From World Trade Online

From World Trade Online

Separately, Japanese Chief Cabinet Secretary Yoshihide Suga said in an April 11 press briefing in Tokyo that the two sides are “getting to the final stage as to what should be the plan going forward.”

The bilateral U.S.-Japan consultations have focused on trade issues related to automobiles, insurance and other non-tariff barriers, although it is unclear which non-tariff barriers outside these two sectors the U.S. is seeking to address. On automobiles, Japan had proposed an increase to the number of cars it would allow to be imported under expedited import procedures (Inside U.S. Trade, March 15).

A final announcement between the U.S. and Japan could also coincide with an announcement from Canada, which is expected to give Japan its support for joining the ongoing TPP negotiations. Canadian Trade Minister Ed Fast is in Tokyo this week, where he met yesterday (April 11) with Japanese Minister of Economy, Trade and Industry Toshimitsu Motegi and today (April 12) with Akira Amari, the Japanese minister in charge of TPP affairs.

“Of course we are expecting the Canadian government will give us a green light,” the Japanese official said. Japan is also currently involved in the early stages of bilateral trade negotiations with Canada, with one round having taken place already. The Japanese government announced yesterday that the second round will take place April 22-26 in Ottawa.

The expected announcement from the U.S. and Canada would come just days after Mexican President Enrique Pena Nieto gave his country’s approval for Japan’s entry into TPP talks in a meeting with Japanese Prime Minister Shinzo Abe on April 8. In an April 8 Spanish-language statement, the Mexican president expressed his support for Japan’s rapid entry into the talks. Japan and Mexico also held lower-level TPP consultations on April 4. The progress with the U.S., Canada and Mexico are the latest signs that, as expected, Japan is quickly securing support from most TPP members with the goal of participating in a potential July round of talks.

One complicating factor is the 90-day U.S. congressional notification period that has to elapse before Japan can officially join the talks. Sources have said the Obama administration’s notification to Congress will only occur after consensus has been reached among all 11 TPP members to let Japan join.

Last week, Japan secured the support of Chile after the two sides discussed Japan’s bid in an April 2 meeting. Japanese officials also met with their Peruvian counterparts on April 3. Although Lima said it needed to continue consultations further, the Japanese government source downplayed the idea Peru would oppose Japan joining and said there are no specific issues that are subject to negotiation.

Singapore, Malaysia, Vietnam and Brunei have already endorsed Japan’s bid to join TPP.

Australia and New Zealand have also not yet approved Japan’s participation, but the Japanese government official indicated that there are no specific issues these two countries are seeking to resolve with Japan. He signaled that these countries could publicly offer their support for Japan’s entry after the U.S. makes a decision.

The official said the Australian government has not made a specific demand that a bilateral free trade agreement be concluded before Japan can participate in TPP. The Australian Chamber of Commerce and Industry last month called for the FTA to be completed as a confidence-building measure before Japan is allowed to enter TPP, a demand echoed this week by Australian agriculture sources (Inside U.S. Trade, March 15).

Australia’s ambassador to Japan, Bruce Miller, met with Amari on April 9 to discuss issues related to Japan’s entry to TPP and the bilateral FTA. The two countries began negotiating the Economic Partnership Agreement (EPA) in 2007 under Abe’s previous term as prime minister.

“I think the Australian government would be quite enthusiastic about the conclusion of the Japan FTA, and then use that as a stepping stone to TPP,” Bryan Clark, director of trade and international affairs for the Australian Chamber of Commerce and Industry, said in an interview.

Clark said Australia wants access to Japan’s dairy and beef markets while Japan seeks an elimination of a 5 percent tariff on automobiles in Australia. However, he said any potential breakthrough on these issues could be stymied by Australia’s current stance against commitments on an investor-state dispute settlement mechanism, which Japan is seeking to include in the bilateral deal.

Australian dairy producers want the bilateral deal to be concluded prior to Japan’s TPP entry in order to secure some level of market access, according to an industry source. Australian producers are keen to get a foothold in the Japanese market before Japan enters potentially complicated market access talks with other major dairy producers in TPP, this source said.

If Japan agrees to some level of market access on a sensitive agricultural good, that would be the best way for Tokyo to demonstrate that it is serious about making concessions in TPP, according to this source. Japan-Australia negotiations broke down after the 16th round of talks last June, but this source said Abe, who initiated the talks in 2007, might have a personal interest in seeing them conclude in the near term.

New Zealand Trade Minister Tim Groser last month said he welcomes Japan’s participation in the talks as long as it commits to a comprehensive approach toward tariff elimination without exclusions, even on sensitive items like dairy products, a major New Zealand export interest (Inside U.S. Trade, March 29).

One New Zealand industry source downplayed the idea that New Zealand would demand specific measures from Japan as a condition for joining. This source noted that New Zealand’s main interest is agriculture, which is a topic that Tokyo will have to negotiate in detail with all TPP members. The U.S., by contrast, is demanding progress upfront on issues like automotive trade, which is really only relevant for the U.S., this source noted.

Time is running out for Japan to secure the support of all TPP members by the time of the April 20-21 Asia-Pacific Economic Cooperation (APEC) meeting of trade ministers, which Japan sees as a possible venue for announcing that consensus has been reached among all TPP members on Japan’s participation. Such an announcement at APEC could enable Japan to participate in a possible round of talks in late July, observers have noted.

However, sources said it may be difficult to schedule a round during July due to the fact that Ramadan — the Islamic holiday during which Muslims fast from sunrise to sunset — is expected to begin on July 8 and conclude on August 7. It may be difficult for some negotiators to participate in a TPP round during this time. Malaysia and Brunei, both TPP participants, are majority-Muslim countries.