The United States on Friday approved Japan's entry into negotiations on the Trans-Pacific Partnership, a critical step for Tokyo's inclusion in a regional trade pact that underpins the Obama administration's efforts to boost exports to Asia.
Acting U.S. Trade Representative Demetrios Marantis said in a statement that the U.S. and Japan have agreed on robust actions in the automotive and insurance sectors, as well as other non-tariff measures — key areas of U.S. concern. But they will need to hold further negotiations in parallel with the TPP talks to further iron out their differences.
Japan's admission into the TPP negotiations still requires approval from the other 10 nations involved, and "the completion of our respective domestic processes," the statement said.
U.S. lawmakers quickly insisted that Japan lift barriers to U.S. exports. Michigan Republican Rep. Dave Camp, chairman of the powerful House Ways and Means Committee, said he would not endorse Japan's participation without assurances it wouldn't diminish the scope of the negotiations or delay the goal of concluding the negotiations this year — already viewed as a tough deadline.
Providing the other nations endorse Japan's participation, Friday's announcement could pave the way for it to join the next round of TPP negotiations in July.
The pact aims to reduce duties on a wide range of goods and services and ease regulatory and other non-tariff barriers to trade. Marantis told reporters Japan's entry into the pact will help promote it as "the most promising pathway to achieving a free-trade area in the Asia-Pacific."
Japan is the world's third-largest economy, and the U.S. aside, its GDP exceeds the combined total of the other participating nations: Australia, Canada, Malaysia, Mexico, Vietnam, Chile, New Zealand, Brunei, Singapore and Peru. If Japan is admitted, the TPP countries would account for nearly 40 percent of global GDP and about one-third of all world trade.
China, the world's second-largest economy, is not taking part.
Japanese Prime Minister Shinzo Abe announced his country's intent to join TPP just a month ago as part of efforts to revive a long-slumbering economy. But he still faces considerable domestic opposition to the pact, not least from Japan's heavily subsidized farmers, who are a traditional bastion of support for the ruling Liberal Democratic Party.
There has also been grumbling in the U.S. Congress and among auto producers, with critics saying that Japan exports 120 automobiles to the U.S. for every American vehicle sold to Japan, and that an undervalued yen is giving an unfair advantage to Japanese producers.
In a sign of progress, Friday's statement said that Japan has agreed to more than double the number of motor vehicles eligible for preferential imports.
Reaction from lawmakers to the administration's announcement was mixed.
Sen. Orin Hatch of Utah, senior Republican on the Senate Finance Committee, said Japan's entry into negotiations would represent a historic opportunity to open up one of the world's largest export markets where American products have faced barriers for decades. But Democratic Sen. Debbie Stabenow of Michigan warned she would urge the president and Congress not to ratify the trade agreement unless Japan stops blocking U.S. companies.
"Any agreement that allows Japan's businesses to continue playing by one set of rules while ours are forced to play by another will cost us jobs, and I will do whatever I can to stop it," she said.
Stabenow said the U.S. trade deficit with Japan is $76 billion, higher than with any other nation except China.
"The bottom line is Japan must address its longstanding tariff and non-tariff barriers to U.S. exports — in particular on autos, insurance, and agriculture," Camp said.
The U.S. and Japan have agreed to address further issues in the automotive sector and on non-tariff measures in separate bilateral negotiations that will be conducted at the same time as the TPP talks. Marantis said the U.S. will not be able to "close" with Japan on the TPP unless it can finalize these parallel negotiations, too.