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Japan Says It Will Open Up Economy

posted on November 12, 2010


A policy paper released Saturday reflects Japan's concerns that it is falling behind in forging free trade deals. It says Tokyo will work to wrap up pending negotiations with Australia and Peru, resume suspended trade talks with South Korea, and seek new talks with other countries or regions.

"If Japan's trade and investment environment becomes less attractive than the environment in other countries, there is a possibility that future employment opportunities will be lost," the paper on comprehensive economic partnerships says.

The document, produced by a wide range of ministries, represents new government policy and will be formally adopted by the Cabinet this week, Noriyuki Shikata, a spokesman for Prime Minister Naoto Kan's office, said Sunday.

The document was released ahead of an Asia-Pacific Economic Cooperation summit that Japan is hosting in Yokohama next weekend, where leaders of 21 economies will explore the possibility of a Pacific-wide free trade area. As host, Japan should show leadership to pave the way for realizing this goal, the paper says, although some APEC members are balking at the idea.

Tokyo says it needs to gather more information about a U.S.-backed trade agreement called the Trans-Pacific Partnership that Kan's government is considering joining, but that it will begin consultations with some TPP members.

Japanese farmers are opposed to the TPP because they worry that cutting import tariffs will ruin them.

More broadly, the paper says Japan faces a "watershed moment" and needs to deepen ties with emerging economies as huge structural changes in the global economy are causing its own economic status to decline.

"Recognizing this, the government of Japan is absolutely resolved to 'open up the country,'" it says.

However, it doesn't get very specific beyond saying Tokyo would be more aggressive in promoting more free trade deals and that it would press ahead with domestic reforms, including in agriculture.

The paper recognizes the potential adverse impact on farmers. It suggests that Japan needs to overhaul its farming policy, adding that with its population of farmers aging, agriculture in Japan might not be sustainable in the future.

It does not make specific proposals, but says the government would develop a basic policy stance by next June and draw up an action plan with longer-term views by next October.

In general, the ruling Democratic Party has weaker ties with the farming lobby than the conservative Liberal Democratic Party governments that ruled Japan for most of the post-World War II era.

So in its willingness to reform farming and its increased openness to free trade, the paper represents a change from the LDP.

"This could send a message that this administration is different. It's an important signpost," Shikata said.

Tags: Asia economy Japan news trade