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.

Disenchanted Japanese Give Abe Another Chance

Japan’s ruling conservative parties were on track to win another majority in snap elections on Sunday but low voter turnout reflected rising disenchantment with Prime Minister Shinzō Abe’s economic reforms.

Japanese media projected Abe’s Liberal Democrats and their socially more conservative coalition partners in the Komeito party would win more than 317 seats in the country’s lower house of parliament, a loss of under ten seats but enough to maintain a comfortable majority.

However, barely one in two eligible voters turned out compared with almost 60 percent turnout in the last election in 2012.

Abe called early elections last month to seek a fresh mandate for his economic policy when the country slipped back into recession.

Key parts of the reform agenda have stalled. Read more “Disenchanted Japanese Give Abe Another Chance”

Japan’s Abe Calls Snap Elections as Reforms Stall

Japan’s prime minister, Shinzō Abe, called a snap election for the lower house of parliament on Tuesday to seek a fresh mandate for his stalled economic reforms. The announcement came a day after data showed the country had slipped back into recession.

Abe also said he would delay a planned sales tax increase to 10 percent. His earlier tax hike, from 5 to 8 percent, is widely blamed for pushing the world’s third largest economy into negative growth.

The nationalist politician, who staked much of his political capital after returning to power in December 2012 on reasserting Japan’s regional influence, nevertheless insisted during a news conference in Tokyo that his economic program was working.

“I am aware that critics say ‘Abenomics’ is a failure and not working but I have not heard one concrete idea what to do instead,” he said. “This is the only way to end deflation and revive the economy.”

But key parts of his reform agenda remain stalled. Read more “Japan’s Abe Calls Snap Elections as Reforms Stall”

America, Japan Block Trans Pacific Partnership Progress

The flag of Japan
The flag of Japan (Bryan Jones)

What could be one of the world’s most comprehensive trade agreements, encompassing twelve nations that jointly account for 40 percent of global commerce, remains mired in disputes that have less to do with trade than domestic politics.

The most recent Trans Pacific Partnership talks in Sydney, Australia failed to resolve key differences between the tentative bloc’s two largest economies: Japan and the United States.

America’s chief trade negotiator, Michael Froman, said on Thursday he did not expect to have a final agreement by the time leaders of the Asia-Pacific Economic Cooperation meet in Beijing next month.

Agreement is already a year overdue. The talks’ deadline was first set for the end of last year.

The talks stalemated in September when Japan’s negotiators walked out of a meeting with their American counterparts in Washington DC. The Americans had been disappointed by the Japanese’s refusal to discuss a big cut in tariffs and withdrew their own offer to lower tariffs on imported car parts. The Economist cited one Japanese policymaker describing the episode as the most acrimonious since the bruising bilateral trade wars of the 1980s.

As The Wall Street Journal put it at the time, “America wants Japan to deliver on its rhetoric of bold reform, aimed at reviving the country’s long stalled economy.”

Conservative prime minister Shinzō Abe has promised to revitalize Japan’s economy, the world’s third largest, after two “lost decades” that followed a deep recession in the 1990s. But almost two years into his second term, reforms have been underwhelming. Abe has shied away from making the sort of changes in agriculture and Japan’s labor market that could lift the island nation’s economy out of its long slump.

The United States are not without blame. The country subsidizes automakers and farmers and many legislators 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. Such protectionism also hampers America’s trade talks with the European Union.

Both pacts are about more than economics. A transatlantic free-trade agreement would revitalize the Western alliance at a time of renewed Russian assertiveness in Eastern Europe. The Pacific talks represent the economic side of President Barack Obama’s “pivot” to Asia, as the Atlantic Sentinel‘s Richard Colapinto
explained last year.

Some leaders in Asia were concerned that the United States were relying too much on the military to signal its commitment to the region. Thus, the free-trade area was a vehicle President Barack Obama could use to emphasize the economic side of his policy. By seeking to increase the quality of trade relations in Asia, his administration puts the onus on China to reform its commercial practices if it wants to participate.

China has so far been excluded from the talks. If they fail altogether, other countries in East and Southeast Asia will surely be tempted to enact bilateral trade pacts with what is soon to be the world’s largest economy. A Trans Pacific Partnership, however, should encourage China to open up its market — as long as it is not principally excluded from the group.

Abe’s Refusal to Shake Up Japan’s Labor Market Spells Decline

When Prime Minister Shinzō Abe finally unveiled his plans to make Japan more competitive in June, the proposals underwhelmed. While he promised to lower Japan’s corporate tax rate, currently the highest in the developed world, to below 30 percent, Abe shied away from comprehensive agriculture and labor reforms that could revitalize the island nation’s economy. The latter, especially, are sorely needed.

Japan’s rigid labor laws, which make it nearly impossible to lay off workers, have led many companies to limit hiring to part-time or temporary employees who are typically paid a third less. 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. 70 percent of Japanese women also still quit their job when they have children.

For both genders, regular jobs have fallen 3.1 percent in recent years. The average wage per worker in real terms has dropped 9 percent since 1997 and 2 percent since Abe took office just two years ago. Read more “Abe’s Refusal to Shake Up Japan’s Labor Market Spells Decline”

Japan’s Abe Shies Away from Structural Economic Reforms

Japan’s prime minister, Shinzō Abe, finally unveiled the “third arrow” of his economic reform program on Tuesday but the measures hardly signified a decidedly more liberal policy.

The conservative leader promised to lower Japan’s corporate tax rate, currently the highest in the developed world, to below 30 percent. But he notably shied away from proposing agriculture and labor market reforms that could lift the island nation’s economy out of its long slump.

Abe has promised to revitalize Japan’s economy, the world’s third largest, after two “lost decades” that followed a deep recession in the 1990s. Read more “Japan’s Abe Shies Away from Structural Economic Reforms”

Putin at Ease in Asia’s Power Politics

Presidents Vladimir Putin of Russia and Xi Jinping of China observe a military ceremony in Shanghai, May 20
Presidents Vladimir Putin of Russia and Xi Jinping of China observe a military ceremony in Shanghai, May 20 (Kremlin)

There is an expression in Japan: kumo o tsukamuyou. It translates roughly into “like grasping a cloud.” We might call it “wishful thinking.” The proverb springs to mind when reading Japan’s former defense minister Yuriko Koike’s recent commentary.

In it, Koike presents her perspective of the challenges Japan has to face in East Asia. She believes these challenges are easy to enumerate for they all depend on one factor alone: liberal democracy. Those closest to it are under pressure by those farthest from it. China, Russia and North Korea are problems, Japan, the United States and their allies are the solution.

Koike’s is an ideal world in which the leader of the world’s biggest democracy could only possibly choose to ally with likeminded democratic powers and thus India’s new prime minister, Narendra Modi, is dutifully expected by Koike to team up with the alliance being formed to contain China’s assertiveness in the East and South China Seas.

Yuriko Koike, though, might have another thing coming. Not only is Modi not the obvious ally she believes him to be; the government in Tokyo itself may very well have other plans. Read more “Putin at Ease in Asia’s Power Politics”

America, Japan Seen to Be Making Progress in Pacific Trade Talks

When President Barack Obama departed Japan last week, on the first leg of a four country Asian tour that will also take him to Malaysia, the Philippines and South Korea, the headlines were that he had failed to reach a trade accord with Tokyo. The sticking point of agricultural subsidies, which have always been the major stumbling block, halted progress on the proposed Trans Pacific Partnership. But American and Japanese negotiators are actually said to be making real progress on this issue with the outlines of a compromise taking shape.

If Japan and the United states come to a bilateral agreement as a prelude to broader negotiations among the participants in the Trans Pacific Partnership, it would constitute a significant development for the region and global trade. It would also give Japan’s prime minister, Shinzō Abe, his third economic reform “arrow” to stimulate the island nation’s economy and Obama a diplomatic victory as well as renewed momentum for his Asia pivot.

In addition, the United States will have provided an alternative to the supposed “Beijing Consensus,” the state centered economic model championed by China’s rise that many observers in Asia predicted would gain in popularity at the expense of free markets. Read more “America, Japan Seen to Be Making Progress in Pacific Trade Talks”

American Bomber Overflights Challenge Chinese Air Control

Guam
A B-52 Stratofortress bomber leads a formation of American and Japanese fighter jets in a flight over Guam, February 21, 2011 (USAF/Angelita M. Lawrence)

America sent a strong signal on Tuesday of its position in a territorial dispute between China and Japan when it conducted bomber overflights of the Senkaku Islands. The island chain has been at the center of tensions in the Sino-Japanese relationship for some years and lies at the heart of an Air Defense Identification Zone that China declared just days ago.

Chinese authorities’ announcement of the ADIZ unilaterally requires all aircraft wishing to operate within a broad zone of the East China Sea to register their flight plans and other identifying information ahead of time. Failure to comply would, according to the government in Beijing, lead to proportionate responses from its armed forces. The implication being that this applies to the military and merchant aircraft that regularly service and patrol the Senkaku Islands which are administered by Japan and known in China as the Diaoyu Islands. Read more “American Bomber Overflights Challenge Chinese Air Control”

Global Interest in Japan’s Election, Expected to Strengthen Premier

As Japanese go to the polls Sunday to vote in elections for the upper house of parliament, all eyes will really be on the margin of victory for Prime Minister Shinzō Abe’s ruling coalition. Judging from the latest polls, and from the results of municipal elections in Tokyo last month where Abe’s Liberal Democrats won handily, the premier can expect to gain control of the upper chamber and claim a mandate for his policies that could fundamentally change the world’s third largest economy and its role in the region.

After the elections, the real drama will start. Abe will be expected to move forward and provide greater details about his plans to restructure the Japanese economy, the so-called third arrow of “Abenomics.”

In addition, Abe could change Japan’s national-security strategy which would transform the role of the military for the first time since the end of World War II. Read more “Global Interest in Japan’s Election, Expected to Strengthen Premier”