Earlier this week, the Nikkei Asian Review published At odds with US, Japan reaches out to other TPP partners. The title would lead you to believe Japan is working with other countries to strengthen opposition to the toxic, mislabeled trade deal known as the TransPacific Partnership.
The text of the article suggests otherwise, that Japan’s prime minister Abe will feel compelled to offer some concessions when Obama visits next month. On the surface, that would represent a significant shift. Readers may recall that our Japan-savvy commentor Clive parsed an article last December in Japanese from Fisco, which made clear that the Japanese doubted the deal would get done, and was extremely pointed by Japanese standards in saying that the US was refusing to negotiate on tariffs (and on other matters).
Agricultural tariffs are a big deal in Japan. The island nation has high tariffs, famously for beef and rice, and farmers are a important voting block. And tariffs are not resented domestically. Japanese prefer to eat and buy Japanese, and are generally leery of the quality of foreign products (and after America’s experience with the crapification of pretty much everything, they’ve got good reason to be concerned, even after allowing for the occasional product quality scandal).
The Nikkei article explains the current state of play: the Japanese had hoped to conclude other bi-lateral trade deals with countries like Australia and New Zealand on the heels of wrapping up the TPP. But now that that looks to be in doubt, Japan is trying to ramp up talks on these stalled trade pacts (for instance the deal with Australia has been in the works since 2006). Here are the key bits of the Nikkei piece:
But U.S. Trade Representative Michael Froman has insisted that Japan must end all of its import duties. On the sidelines of a ministerial conference last month in Singapore, Akira Amari, Japan’s economic policy minister, tried to persuade Froman to agree to some exceptions. But the two sides remained divided…
To be in a better position to protect its five priority areas — rice, wheat, beef and pork, dairy products and sugar — Tokyo aims to wrap up negotiations with Australia and other TPP participants by the time Obama touches down.
Japan will send negotiators to Mexico, New Zealand, Singapore and other countries this month. All of them are likely to make uncomfortable demands for tariff elimination — Mexico on pork, New Zealand on dairy products, and Singapore on chocolate. Japan will not agree to drop these tariffs but will consider lowering them.
The Abe government, however, has little time to sell this deal before Obama’s visit. Moreover, Japanese farmers will fight even tariff reductions. Some LDP lawmakers fear this approach could run afoul of a parliamentary committee resolution promising to defend the five priority areas. Officials at the agriculture ministry are also wary. Support for exposing the farm sector to greater foreign competition is far from rock solid within Abe’s party or government.
In fact, this does not sound like anything could possibly get resolved with any of Japan’s trade partners before Obama arrives, meaning this is all a big exercise in looking like Japan is making vigilant efforts (the Japanese are masters of pretending to cooperate by doing 40% of what you asked them to do slowly).
I pinged Clive, who has the considerable advantage of being able to read the original article in Japanese. His take:
My reaction on reading both versions was “it’s good to know that the traditional art of Kabuki is not only alive and well, but thriving in Japan”. In order to unpack that statement, one has to think about the Japanese obsession – and obsession it is, they don’t put it on just for the benefit of foreigners – with saving face. They really don’t want to have Obama visit and to be put on the naughty step over TPP. So they will feel compelled to be at least seen to be doing something.
This desire, though, will be set against hard political reality. In Japanese there’s a word 根回し (nemawashi) which roughly translates to “doing the groundwork”. No-one — not even company presidents or prime ministers – gets to simply dictate decisions. Consensus is important and everything is mired in a cycle of give-and-take, you scratch my back and I’ll scratch yours. When the article concludes “The Abe government, however, has little time to sell this deal before Obama’s visit” it means that the essential nemawashi has either not even been started or barely begun. For Abe to demand tariff reductions be accepted both to the LDP and the civil service would be like me marching up to you and demanding $10. It would be, in Japanese culture, the epitome of cack-handed rudeness and disrespect. The political equivalent of farting in an elevator.
That all said, it would seem that Japan might be willing to concede tariff reductions. But not tariff eliminations. Which brings me back to the Kabuki. A reduction of, say, 5% in a tariff is undeniably a reduction. But hardly a material one. Which is I think why Japan is so keen to be giving the impression of negotiating, but only negotiating on the reduction level of a tariff but not the removal. It would enable the classic Japanese negotiating tactics of either giving a trivial concession, or appearing to discuss a more significant concession but dragging out the details ad infinitum. The problem I think they have with tariff removal is that it’s a binary thing. You either have them or you don’t. So no potential there for gamesmanship.
There’s also a marvellous example of Japanese duplicity going on (shortform version: Why beef? Why Australia? Out of all the TPP issues, why that one? Put quickly, it’s a hot-button issue for the Japanese public so I don’t think it is entirely coincidental that it is being dredged up here and now).
One bit about nemawashi: it’s generally presented in the Western media as “consensus building” which implies it’s a nice process. It’s anything but that. Every party that has a legitimate interest must be consulted or they have the right to sabotage the result. You get lots of bitching and protracted horse trading.
So in other words, expect to hear the Trade Representative’s office to bray that considerable progress was made on the TPP as a result of Obama’s visit. Remember, in negotiating, the impression that progress is being made is critical. But anyone who has been following this beat and isn’t in the can for the Administration is certain to tell you otherwise.