Europe and Japan Finalize Trade Deal

Japan flag
The flag of Japan (Bryan Jones)

The European Union and Japan have finalized a trade agreement that would create the world’s largest open economic zone when it comes into effect in 2019.

The deal cuts tariffs, harmonizes product regulations and liberalizes public procurement for a market of 600 million people.

The EU and Japan account for 28 percent of the world’s economic output.

In a joint statement, European Commission president Jean-Claude Juncker and Japanese prime minister Shinzō Abe said the deal demonstrates their commitment “to keeping the world economy working on the basis of free, open and fair markets with clear and transparent rules.” Read more “Europe and Japan Finalize Trade Deal”

Allies Hope for the Best from Trump, Must Plan for the Worst

Presidents Recep Tayyip Erdoğan of Turkey and Donald Trump of the United States listen to Secretary General Jens Stoltenberg of NATO making a speech in Brussels, May 25
Presidents Recep Tayyip Erdoğan of Turkey and Donald Trump of the United States listen to Secretary General Jens Stoltenberg of NATO making a speech in Brussels, May 25 (NATO)

American allies are coping with Donald Trump’s disruptive presidency in similar ways, a collection of essays in the latest issue of Foreign Affairs magazine reveals:

  • All feel they need to step up and defend the liberal world order as Trump is determined to put “America first”.
  • They worry that a new era of American isolationism could make the world poorer and less safe.
  • Leaders are doing their best to rein in Trump’s worst impulses and most of their voters understand the need for pragmatism, although they have little faith in this president. Read more “Allies Hope for the Best from Trump, Must Plan for the Worst”

Europe, Japan Send “Strong Signal” with Trade Deal

Tokyo Japan
View from the World Trade Center Building in Tokyo, Japan (Unsplash/Louie Martinez)

European and Japanese leaders have announced a landmark trade agreement on the eve of the G20 summit in Hamburg, Germany, where America’s president, Donald Trump, is expected to press his case for protectionism.

The treaty has yet to be finalized. A summit in Brussels was hastily arranged to “send a strong signal,” as the EU’s trade commissioner, Cecilia Malmström, put it earlier this week.

“We believe we should not build walls or raise protectionism,” she said. Read more “Europe, Japan Send “Strong Signal” with Trade Deal”

Time Looks Ripe for Japan-NATO Cooperation

Strategic thinkers have proposed closer cooperation between Japan and NATO for more than a decade. The circumstances are now such that this could become a reality.

Japan has surprised many by weakening its post-World War II pacifist posture, increasing defense spending and investing in fifth-generation warplane technology. These reforms are an invitation to NATO to engage more seriously.

Part of the work is being done for it. Japan’s security pivot brings the island nation in closer alignment with the United States. This, in turn, brings Japan closer to NATO.

Japan’s reinterpretation of its constitutional self-defense clause could be a stepping stone to collective self-defense. It has already taken part in multinational military exercises and contributes to peace and stability missions around the world. Its security doctrine is well in line with NATO’s. Both sides are committed to upholding democracy and the rule of law and advancing the cause of international security.

Areas of cooperation could include counterterrorism, cybersecurity and peacekeeping. Both sides would benefit from an open exchange of experiences, ideas and technologies in these regards.

Japan also holds a wealth of experience when it comes to responding to and managing human crises, like natural disasters. NATO’s civil response capacities, in turn, can serve as an example for Japan’s Self-Defense Forces and the two can be mutually reinforcing. Read more “Time Looks Ripe for Japan-NATO Cooperation”

Japan’s Abe Once Again Puts Off Difficult Reforms

Prime Ministers Matteo Renzi of Italy and Shinzō Abe of Japan attend a ceremony in Tokyo, August 3, 2015
Prime Ministers Matteo Renzi of Italy and Shinzō Abe of Japan attend a ceremony in Tokyo, August 3, 2015 (Palazzo Chigi)

Japanese prime minister Shinzō Abe once again backed away from reform on Wednesday when he delayed a planned sales tax increase that was meant to shrink a huge deficit.

At this point, it seems we would be deluding ourselves if we still take “Abenomics” seriously as a program of economic reform.

When he returned to power in 2012, Abe promised to tackle sclerotic growth in three ways: short-term monetary and fiscal stimulus, long-term fiscal consolidation and structural economic reform.

He only managed the first and has constantly found excuses to put off the second and third — which are the more important if Japan is to find its way back to growth. Read more “Japan’s Abe Once Again Puts Off Difficult Reforms”

2015 in Geopolitical Review

World leaders speak at the G7 summit in Bavaria, Germany, June 11
World leaders speak at the G7 summit in Bavaria, Germany, June 11 (Bundesregierung)

Geopolitics is about trends. Individual events add up to patterns; patterns melt into inertia; inertia gains social gravity; inevitably, maps are redrawn, regimes fall and through the litany of news reports we wonder how it all came about.

So while it is beyond cliché to do a yearly review, for geopolitics, it’s also extremely useful. What were the trends in 2015 and where might they go in 2016 and beyond? Let’s get super. Read more “2015 in Geopolitical Review”

Pacific Nations Reach Agreement on Trade Pact

Barack Obama Shinzō Abe
American president Barack Obama and Japanese prime minister Shinzō Abe at the White House in Washington DC, April 28 (White House/Pete Souza)

Negotiators from Japan, the United States and ten other Pacific nations reached an agreement for a comprehensive trade pact on Monday that would be the signature achievement of President Barack Obama’s economic “pivot” to Asia.

The deal comes after five years of talks and despite opposition from farm lobbies in Japan to trade unions in America who fear that freer trade across the Pacific Ocean will depress prices and wages. Read more “Pacific Nations Reach Agreement on Trade Pact”

Why Japan Is Readying for War Again

Japan flag
The flag of Japan (Bryan Jones)

Ironically, the final vote was accompanied by a fist fight but it’s official: Japan may go to war again. The third largest economy on Earth entering the geopolitical sphere as a military power is absolutely huge. For Beijing, it’s a disaster. For DC, it’s the geopolitical coup of the decade. And for Japan, it’s increasingly necessary.

But why, and how? Let’s get super. Read more “Why Japan Is Readying for War Again”

Japan’s Economy Shrinks as Abe Puts Off Reforms

Night falls in Tokyo, Japan
Night falls in Tokyo, Japan (Unsplash/Simon Launay)

Japan’s economy shrank at an annualized pace of 1.6 percent between April and June of this year, calling into question Prime Minister Shinzō Abe’s commitment to controversial but pro-growth reforms.

Exports fell, as did consumer spending, depressed by a sales tax hike.

The Bank of Japan’s weakening of the yen has also made imported foods more expensive, putting further pressure on households. Read more “Japan’s Economy Shrinks as Abe Puts Off Reforms”

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

American president Barack Obama and Japanese prime minister Shinzō Abe at the White House in Washington DC, April 28
American president Barack Obama and Japanese prime minister Shinzō Abe at the White House in Washington DC, April 28 (White House/Pete Souza)

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.