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Japan struggles to set example on free trade

YOKOHAMA, Japan — As Japan hosts a summit touting the benefits of Asia-Pacific free trade, Prime Minister Naoto Kan faces acrimonious debate on whether to tear down barriers around Japan’s own faltering economy.

Charged with helping the 21-member Asia Pacific Economic Cooperation (APEC) group — including the United States, China and Russia — carve a trade consensus, Kan is struggling to convince his own government to do the same.

Japan has faced criticism for tightly protecting its inefficient farm sector and especially its cherished rice farmers, but now says it is intent on making reforms. ‘Japan will be opening up,’ Kan pledged on Saturday.

His government is edging towards a US-led plan for a regional free trade treaty known as the Trans-Pacific Partnership (TPP), but has deferred until June a decision on whether to join talks on membership.

Heated debate has broken out within the Japanese government on joining the pact, with the trade ministry in favour but the agriculture ministry opposed, fearing the impact of cheap imports on farmers.

More than 3,000 demonstrators rallied against the proposal in Tokyo on Wednesday.

As he took up his role as host of the APEC summit on Saturday, Kan defiantly embraced the liberal trade concept in the wake of a G20 pledge to ‘resist protectionism in all its forms’ made a day earlier in South Korea.

‘Many countries in the world, especially in this APEC region, are proactively opening up their countries to establish free-trade areas by sealing economic partnership agreements,’ Kan said ahead of Saturday’s summit.

‘To be honest with you, our country was a little lagging behind in terms of riding the wave towards that movement.’

Kan also stressed the importance of making Japan’s highly protected farm sector more competitive in the global market — referring to domestic opposition to the TPP.

The symbolism of the new approach being aired in Yokohama, where 151 years ago Japan made the monumental decision to open itself to commerce with the outside world after two centuries of self-imposed isolation, is clear.

‘Yokohama is a trading port which led Japan along its modernisation path. There is great significance that APEC is held this year in the city of Yokohama,’ Trade Minister Akihiro Ohata said this week.

Kan’s hosting of the summit comes amid criticism of his handling of diplomatic spats with Russia and key trade partner China, as relations with Beijing have plunged to their lowest level for years.

The tensions are proving yet another headache for an administration dealing with deflation, a shrinking population, a mountain of public debt and the impact of a surging yen on a fragile economic recovery.

The APEC bloc has agreed 2011 will be a ‘critically important window of opportunity’ to advance talks, as many nations hold elections the following year.

It has pledged not to introduce new barriers against free trade for the next three years.

Although APEC has made little headway in creating an envisaged free trade zone across the Pacific Rim region, the TPP initiative backed by US President Barack Obama is gaining momentum.

It is seen as a vital building block for a Free Trade Area of the Asia Pacific (FTAAP) that would link economies from China to Chile and the United States but currently remains an undefined and long-term goal.

The TPP so far has just four signed-up members — Brunei, Chile, New Zealand and Singapore — who have agreed to drop most tariffs and other trade barriers.

The world’s largest economy, the United States, is now in talks to join the group, as are Australia, Malaysia, Peru and Vietnam.

Beijing, which this year overtook Japan as Asia’s biggest economy, has not yet made a decision but ‘is actively studying (TPP) with interest,’ Chinese ambassador Cheng Yonghua was quoted as telling the Nikkei daily recently.