Japan’s Abe Calls for Pacific Trade Progress, Promises Reforms

The Japanese prime minister promises agricultural reforms in order to advance the Trans Pacific Partnership.

Japanese prime minister Shinzō Abe promised to enact long-overdue agricultural reforms on Wednesday as he encouraged American lawmakers to make progress on a Pacific trade treaty.

Addressing the United States Congress in Washington DC — the first Japanese leader to do so — Abe said Japan was in the middle of a “quantum leap” toward liberalization. “We have regained our spirit of reform and our sense of speed,” he said. “Japan will not run away from any reforms.”

However, since his election in 2012, the conservative party leader has done little to overhaul his island nation’s agriculture and labor markets. The former are critical if Japan is to join the United States and ten other countries in a Trans Pacific Partnership that could boost global economic output by $220 billion over the next ten years.

The trade talks stalemated last year when Japan’s negotiators walked out of a meeting with their American counterparts. The Americans had taken the Japanese to task for refusing to even discuss a cut in tariffs and withdrew their own offer to lower tariffs on imported auto parts.

The Economist cited one Japanese policymaker at the time describing the episode as the most acrimonious since the bruising trade wars of the 1980s.

Powerful agricultural cooperatives and high subsidies shield Japan’s farms from international competition while rigid labor laws make it nearly impossible to lay off workers. Many firms limit hiring to part-time or temporary workers who are typically paid a third less than full-time employees. 17 percent of Japanese men aged 25 to 34 now hold such jobs. For women of all ages, the rate is a staggering 57 percent.

Despite promises of reform, Abe has done little to make Japan more competitive.

The United States are not without blame. The country subsidizes its own automakers and farmers and many lawmakers, especially in President Barack Obama’s Democratic Party, are reluctant to expand foreign access to a variety of markets, mostly food but also biodiesel and ethanol production, for fear of job losses in their districts and states.

With Republicans controlling both chambers of Congress, Obama may yet get the authority he needs to negotiate the Pacific trade pact.

The president expressed optimism on Tuesday, saying, “The politics around trade can be hard in both our countries but I know that Prime Minister Abe, like me, is deeply committed to getting this done and I’m confident we will.”

Abe reminded lawmakers the following day that the Pacific partnership was about more than trade. “It is also about our security,” he said. “Long-term, its strategic value is awesome.”

Obama’s team sees the treaty as part of their “rebalancing” strategy — popularly known as the Asia “pivot” — designing to bring China into the existing liberal world order rather than have it attempt to create a competing, presumably more authoritarian, order under its leadership.

China and Japan are also embroiled in a sovereignty dispute over the Senkaku Islands, situated northeast of Taiwan. Like many of China’s neighbors, Japan worries about the country’s willingness to use force to press its territorial claims.

China isn’t part of the trade talks. But a successful treaty, involving the world’s first- and third largest economies, would pressure the country to meet its standards and stop trying to game global trade to impede foreign companies.