Lawmakers, business groups balk at trade deal with protectionist Japan

A broad range of groups are expressing concern that Japan won't be able to meet the high standards of an Asia-Pacific trade deal, and are urging a careful examination of Tokyo's push to join talks.

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Business groups, lawmakers and U.S. automakers are calling on Japanese Prime Minister Shinzo Abe to provide specifics as to how he will open his nation's markets to a wide array of U.S. exports, especially autos, before the nation is given a seat at the negotiating table of the Trans-Pacific Partnership (TPP).

Abe has formally announced his nation's intent to join the 11-nation TPP trade deal talks as part of his plans to bolster Japan's economy.

While business groups, overall, say they welcome Japan's interest in joining the discussions, they are steadfast in their requirement that Tokyo adheres to the high ambitions set out so far by TPP negotiators.

Still, there are some lawmakers who are urging President Obama to deny the nation entry into the talks because of numerous trade barriers.

Sen. Debbie Stabenow (D-Mich.), co-chairman of the bipartisan Senate Manufacturing Caucus, called on the White House to bar Japan from participating until the country ends trade practices that hurt U.S. businesses and workers, especially autos.

"Opening U.S. markets to more Japanese products while Japan keeps its market closed to American automakers simply does not make sense," Stabenow said in response to Abe's announcement.

"Japan needs to take concrete, unequivocal actions to open its automobile market before it is allowed to join the Trans-Pacific Partnership.”

American Automotive Policy Council President Matt Blunt argued that because of Japan's long-term trade policies, including currency manipulation and a blockade on U.S. exports, the Pacific Rim nation should be shut out.

"This is why allowing Japan to join the TPP at this time risks unraveling the entire negotiations and will certainly delay its completion," he said.

“We urge the administration to not accept Japan into the TPP negotiations at this time."

About 50 congressional Democrats sent a letter to Obama this week, saying that despite being the third-largest auto market in the world, Japan ranks last among Organization for Economic Cooperation and Development (OECD) members in terms of auto market import penetration, at 5.9 percent in 2012.

By comparison, other OECD countries with major auto sectors, including the United States, have an import share above 40 percent.

Another major argument against Japan's entry, they say in the letter, is that the automotive sector represents two-thirds of the U.S. trade deficit with Japan.

Yet, Japanese Automobile Manufacturers Association Chairman Akio Toyoda said that "the establishment of high-level economic partnership would, among other benefits, promote free trade and provide common rules across a variety of sectors such as investment, trade facilitation and intellectual property rights, which generally advance business opportunities in the region."

"We look forward to sustained and vigorous efforts on the part of the Japanese government toward an early realization of an agreement, which can truly benefit the automobile industry," he said.

But lawmakers aren't optimistic that Japan's addition to the talks will lead to more market access for autos or any other products.

Democratic Sens. Sherrod Brown (Ohio) and Carl Levin (Mich.), who also signed the trade letter, say Japan's practices have hurt U.S. workers and companies, especially those in the auto industry.

“Japan should not be able to get away with a one-sided trade agreement that hurts our nation’s manufacturing industry," Brown said.

House Ways and Means ranking member Sander Levin (D-Mich.), who signed the letter calling for careful consideration of the request, said "we need to send a clarion call about the history of Japan’s closed market."

"It is hard to imagine how TPP negotiations could transform a perpetually closed Japanese automotive market and level the playing field for our automotive companies and their workers, particularly given the administration’s goal of concluding by the end of this year a high-standard agreement that truly opens foreign markets to U.S. exports.”

House Ways and Means Chairman Dave Camp (R-Mich.) said he remains concerned that Japan has not yet provided adequate assurances that it is fully committed to resolving the outstanding barriers to U.S.-Japan trade, especially in auto exports and insurance, "which is essential to receiving my support for Japan to join the negotiations."

"Once we get this commitment from Japan, I look forward to continuing consultations with the administration with respect to Japan’s participation in the negotiation of a comprehensive and ambitious agreement that addresses tariff and non-tariff barriers in all areas, including agriculture," Camp said.

"At the same time, Japan’s interest in joining cannot unravel the significant progress we have already made in the TPP negotiations or delay the conclusion of TPP by the APEC summit in October.”

There is a similar argument on the Senate side of the Capitol.

"It is critical that Japan demonstrate the ability and political will to undertake the strong trade commitments envisioned in the TPP before they formally join the agreement," said Finance Committee ranking member Orrin Hatch (R-Utah).

But expressing interest does not mean Japan will earn a spot in the talks, which have just concluded the 16th round of negotiations in Singapore.

During the recent discussions, the 11 member nations agreed that no nation would be permitted to wall off any sector of their economy to the trade agreement.

Still, reportedly, eight TPP nations — Brunei, Canada, Chile, Malaysia, Mexico, Peru, Singapore and Vietnam — have already given their approval to Japan's entry.

Australia, New Zealand and the U.S. have not announced their decisions.

After Abe met with Obama last month at the White House, the two nations appeared to set up a possible track to let Japan enter the discussions.

But those talks included possible exclusions and were clear that Japan would not have to agree to drop certain tariffs before entering the discussions.

“I look forward to working with USTR [Office of the United States Trade Representative] to ensure Japan meets the high-level standards of this agreement in order to guarantee that it works for American workers, businesses, ranchers and farmers," said Senate Finance Committee Chairman Max Baucus (D-Mont.).

"I’m hopeful we can build on the progress we recently made when Japan began accepting more U.S. beef exports," Baucus said.

Despite the more strident opposition, business groups and some lawmakers are open to the idea of Japan joining but expect the nation to subscribe to the high standards under negotiations.

Business Roundtable (BRT), which had recently said that Japan's entrance should be delayed until after completion of the trade deal over concerns that adding them now would derail the delicate negotiations, was more open to them joining the talks.

BRT said it welcomed Abe's decision and would support Japan's inclusion "based on their acceptance of its high standards,” said Doug Oberhelman, chairman and CEO of Caterpillar and chairman of BRT's International Engagement Committee.

“Japan’s joining the negotiations would make the TPP an even stronger engine for promoting U.S. growth, opening markets and ensuring strong two-way rules for international trade," he said.

National Association of Manufacturers President and CEO Jay Timmons said if Japan gets into the talks "it is important that the negotiations are not slowed down and countries commit to the same level of high ambition as the existing TPP countries."

"Significant work remains to ensure manufacturers in the United States gain a level playing field and concrete access in the Japanese market," he said.

Scott Paul, president of the Alliance for American Manufacturing, welcomed and encouraged Japan's interest in freer trade, but said "let's not roll out the red carpet for their inclusion in the TPP."

"Japan’s closed market, currency manipulation, and many other concerns stand in the way," he said.

Still, U.S. Chamber of Commerce President and CEO Thomas Donohue argued that Japan’s participation on the right terms would be a game-changer for the negotiations.

"If Japan is ready to engage in the negotiations on the same terms as the other participants and ongoing consultations yield progress on outstanding concerns with the United States, then its goal of becoming a TPP partner should be considered favorably," he said.

“It is vital that Prime Minister Abe’s positive announcement be followed by a strong and sustained commitment to market-opening reforms and a willingness to put all issues on the table in the negotiations, as the other TPP partners have done."

The National Foreign Trade Council (NFTC) also urged negotiators to maintain their commitment to complete a high-standard, comprehensive agreement.

"For this to happen, Japan must be committed to dismantle deeply rooted tariff and non-tariff barriers to trade in key sectors, including autos, insurance, pharmaceuticals and agriculture," said Chuck Dittrich, NFTC's vice president for regional trade initiatives.

“Japan must continue to reorient its engagement with the United States and other TPP partners for the agreement to reach its full potential,” said NFTC President Bill Reinsch.

“The administration has made clear that it would like to see a conclusion of the negotiations this year, so as the United States and other TPP partners seek to expand membership further, it is critical to maintain momentum while still abiding by the core commitment to a comprehensive agreement that precludes no sector and addresses all issues relevant in today’s integrated global economy.”