6 June 2013

For Immediate Release

US terms for Japan’s entry holds Japan and TPPA to ransom

‘The bon homie bound to be shown between Japan’s Foreign Minister Fumio Kishida and his New Zealand counterparts this week should not disguise the realities of the Trans-Pacific Partnership Agreement in Japan’, warned Professor Jane Kelsey who has just completed a week’s tour of Japan at the invitation of coalitions opposed to the TPPA.

‘The terms of Japan’s entry are effectively a surrender to the US, which has secured two sets of parallel negotiations that will potentially hold the TPPA talks hostage to securing its desired bilateral outcome from Japan.’

Proposed new US Trade Representative Michael Froman has said these talks will operate on the same time frame as the TPPA and the US will not close with Japan on TPPA unless it has what it wants.

These parallel talks are separate from the deeply fraught question of market access for agriculture in the TPPA, where the US will be caught between wanting to give Japan flexibility to justify its own selective approach on agriculture and demanding that Japan surrenders to US agribusiness interests.

Very different explanations of the terms for Japan’s participation have been released in the US and Japan. Key players in Japan have been led to expect that five groups of sensitive agricultural products will be excluded, including dairy.

It is unclear what the US approach means for the broader negotiations.

‘Clearly, from the US perspective the TPPA has now become a bilateral FTA negotiation with Japan. This leaves the rest of the TPPA countries, including New Zealand, as onlookers, despite Tim Groser’s claims that New Zealand will not agree to any exceptions for Japan’s agriculture’.

‘No one should underestimate the internal resistance to US demands in Japan, let alone those from New Zealand - even assuming the Abe government survives for the duration of the TPPA and parallel bilateral negotiations’, according to Professor Kelsey.

The faction opposed to the TPPA in the governing LDP party agreed to Japan joining the talks, but set six tough conditions to protect the national interest in any final deal.

‘Despite media reports suggesting the Abe government will roll any internal dissent, the anti-TPPA faction in the LDP is resolute about these conditions’, said Professor Kelsey, who met with the Diet member leading the group while in Tokyo.

Explanation:

Because of a 90 day notification requirement in the US, Japan can only join the final two days of the July round of TPPA negotiations in Malaysia from 15 to 25 July.

As with Mexico and Canada, Japan had to accept all the text that the other parties have so far agreed, even though it will not be allowed to see that text until 23 July.

In a display of bad faith, a series of inter-sessional meetings are now planned to try to close as much of the text as possible before Japan joins.

As a term of agreeing to Japan’s entry, the US demanded that Japan make down-payments that facilitate the entry of more US motor vehicles and a moratorium on approving the sale of new cancer and other medical insurance products by Japan Post Insurance.

The Abe government has agreed to two further sets of bilateral negotiations that will run parallel to, but separate from, the TPPA itself.

One will cover a long list of US demands on automobiles, including testing and standards, distribution, financing, and participation by the US industry interests in Japan’s domestic regulatory decisions. This side agreement would become enforceable through the TPPA dispute process.

The second parallel talks involve a raft of ‘non-tariff measures’, including insurance, investment, intellectual property, food and other technical standards, government procurement and competition policy. These would be implemented in various ways, including requirements for Japan to change its laws.

The non-tariff measures covered in the parallel talks are also subject to TPPA negotiations, and it is unclear how a US deal with Japan would interface with rules being developed in the TPPA talks themselves.

Obama’s proposed new Trade Representative Rob Foreman said in a press conference on 31 April 2013 that outcomes of the parallel talks would have to be implemented before the US brought the TPPA into effect in relation to Japan. He fudged the answer when asked if that meant the whole agreement would be blocked if there were no agreement with Japan in these parallel talks.

These parallel talks are additional to the negotiations on market access for agriculture. The US has insisted these are negotiated bilaterally with countries that do not currently have US FTAs.

The Japanese language version of the bilaterally agreed terms for Japan’s entry implies the exclusion of five groups of agricultural products: rice, sugar, dairy, wheat and barley, beef and pork. The US version merely notes that Japan has sensitivities in agriculture, as does the US in manufacturing.

The LDP identified six items that were essential to protect the national interest: exemption of tariffs on agricultural, forest and marine products;
1. protection of safety and environmental standards and removal of US tariffs for automobiles;
2. maintenance of universal health insurance coverage and the public drug price system;
3. food safety standards, including food labelling, GE and BSE beef standards;
4. exclusion of investor-state dispute settlement; and
5. maintenance of Japan’s approach to financial services, including insurance and Japan Post.

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