exporters got hurt” by the TPP withdrawal, Miller said. “Agricultural producers were incensed at the Trump move.”

If TPP will persist without the US, as appears to be the case, US companies that operate across borders, may want to enhance their presence in TPP11 countries. “With the US out of the agreement,” said Overby, “some US manufacturing jobs will go offshore. They will move to TPP11 or RCEP countries to take advantage of those agreements.” RCEP, the Regional Comprehensive Economic Partnership, encompasses the ASEAN countries plus Australia, New Zealand, China, India, Japan and Korea.

If Overby’s prediction comes true, US policymakers, as the Japanese fervently hope, may realize that the US is better off in the TPP than out. Matthew Goodman, a senior adviser in Asian economics at CSIS, agrees with that proposition and said, “At some point we’ll be back, but I won’t predict when.”