Tokyo signals U-turn on TPP, moves to activate trade pact sans U.S.


In an apparent shift, Tokyo plans to push forward talks for activating the Trans-Pacific Partnership agreement without the United States, which withdrew from the multination trade pact in January after President Donald Trump said he would instead pursue bilateral trade deals, a government source said.

With the China-excluding pact, inked last year as part of an effort toward high-level trade liberalization, currently adrift after America’s exit, Japan has stepped up to take the lead in making sure the massive trade deal takes effect among the remaining 11 members, the source said Saturday.

The 11 members are expected to begin discussing the issue at a meeting of chief negotiators in Canada early next month. Their trade ministers will also meet in Vietnam later in May on the sidelines of an Asia-Pacific Economic Cooperation gathering.

Tokyo was reluctant to let the TPP take effect without the U.S. — the biggest market in the scheme — amid concerns that doing so would provide few tailwinds for automakers and other Japanese exporters .

But with free trade perceived as being under threat amid the rise in protectionist sentiment driven by Trump’s election, calls have been growing from the government for Japan’s leadership to maintain momentum on free trade issues.

On Saturday, Chief Cabinet Secretary Yoshihide Suga signalled that Tokyo was ready to proceed with the TPP’s implementation while softening any pushback from the U.S.

“We have a feeling that the 11-nation framework should be given weight,” Suga said in an interview.

Amid the uncertainty, Japan, which is aiming to expand free trade to bolster its export-oriented economy, has also been promoting talks on the China-led 16-member Regional Comprehensive Economic Partnership, which does not include the United States.

Analysts, however, have voiced concern that high-level trade regulations may not be established under RCEP since Beijing, the grouping’s largest economy, might seek to impose its own rules on the Asia-Pacific region.

The TPP was signed in February 2016 by Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam, and covers around 40 percent of the global economy.

Under the current rules, its implementation requires ratification by nations accounting for 85 percent of the combined gross domestic product of the 12 member countries. The deal was therefore effectively dead after the U.S. — which represents over 60 percent of the trade bloc’s GDP — withdrew.

But Trump, who took office in January pledging to pull the United States out of what he had labeled a “job-killing” free trade pact, has not opposed the remaining 11 nations following through on it.

One idea being considered to lower the threshold for activation envisions a separate protocol to allow the TPP to be applied to any remaining member that agrees to it, the source said.

The government of Prime Minister Shinzo Abe plans to finalize its position on the TPP after considering the outcome of a high-level Japan-U.S. economic dialogue set to be held in Tokyo on Tuesday, the source said.

Those talks will be led by Deputy Prime Minister and Finance Minister Taro Aso and U.S. Vice President Mike Pence, who are scheduled to discuss infrastructure investment, trade rules and macroeconomic policy.

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