Some rather strong anti-TPP (the Trans-Pacific Partnership free trade agreement) headlines prevail in Japan these days, such as “Only Fools and Traitors Favor the TPP” (monthly magazine Will, January 2012). Book titles employ equally negative expressions, including A Policy Full of Faults, Taken in by the US, and A Fraud Called the TPP.

　　　Obviously, the editors who came up with these headlines are seriously concerned in their own way about the future of Japan based on their views on the nation’s interests. However, it must be understood that Japan faces a most critical geopolitical situation at this juncture. Without approaching the questions pertaining to Japan’s TPP participation with absolute coolness of mind, one may inadvertently find himself in a position advocating a policy detrimental to Japan’s national interests.

　　　Conspicuous in the arguments against Japan’s participation is an assertion that the TPP is “a US plot” designed to inundate the Japanese markets with American goods and services. The anti-TPP camp in Japan bases such claimsﾂ黴€on a pledge to double US exports in the five years leading up to 2014 made last year by US President Barak Obama in Yokohama during the Asia Pacific Economic Conference ( APEC). In order to achieve this goal, those opposed to the TPP assert, the US is out to control the Japanese market on its own terms.

　　　But how could TPP negotiations possibly lay down such rules as would arbitrarily allow the US to control Japan? Needless to say, the US alone cannot establish TPP rules. They are ultimately established through tough rounds of multi-national negotiations. In point of fact, these negotiations are fierce battles with the vital interests of all the negotiating nations at stake. Therefore, no matter how strong American influence may be, the negotiators are expected to eventually arrive at a mutually agreeable set of conclusions, taking into consideration each other’s national interests to the best of their ability.

　　　Suppose the US still attempts to set self-serving rules arbitrarily. Under such circumstances, other nations will likely turn away from the US and consider shifting to form an entity different from the TPP -€ such as ASEAN+3 (ten ASEAN nations plus China, South Korea, and Japan), or ASEAN+6, including Australia, India, and New Zealand.

　　　In fact, fretting over Japan’s belated decision to enter into TPP negotiations, China switched its stand, abruptly starting to show a positive attitude towards free trade negotiations with Japan and South Korea, as well as with ASEAN+3.

　　　One positive aspect of multi-national negotiations is that a big power cannot always have its own way. That is why it is absolutely important for Japan to participate in the negotiations as soon as possible so it can propose rules aimed at safeguarding its own interests.

Japan to be Taken in by the US?

　　　One hears voices expressing concern that there is no knowing what unfavorable conclusions Japan will have to accept once it enters into TPP negotiations. However, there is no negotiation that plainly shows its outcome from the outset. One does his utmost to win the best possible results;that is what negotiations are all about.

　　　I wish to urge those who are too readily terrified of Japan’s chances of being taken in by the US under TPP rules to bear in mind that these rules will be applied equally to all of the participating nations. I am not sure which rules these people refer to when voicing their fear of the US stripping Japan of its wealth. But isn’t it rather illogical to claim that Japan alone will be the “victim” since the same rules apply to the US as well under the TPP framework?

　　　It is the FTAAP (Free Trade Area of the Asia Pacific) that APEC, created in 1989 by a group of Asia-Pacific nations with Australia and Japan playing the central role, is striving to materialize by 2020. The TPP is one realistic step towards clearing the way to the FTAAP, which Japan has already agreed to pursue as part of its grand national objective. When APEC, in which Japan continues to play a significant role, agreed on the FTAAP as an objective, virtually no fears or criticisms were voiced in Japan. I find it extremely difficult to comprehend why there has been such furious opposition to the TPP in Japan, which is one very realistic step towards the FTAAP.

　　　I also do not find the claim very convincing that the US is out to conquer the Japanese market in order to successfully double its exports by 2014, as earlier mentioned. Canada constitutes the largest export market for the US, accounting for 19% of its total exports, followed by Mexico (13%), China (7%), and Japan (fourth place at 5%).

　　　Compared with other nations which have long made clear their readiness to pursue the TPP by participating in the negotiations -€ such as Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, and Vietnam -€ Japan occupies an extremely important share of the US export market. But it simply does not make sense for the US to target Japan, which accounts for only five percent of the total US exports, as the single market in which the US can expect to double its total annual exports by 2014.

　　　Further, it is worth mentioning that much of US exports to Japan are industrial products, on which Japan already levies lower tariffs -€ between 2.5% to 3%. So, even if Japan has to eliminate tariffs altogether within the TPP framework, it would be unthinkable for US products to achieve superiority over Japanese products suddenly and dramatically, dominating the Japanese market.

　　　Meanwhile, agricultural and food products represent approximately 18 percent of US exports bound for Japan, with grains topping the list. TPP or not, the effect will be negligible on Japan in this area, as Japan has already eliminated tariffs on grains such as corn.

“TPP Study Group Report” by a Private Think Tank

　　　Meanwhile, the Japanese cattle industry will certainly be affected when tariffs are removed, as Japan currently imposes high tariffs on imported beef. Even so, however, Japanese should remember that high-quality Japanese beef can be exported overseas tariff-free and competitively. Remember, the rules are reciprocal. The TPP is not expected to establish rules under which only one single nation becomes triumphant. That is why the US dairy industry, fearful of possible export offensives from Australia and New Zealand, is opposed to the TPP. Similarly, the US sugar industry has expressed bitter opposition, as is generally known, and is believed to be working out measures to put sugar on the list of exceptions to tariff elimination during the on-going TPP negotiations.

　　　The controversial ISDI (Investor-State Dispute Settlement) provisions to be stipulated in the TPP agreement have attracted strong criticism and opposition in Japan. These provisions permit investors to sue foreign governments when their businesses are negatively affected due to unfair policies imposed on them. I find the “TPP Study Group Report” -€ a report on discussions conducted by the Canon Institute of Global Studies, a private Tokyo think tank affiliated with Canon Inc., perhaps the most comprehensible, fact-based analysis of the functions of the ISDI. Allow me to introduce its explanations of the provisions (from pages 34 to 36 of the 55-page Japanese-language report):

　　　●The state will be sued for violation of ISDI provisions only when it engages in a “drastic act of plunder” tantamount to abruptly nationalizing the property of a foreign enterprise;

　　　●The 2000 “Metalclad dispute,” which those opposed to the TPP fondly refer to, is a case in which the Mexican government was sued under the provisions of the North American Free Trade Agreement (NAFTA) -€ by the hazardous waste treatment company Metalclad Corporation of Newport Beach, California. In this case, an international tribunal ruled that the Mexican government clearly had given arbitrary and discriminatory treatment to the US company, failing to protect its rights as a foreign investor;

　　　●The 2007 “MＭT dispute” also involved NAFTA. In this case, the Canadian government was sued by the US fuel manufacturer Ethyl Corporation, headquartered in Richmond, Virginia, for arbitrarily imposing an unfair burden on a foreign investor by banning the transport and use of the toxic gasoline additive MMT under a new Canadian environmental law. Prior to this case, the Canadian government had already been sued by a provincial government for arbitrarily imposing the ban and violating domestic legal procedures. In this instance, too, the state lost the case.

　　　In other words, foreign investors can sue the state only when the government takes unmistakably unjust measures targeting foreign corporations. So long as the TPP establishes these rules, it would then be possible, when China becomes a signatory, for instance, for Japanese corporations operating in China to sue the Chinese government for unfair and discriminatory policies and measures against them. I would think Japan ought to be quite pleased with such a turn of events.

　　　That is why I stress that now is really the time for genuinely rational thinking.

(Translated from “Renaissance Japan” column no. 489 in the December 15, 2011 issue of The Weekly Shincho.)