Japan to enter talks toward Pacific Rim free trade

Associated Press

TOKYO (AP) — Prime Minister Yoshihiko Noda said Friday that Japan will participate in talks on joining a U.S.-backed Pacific Rim free trade zone, a decision strongly opposed by farmers who say the move will ruin them.

He said that joining the Trans-Pacific Partnership talks will allow Japan to tap into the region's dynamic growth.

"I've decided to start discussion with related countries toward joining TPP negotiations at the APEC summit in Honolulu," Noda told a news conference the night before he was leave for Hawaii. "I believe joining the talks would serve our national interest."

Noda's announcement was delayed by a day and comes after intense debate within the ruling party, which was deeply divided on the issue.

Big exporters say that joining the trade bloc would allow them greater access to foreign markets, promote regional investment and keep Japan competitive. But heavily subsidized farmers worry that slashing tariffs on rice and other agricultural goods would drive them out of business.

Protected by decades high duties on imported rice (778 percent), wheat (252 percent) and butter (360 percent), farmers say they would not be able to compete with huge American and Australian farms. Although agriculture accounts for just 1.5 percent of Japan's economy, farmers have an outsized influence in parliament because of the way rural districts are represented.

Noda admitted that the way he worded the decision slightly backtracked from a clearer announcement to join TPP to show his consideration to the divisive issue.

"I'm fully aware that TPP could provide a big merit but is also causing tremendous concerns," he said. "We will defend what we must protect, and try to win what we should gain."

But he added, "Japan must tap into the Asia-Pacific region's growth in order to pass on our prosperity, which we have built as a trading nation, to the next generation."

The U.S., Australia, Malaysia, Vietnam and Peru are currently negotiating to join the bloc, which already brings together the smaller economies of Chile, New Zealand, Brunei and Singapore.

Noda had said he wanted to make a decision on whether to join the bloc before the APEC summit, where President Barack Obama will host 20 other regional leaders. He said he planned to inform Obama and other participants about his decision during the meeting.

Some APEC members see the TPP as a building block for a free trade area encompassing all of Asia and the Pacific that would comprise half the world's commerce and two-fifths of its trade.

Proponents say participating TPP will jolt Japan's moribund economy, burdened by a surging yen and shrinking population, and allow Japan to tap into Asia's burgeoning growth. They also say Japan still have a say in crafting the agreement if it joins now at the last minute.

Japan is worried about falling behind regional rivals in trade liberalization. Only 16 percent of Japan's trade is covered by free trade agreements, compared with 71 percent for Singapore and 36 percent for South Korea — if a deal with the U.S. is ratified by the Korean legislature.

Critics say it is bad timing to introduce more competition as Japan is still recovering from the March tsunami and nuclear crisis.

Some U.S. lawmakers are wary about including Japan in the trade talks.

Earlier this week, Sen. Carl Levin, prominent Democratic senator, urged Obama in a letter to oppose Japan's entry unless it opens its domestic auto market.

Levin, who represents Michigan, the heart of the U.S. automobile industry, accused of operating a one-way trade policy in which it exports millions of automobiles annually but retains nontariff barriers that stifle foreign competition at home.

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Associated Press writer Malcolm Foster contributed to this report.

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