As next November’s APEC summit gets closer, it is increasingly clear that Washington and Tokyo are not quite on the same page with respect to trade policy. It is also unclear how the two governments will manage this rather uncomfortable diplomatic dilemma.
At issue: The Trans-Pacific Partnership (TPP) trade initiative, which President Obama would like to make a centerpiece of the APEC meeting, to be held in his home state of Hawaii. But Japan’s new prime minister, Yoshihiko Noda, while supportive of TPP, has not yet been able to forge a consensus in Japan’s leadership circles in full-favor of the changes in the country’s agricultural policies that TPP involvement would entail.
The result is a mixed message from Tokyo, reflective of ongoing domestic policy debates:
First: Tokyo will give a tentative ‘yes’ to participate in the TPP negotiations, but with no prior commitments; as one Japanese official put it: “We want to find out more about TPP.”
Second: Japan will simultaneously proceed with separate free trade talks with China, South Korea, and the European Union, completely outside the TPP framework.
US officials are not happy, though some express sympathy with Noda’s domestic realities, while others – particularly those closer to Obama’s inner circle – are upset that Japan is proving ‘difficult’ at a time when a politically-beleaguered Obama very much wants to showcase his skills at job-producing economic diplomacy in Asia.
CONFLICTING AGENDAS: Obama and Noda have conflicting agendas, though the differences are nothing close to strategic in nature, and might not be irreconcilable. The problem is political and diplomatic: Obama is entering full-fledged reelection mode, and Noda faces huge domestic policy challenges. Diplomats on both sides will be working overtime between now and the APEC summit to make sure the signals sent from each side are consistent; allied.
After APEC comes an expected Washington visit by Noda, probably in January, fulfilling a long-overdue commitment from the two countries for their respective leaders to get together.
For the Obama administration, the APEC summit was supposed to be the unfolding of a big US strategic policy shift, away from over-commitment to Southwest Asia (Iraq, Afghanistan), in the wake of the 9-11 terrorist attacks, and towards East Asia. For Obama personally, the APEC meeting was to have carried great personal significance: He is the first US president with such deep roots in East Asia; he wants to end one difficult chapter in US foreign policy, and finally bring the US into the much-hailed “Pacific Century,” which means heavily distributing US economic and military ‘hard’ and ‘soft’ power toward the region facing the historic rise of China.
Today, with his political troubles at home well-known, Obama needs to show that his cherished vision for a new US role in Asia will deliver jobs at home.
Noda, meanwhile, faces his own set of difficult domestic problems: He’s young, in charge of a ruling Democratic Party of Japan (DPJ) that has yet to prove it can effectively govern; the country’s national finances are in trouble, just when the nation needs to raise funds to rebuild the Tohoku region ravaged by last March’s horrendous tsunami; and the country faces a huge energy crisis, with public confidence in nuclear-generated power understandably shaken by the tsunami-induced crisis at the Fukushima electric facility.
Noda is compelled to focus on domestic issues. But he is proving to be a lot more shrewd than many analysts initially expected.
On TPP: Noda supports opening up Japan’s agricultural markets. Along with many reformists in Japan, including his predecessor, Naoto Kan, Noda believes agricultural reform is inevitable, and will bring many economic benefits. But he is hamstrung by domestic reality: It will take time to bring his own party, much less the whole of Japan’s ruling elite, into agreement.
But the commitment is not in doubt: Noda has maintained 200-plus person TPP team inside the prime minister’s office (Kantei), led by a veteran Foreign Ministry official but backed by key politicians, assigned the task of achieving a consensus. The key is to link opening up the agricultural market with a big program to modernize areas that might be significantly hurt by increased agricultural imports. This is a work in progress.
Beyond TPP as an economic policy, Noda maintains Kan’s view in three key respects:
First: TPP is a strategic policy; Japan and the US together should be setting the trade economic, and overall political-security agenda in Asia, to which China would then have to respond.
Second: Japan cannot go ahead with the existing plans for construction of a new US Marine facility in Okinawa. But to say so would risk terrible tension in US-Japan relations, which neither Noda nor Japan needs at this time.
Third: As a result, support for TPP has the potential benefit of winning US willingness to reduce pressure on Okinawa issues.
IMPLEMENTATION: With all of these moving, legitimate considerations on each side, diplomats will have to burn the midnight oil to avoid tensions from boiling over.
US officials, as they often say, are not clear who is running the show in Tokyo. For example: In the last week alone, the new minister for national strategy, Motohisa Furukawa, was in DC, meeting with top US officials (including Fed Chairman Ben Bernanke). Furukawa endorses both TPP and the plan to build the new US base on Okinawa.
By contrast, Japanese trade officials last week told their US counterparts in Washington about plans to move ahead with FTA talks with China, the ROK, and the EU. For Japan’s agriculture lobby, beef, sugar, wheat, and rice remain key, and the planned FTA talks would supposedly pose less of a domestic threat than would TPP.
Other key Japanese officials were also in DC last week, including a top national security advisor to Noda, who conveyed the “yes, but” position on TPP that seems to be Noda’s actual perspective at this point.
The US and Japan are by no means strategically out of alignment. But conflicting domestic agendas on the part of the respective national leaders may make for some tense moments over the next few weeks and months. And if serious disagreements do emerge before the expected Washington summit, they are likely to revolve more around Okinawa and the US Marine presence, than about trade issues.