Will US Browbeating of Japan Revive the Zombified TransPacific Partnership?

As readers may recall, we declared the toxic, national-sovereignty-gutting, misnamed “trade” deal called the TransPacific Partnership to be dead based on America’s colossal mishandling of Japan (not that it has handled the other prospective signatories any better, mind you). The pact was designed to be an “everybody but China” grouping, a centerpiece of Obama’s pivot to Asia. Japan’s participation is essential to meeting that objective, as well as to another critical objective: that of getting major nations to sign up to agreements that subordinated national regulations to the profit-making rights of foreign investors, who could sue governments over any incursions in secretive, conflicted arbitration panels.

Nevertheless, meetings on the TransPacific Partnership continue, with the latest round in Sydney last week. The US press is depicting the Japanese as bad guys who can be browbeaten into giving up protecting their beef and rice farmers, among others. From a Wall Street Journal article titled Japan Market Access Still Hurdle at Trans-Pacific Partnership Talks:

Japan will come under renewed pressure to further open up its automotive and agriculture industries to global trade during Trans-Pacific Partnership talks here over coming days, amid heightened calls for Tokyo to ensure increased market access remains a key plank of its structural reform agenda under Prime Minister Shinzo Abe.

The issue of market access in Japan is critical to the success of the TPP, as it will help determine the full benefits of the pact that will flow to its 12 nation participants, which jointly account for 40% of the global economy…

“Going into this weekend, we’re enjoying a great deal of momentum and focus across the board,” said U.S. trade representative Michael Froman in the opening remarks to the meeting.

“The issues left at the end are often times the most challenging but now is the time to start working through those and finding solutions,” he said, adding talks in recent months had been productive.

Yves here. This reads as if it comes from a parallel universe. “[F]ull benefits of the pact that will flow to the 12 nation participants”? No, the benefits are intended for effectively stateless multinationals that are smart enough to be big US campaign donors, such as the financial services industry, Big Pharma, and tech companies. And as for the “great deal of momentum,” if anything, it has all been in reverse.

But we thought it was possible that we might be missing something, so we checked in with Naked Capitalism’s de facto Japan stringer, commentariat member Clive. His report:

My usual Japanese press diet has downplayed the indications in the WSJ article of the kind of focus on Japanese market access at the current round of TPP negotiations and ministerial meetings between Japan and the US. After reading the WSJ, you’re left with the distinct impression that the U.S. has firmly placed Japan on the naughty step. But after reading Japanese media coverage, I started to wonder if they were reporting the same event. The usually reliable Yomiuri Shimbun has this article from yesterday afternoon, which is short enough to translate easily in full:

(all participating) TPP (countries) Ministerial Meeting Kicks Off … Japan and the United States also Hold (separate) Bilateral Talks

From Miyuki Yoshioka in Sydney

The ministerial meeting negotiations for the Trans-Pacific Economic Partnership Agreement (TPP) kicked off in Sydney on the 25th (of October 2014).

The focus (of the negotiations) will be on the progression of compromises in areas of difficulties such as “the reform of state-owned enterprises” (SOEs) where developed countries and emerging countries are in conflict.

The ministerial talks will take place for three days, lasting until the 27th (of October 2014). Japan’s Minister (for Economic Revitalisation) Amari told reporters prior to the meeting on the morning of the 25th “Because the consultations between Japan and the United States are proceeding vigorously, the other participating countries will be encouraged that they can accelerate their (negotiating) work”. Australia’s (Minister for Trade and Investment Andrew) Robb also announced at the opening (of the talks) “Each (TPP participating country) is heading in the same direction towards a political conclusion, aiming for agreeing the basic elements, with some vigorous negotiating expected between ministerial representatives”.

Clive again… so that’s all, err, very, vigorous then. I’m not sure what the Japanese is for “bun fight” is (I think it’s a Britishism and maybe it doesn’t have an American equivalent !), but that about covers it as a description of the meeting for me. Compare and contrast the Japanese media’s coverage to the WSJ’s. There’s nothing about Japan being taken off to a dark corner of the playground to be given a good kicking by the U.S. apart from a brief reference in the title of the piece that there’s separate U.S./Japan-only talks going on too.

There is the usual (from the Japanese perspective) references to other TPP countries’ areas of discord, especially SOEs. And the Japanese press drags Australia into the fray, quoting Trade Minister Robb as saying essentially that everyone is lobbying for their own pet interests but there’s a will to reach a political (and that’s an interesting term to use isn’t it? Politics NOT economics will be the basis for any agreement) deal but everyone will have to do some give-and-take with regards to their political baggage.

It’s hard to say if the WSJ’s piece is coming, sock-puppet like, from official Washington sources. The fact that this is in the WSJ makes me a tad suspicious, but suspicion isn’t proof. If this is coming from Froman’s camp, then the US Trade Representative’s team really hasn’t learned a single thing from the (now years of) negotiations with Japan. Singling out, in public, the Japanese and trying to foist the blame for stalled negotiations onto them is just about the most counterproductive thing they could possibly do. The Japanese will go into face-saving mode, as in the Yomiuri’s feature, pointing the finger at everyone else and trotting out their well-honed cover story that “it’s all the other guys’ faults”. It could also be an acknowledgement of the reality that, without. Japan, there’s really little point in the TPP. Hence the pressure being heaped on the Japanese. They really are a special case as far as he TPP goes.

But again, the U.S. negotiating team seems unable to read the clearly signalled Japanese position. If they were going to cave on the substantive issues still in play, they’d have done it by now. It’s highly unlikely that Japan’s Prime Minister Abe has any domestic political room to manoeuvre — and the U.S. can’t or won’t throw him any sweeteners. A failed TPP deal will look bad for Abe (he has invested and continues to invest political capital in it), but as Amari’s comments at the start of the Sydney negotiating round show, if the negotiations do fail, there’s no shortage of handy scapegoats which the Japanese can use.

An article in the Nikkei Asian Review, on Obama’s lame duck status and how Republican hopefuls jockeying for position makes the prospects for seeing any legislation get done in the next two years even worse, discusses the TransPacific Partnership in passing. It points out another obstacle we’ve cited: Obama’s decision to be extremely secretive about the TransPacific Partnership text (literally only Congresscritters on the right committees can go and read the text; they can’t take copies and have their staffers study them) has produced a revolt over his abuse of the already-way-too-generous fast track authorization, which limits Congress to a yes or no vote on an entire deal once it has been cooked up by the Administration. Democrats are most upset about it, but they have a fair bit of Republican company. But as the article points out, even if the Republicans gain ground in November, it is unlikely to help any of the stalled trade deals:

Obama said earlier this year that he hoped to have a framework agreement on the Trans Pacific Partnership — the vast, 12-nation trading bloc — by the time of the East Asia Summit in Myanmar on Nov. 13-14. The TPP is the economic cornerstone of Obama’s Asian pivot. But a TPP deal has always been contingent upon congressional agreement to grant Obama “fast track” authority on trade pacts, so allies can be certain Congress will not tinker once decisions have been made.

There is a school of thought that a Republican-led Congress would be more business-friendly than Obama’s labor-allied Democrats, and the GOP might be more willing to grant the president the trade authority he needs. But that optimistic view ignores the 2016 electoral calendar, and Republican hardliners’ unwillingness to be seen giving this president anything that smacks of a victory.

As evidence of that obstructionist mindset, look no further than the number of empty posts at U.S. embassies around the world. At least 33 countries are currently without an American ambassador because Republican senators are holding up the normal process of approving nominations. Among those vacant posts are Vietnam, which has lacked an ambassador since August, at a crucial time when the U.S. is stepping up military aid to Hanoi in response to China’s increasing assertiveness. Thailand will soon be another, as Ambassador Kristie Kenney has announced she is returning to Washington without a replacement in position.

In other words, the Administration effort to pretend that the TransPacific Partnership is moving forward is fooling no one that counts. And the US negotiators have waited way too long to have made the sort of concession that might have enabled it to go forward. While miracles are in theory possible, that’s about what it would take at this stage to bring this deal back from the dead.

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  1. ProNewerDeal

    Yves, thanks for this article – this it rare great news, to see that the TPP is likely dead, at least for a few years.

    OTOH, what is the probability of the Grand Ripoff of Social Insurance “Grand Bargain” after the Nov. 2014 election? Does an R majority in the Senate increase the probability of a Grand Ripoff, since it would establish far-right-wing control of both Congressional branches (R party) & the Exec branch (right-wing Obama Reagan Jr)?

    I haven’t seen the Grand Ripoff topic discussed much this year, I worry that it is still a genuine threat, given Billionaire plutocrats like Pete Peterson spending Millions on PR hacks like Alan Simpson pushing for it.

    1. ambrit

      I’m not so sure that either party would want to raise the Grand Rip Off in an election cycle, which pretty much covers eternity nowadays. Pushing through a Grand Rip Off of Social Security would be the defining moment of ‘Evil Government’ for most older people because, if they are not somewhat dependent on it themselves, they know someone who is. Such a massive display of all the worst aspects of Elite culture will set the ground rules for a big political movement. As cynical as I usually am, even I must admit that some ‘reform’ movements have the power to effect change.

      1. evodevo

        Yes. We thankfully have the ongoing example of W’s “mandate” in 2005 that failed so spectacularly. I hope the GOPers have not forgotten that. The effect of the Great Crash on peoples’ 401ks also helps ram home the point. I am not optimistic about the Dem’s chances of holding on to the Senate, and the damage the Teabaggers could possibly do between now and 2016 is alarming.

        1. beene

          With any luck we will see that Obama’s Grand Bargain and Obamacare ending democratic position in the Senate for dressing up the rights agenda for what it is crony capitalism.

  2. John Zelnicker

    I agree with ambrit. I also think this is another situation where the Republicans are not going to give Obama any kind of victory and will stonewall even the “structural reform of the safety net” that they so fervently desire.

  3. Angelo

    TPP is sinking faster in the waters of the Pacific than the Titanic sunk in the Atlantic.
    Even S/Korea is not fully on board.Their main concern now is their FTA with China which will most likely be signed by years end.

  4. Ulysses

    Let’s hope that the TPP is indeed stalled for awhile. I’m still a bit nervous that the huge corporate interests that want the deal will discover a proper mixture of browbeating, and bribery, to sneak it past the goal post. It is still very important for us to keep pressure on Congresscritters not to allow Fast Track !!

    1. Clive

      Couldn’t agree more. While I suspect we’ll still be fighting off “TPP 2.0” in 10 years’ time, I think that any delay or the forcing of a big re-grouping by the proponents of the current attempt at a TPP will be a major victory. Not that it would be in-and-of-itself anything like a drastic re-working of embedded orthodoxy — but it would strike a significant blow in terms of the general population saying to big business and their government lackeys “this far and no further”.

      So please my dear readers in the U.S. do keep up the howls of protest to your local congresscritter. You’ll be, to some extent, pushing against an open door. And you’ll genuinely in my humble opinion doing the whole world a great service.

  5. Uahsenaa

    Americans really don’t understand how integrated Japanese agriculture is with the culture and society at large. We assume, because we try to hide our means of production as much as possible, that this must be true of everyone else as well, but in Japan, there is so much tourism devoted to regional delicacies, seasonal appreciation of food products, and even basic television shows about going out into the country (the inaka being a highly romanticized space in Japan) and seeing where the food comes from, that you can’t make economic (read: political) demands upon ag without also assaulting a widespread and central element of how the Japanese define themselves. Therefore, for them, negotiations about food are always going to be at least partially about identity, which is something the more conservative elements of Japanese society are always touchy about. You see this with the whole whaling kerfuffle; they do it largely because they’ve gotten it into their minds that it’s part of “who they are” not in response to any real demand for whale meat or other products.

    1. Clive

      A very profound point which I’ve toyed with trying to make in the past but always reached for the delete key because I couldn’t quite find the right words. But you’ve expressed a truth very succinctly.

      I would also add that in addition to the whole “food as a cultural identity” thing (which I’ve just reduced appallingly in describing it that way, but it’ll have to do for now), there’s also income implications. Travel around Japan and you can’t help but notice (outside the urban sprawl — and even in it sometimes!) a small patch of tea bushes or a tiny scrap of land with cabbages growing. Seriously, these “fields” are smaller than my garden, but they are obviously being “farmed” (that’s much too generous a term for it). When I started noticing this, I asked native Japanese, to cut to the chase, what the heck is going on with that ? To call it “sub scale” and “inefficient” barely scratches the surface. That provoked, initially, the usual Japanese “I’m not understanding the question” and vague non-answer answers. Uncharacteristically (for me) I didn’t give up on that one and eventually some sort of pieced-together explanation was extracted: from what I understand, any “agricultural land” and production, however small, is a tax break.

      For rural folk on modest pensions, it can be the difference between being not at all comfortable financially and being able to get by. So tin-pot (that sounds like it is a terrible put down and I don’t mean it derogatorily because as we often say here, not everything in life could- or should- be measured in dollars and cents, I’m merely trying to convey how “uneconomic” it is) agricultural production is also in effect an income substitute for retirees and small rural communities.

      I’m not going to make any judgement about whether this is a “good” or “bad” use of Japan’s government’s tax system or subsidy system (being in Europe, shameless gimmies to agriculture is one glass house we should not be throwing any stones in!) I mention it to give some idea of the complexities in play when terms like “inefficient” and “protectionism” are bandied about. I’m sure the subtleties of this dynamic are entirely lost on USTR Froman… which explains a lot.

      1. Uahsenaa

        I remember many years back seeing one of those “life skills for seniors” shows on NHK about growing carrots on your patio, and I couldn’t fathom for the life of me why any in their 70s would want to do such a thing. The subsidy makes sense of that…

        To further your own point, when I was living in the middle of nowhere Japan myself, I noticed quite a few people practicing what could be called partial subsistence farming, even those whose family income meant they had no need to do so. I one time suggested to a friend of mine that it’s kind of silly to grow spinach in her back yard, when the field just behind her house was where they grew the equally delicious spinach sold at the co-op. up the street. She looked at me like I had just spat in her face. There are perverse incentives to engage in meaningless agri-/horti-culture, to be sure, but I get the sense that many cling to a lifestyle, as my own parents did (growing food and canning it for later), even where there is no economic imperative. The only analog I can think of is how, here in Iowa, it’s political dynamite to even suggest a hindrance to “hunting and fishing,” which means we can never have a reasonable conversation about gun laws. Case in point: the hippy co-op dude running for senate here is also a gun nut.

      2. flora

        This is very interesting. A small island nation encouraging agriculture, even in tiny plots, makes some sense in terms of national defense. Food security and self-reliance during hard times. The U.S. with its vast swaths of farmland simply doesn’t think in terms of not being able to grow enough to feed itself should war be declared or other disaster strike.

  6. TG

    We can hope the TPP is dead.. but…

    After the November elections there will be a bunch of lame duck congresspeople who will be free to engage in a ‘bipartisan’ stabbing of their constituents in the back. We’ve certainly seen that before.

    Remember also the TPP is not primarily about trade – it is about destroying AMERICAN democratic sovereignty. Obama only needs one other country to sign up to put a bunch of corporate lawyers meeting in secret in charge of AMERICAN laws. If Japan won’d do it, maybe Afghanistan? Myanmar? One wonders if Obama can bind us to a trade deal that only the United States has signed…

    1. Yves Smith Post author

      With all due respect, you are missing the point. No Japan, no deal. And Japan is not going along without major changes. The odds against fast track approval gives them an easy excuse, but they are not budging.

      And Harry Reid has said he’s not tabling fast track. He was adamant. I doubt that changes in a lame duck session either.

      1. susan the other

        Is it all or nothing, or just reduced “benefits” if Japan backs out on Ag and cars. Clive’s report sounded like it was all about trade until he got to the detail about our 2 ambassadors in Vietnam and Thailand not being replaced and that made the hair rise up on the back of my neck. Obama is nothing if not stealthy. Diane Feinstein calls him extremely cautions. Cautious like a panther. His feeble-looking “Pivot to Asia” might be more about arms trade to trade allies, and the way we are treating Japan sounds like extortion that would not be otherwise justified. The Japanese are so meticulous about their food I’d bet they wouldn’t be able to gag down our beef even if they did import it. Of course China’s exclusion is the first clue. And keeping it top secret is the second.

        1. Yves Smith Post author

          Clive pointed out in an earlier post is what might get Japan to budge is security assurances, as in major goodies from the Department of State. The dynamic is that the USTR doesn’t even understand where the only solution space might lie, and keeps demanding concessions from the Japanese while refusing to offer ANYTHING to do that trade. Ag and autos are monster concessions for the Japanese, and they are not coming cheap, much the less free, which is what the US thinks Japan should do.

      2. different clue

        Can we be sure that TG is missing the point? Is there any legalistic reason why the USgov couldn’t enter into a rump-TTP with some pliant subordinate partners? If the goal is to establish a transnational Corporate tyranny, how many co-signers are really necessary?

  7. Bonkers

    Why don’t the Japanese simply agree to remove the tariffs, while installing some non-tariff barriers instead? I heard that South Korea does this to great effect.

    Anyway, doesn’t the US have a lot of agribusiness subsidies as well? Or is this completely irrelevant?

  8. Erick Borling

    There is some campaign rhetoric by an “establishment” candidate in Central Washington (state) (Dan Newhouse) attacking his tea-party-esque rival (Clint Didier)– alleging that the Didier will gut Social Security. I inferred that Social Security is still a sacred cow even to Republicans. The two are duking out over the seat being vacated by veteran congressman Doc Hastings.

  9. ChrisPacific

    The ambassador to New Zealand is now overdue by about 10 months. Given that he is an Obama bundler with no prior diplomatic experience, it’s perhaps understandable why the Republicans would block him (of course, a Republican president would no doubt be doing the same thing).

    Here’s a Herald article from a year or so back:


    Standards for foreign service are laid down by the Foreign Service Act of 1980, designed to maintain a diplomatic cadre. It says ambassadorships “should normally be accorded to career members of the service”, who possess “clearly demonstrated competence” – including foreign languages and a wide knowledge of the nations to which they are sent – and that “contributions to political campaigns should not be a factor” in postings.

    Hilarious, until you remember that it’s, you know, the law.

  10. Patrick Donnelly

    After Fukushima, Japan must realize that there are consequences to the culture of arrogance towards the values and cultures of the rest of the world?

    Having a “disappointing ally” provoked the tsunami.

    They are in no mood to acquiesce in economic hegemony and loss of sovereignty. Anarchy does not appeal to the culture that walked out on the League of Nations and it appears that nothing has changed …. They do have a massive need for oil and for food …. !

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