Japan waits to deal direct with Canada on trade, not ready to abandon TPP: envoy
OTTAWA – Japan wants Canada to join the fight against rising American protectionism, but that doesn’t extend to reviving its own direct trade talks with Canada, says the Japanese ambassador.
Envoy Kenjiro Monji says Japan is still determined to save the 12-country Trans-Pacific Partnership, despite president-elect Donald Trump’s vow to take the United States out of it. Japan hopes that Trump can still be persuaded to back off from his opposition to TPP before his Jan. 20 inauguration.
Japan and Canada hoped to deepen their economic ties through their joint membership in the massive Pacific Rim trade deal that would have brought together 40 per cent of the world’s economy.
Canada has for years set its sights on increasing trade with Japan, the world’s third-largest economy, but the two countries set aside work on a bilateral trade agreement in 2014 as the TPP talks progressed.
But Trump’s declaration this last week that he will begin the U.S. withdrawal from the TPP on Day 1 of his presidency appears to have killed the pact, because the U.S. accounts for more than half of the GDP of its 12 members.
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TPP’s rules dictate that the deal can’t go ahead unless it has the backing of countries making up 85 per cent of the pact’s GDP — simple arithmetic that effectively gives the U.S. and Japan the power to kill it.
Despite that, Monji said the agreement is not officially dead and, until it is, reviving talks in the Canada-Japan Economic Partnership Agreement could send the wrong signal to Trump.
“We are not forgetting the bilateral Economic Partnership Agreement,” Monji said in an interview.
“It’s not the right timing to talk about bilaterals.”
Canada and Japan held seven rounds of two-way trade talks between 2012 and 2014. Leaked government documents obtained by The Canadian Press showed that Japan rebuffed Canadian requests for an eighth round in 2015.
Prime Minister Shinzo Abe has said the TPP is “meaningless” without the U.S. However, the Japanese leader has spent much domestic political capital to win support for the deal, so any outright abandonment of the deal would be a major setback for him.
Australian Prime Minister Malcolm Turnbull has said he would like to find a way for the TPP’s other 11 countries to find a way to revive a version of the pact.
Chrystia Freeland, Canada’s international trade minister, has said there’s no way the TPP can come into force without the U.S.
Freeland’s spokesman Alex Lawrence said the minister has “discussed trade opportunities” with her Japanese counterparts, including at last week’s APEC summit in Peru. But he stopped short of characterizing that as anything resembling bilateral trade negotiations.
“Japan is a long-standing and important partner for Canada,” Lawrence said.
“We will continue to explore ways in which we can expand our commercial relations and our progressive trade agenda with the Asia-Pacific region.”
The head of one of Canada’s most influential business groups urged the government to take a closer look at Japan in light of Trump’s stated intention to ditch the TPP.
“Prime Minister Abe has spent a lot of capital on TPP,” John Manley, president of the Business Council of Canada, said in an interview. “This is a serious setback for him, and for his agenda in Japan.”
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Manley said that on a recent trip to Japan with Canadian business leaders, he received clear signals that Japan’s priority was to deepen ties with Canada through the TPP.
Now, he said, the economic landscape has changed. Japan has a stagnant economy and with its fiscal policy stalled and the country’s resistance to immigration, “the only growth avenue is trade.”
Creating a new version of the TPP will be difficult, he said, because the talks were prolonged and it is never easy to find agreement among nearly a dozen countries.
“To try to say ‘not TPP, but something that looks like it,’ I just don’t think that’s going to fly.”
Conservative trade critic Gerry Ritz has urged the government to purse a TPP alternative without the U.S. in light of the support of its other member countries.
“A TPP agreement including Japan is far superior to a Canada-Japan bilateral agreement,” Ritz said this past week.