From Stephen Jacobi in Japan

President Obama’s visit to Tokyo 23-25 April should tell us whether there is a way forward with the Trans Pacific Partnership (TPP) negotiation.  It is in the nature of trade negotiations to teeter on the brink of collapse but there is concern that momentum risks being lost as the United States and Japan go head to head on the perennial issue of market access for agriculture.

A visit to Tokyo last week suggests there may be readiness on the Japanese side to offer new concessions but these are unlikely to satisfy the Americans who remain, like New Zealand, wedded to the idea of a high quality, ambitious and comprehensive agreement.  The Japanese Government continues to want to protect “sacred” sectors  – five in all including rice, dairy products and beef.   Japan may be close to concluding a negotiation with Australia with rather limited liberalisation for some of these same sectors, which will nonetheless give Australia a (hopefully) short term advantage in the Japanese market. For its part the United States has yet to reveal fully its own hand on market access given the stand off with Congress on the President’s trade promotion authority also known as “fast track”.

It is disappointing that things have come to this.  A 21^st century agreement is being held up by last century issues.  A plurilateral negotiation between 12 partners is dissolving to a series of unedifying bilateral deals.  It has been clear from the beginning that TPP was to be comprehensive and Japan knew this when they joined the negotiation.  So it may well prove to be “back to the future” for TPP.

Can this blockage be overcome?  President Obama’s leadership could be decisive – as the largest economy the United States needs to set the tone. Prime Minister Abe also needs TPP to bolster “Abenomics” and get the third arrow of structural reform loosed from its quiver.  The Australians could help by hanging tough on the need for genuine market openings or better still waiting for TPP to deliver this.   There is much more at stake than some additional tonnages of beef.  It is nothing less than the future liberalisation of Japanese economy and the future of TPP as a pathway to wider liberalisation in the wider Asia Pacific.

TPP is a high stakes game.  Those stakes are playing out in Tokyo these coming weeks.