Noda’s unfinished agenda: is Japan TPP participation now more likely?

Author: Aurelia George Mulgan, UNSW Canberra

A recent report in the Wall Street Journal by Mitsuru Obe suggests that Japanese Prime Minister Yoshihiko Noda will announce a decision to participate in the TPP after a cabinet reshuffle (scheduled for early October).

While a decision to participate in the TPP is highly unlikely, a decision to participate in the TPP talks is certainly possible. This would mean the government progressing from its current position of ‘consultations with the TPP member countries’ to formal participation in the TPP negotiations.

What considerations are influencing Noda to make such a move?

First and foremost, new urgency has been given to the decision in light of recent events over the Senkaku/Diaoyu Islands. The Noda government may now be calculating that joining the TPP talks could ‘balance’ China on two fronts — drawing Japan closer to an American-led trade bloc as a hedge against China’s growing economic and military power in the region and generating more leverage for Japan in negotiating a Japan–China–South Korea EPA. Compared to the TPP, this agreement would yield far greater trade benefits for Japan and would not be as politically difficult at home.

Second, Noda wants to bolster his leadership credentials as a prime minister who can make decisions following his success with the consumption tax hike. He may be sensitive to the recent criticism of his government by the Japan Association of Corporate Executives for ‘the politics of indecision’ (kimerarenai seiji) after yet another postponement of a decision on the TPP prior to the APEC meeting in Vladivostok. Noda himself expounded on the need for ‘politics that makes decisions’ in a speech to the Diet earlier this year.

Third, making a decision to participate in the TPP negotiations at this time might assist Noda tactically in dealing with the new force in Japanese politics presented by Osaka Mayor Toru Hashimoto and his political party, the Japan Restoration Association (Nippon Ishin no Kai), given that Hashimoto is in favour of the TPP. The TPP could act as a bridge between the DPJ and the Japan Restoration Association in a possible future alliance.

Finally, by moving on the TPP now, Noda could pre-empt the LDP’s shelving of the issue following the next Lower House election, where it is expected to win the most seats. All five LDP leadership candidates recently came out against the TPP. For example, one of the contenders, Shinzo Abe, said: ‘America has got extremely aggressive. They’re saying that they’re not going to let us participate unless we agree to abolish all tariffs, but they’re keeping their tariffs on sugar and trucks. We need to first reinforce our negotiating powers and then think about whether we can protect our national interest’.

But despite Noda’s continuing desire to realise his TPP ambitions — which he describes as ‘a chance for Japan which has been a trading country and investing country to “brush up” once more’ — several countervailing factors will also be weighing heavily on his mind. Most important are considerations relating to DPJ party unity.

The DPJ is far from unified on the TPP. Noda’s rivals for the DPJ’s top position have assumed various other positions on the TPP, none of them in favour. At the other extreme from Noda is Kazuhiro Haraguchi, who says he is ‘absolutely opposed’ to the TPP and that ‘considering free trade as a golden rule in itself should be revised’. The other two candidates — both former DPJ agricultural ministers — Hirotaka Akamatsu and Michihiko Kano ranged themselves in between the two extremes. Akamatsu stated he ‘would deal with the issue cautiously’, reflecting the position of the DPJ’s Economic Partnership Project Team (Keizai Renkei PT) set up by the Noda government to examine the TPP issue. Kano was closer to Noda’s position in saying that ‘we are not at the stage where we can make a judgement about whether or not to participate when we don’t know what the other countries want from us’. Still, this was far from a ringing endorsement.

The DPJ’s leadership contenders’ respective positions on the TPP reflect more generally the spectrum of views in the party. Bringing the party together on this issue is not within Noda’s power over the next few months. There has never been, and will not ever be, a consensus in the DPJ on the TPP. Making good his TPP policy would require Noda to trample on internal DPJ opposition, just as he did in relation to the consumption tax increase, but that came at a high cost in terms of defections from the party. Noda cannot afford any more. Continuing defections have brought numbers of DPJ Lower House Diet members from a healthy to a meagre majority. It would take only a handful of additional defections before the Noda government would lose its majority, enabling the LDP to initiate another no-confidence motion, which, if successful, would force Noda’s hand on a general election. Maintaining party unity will thus become the political life and death issue for the prime minister and his government in the immediate future. He will not sacrifice this political imperative for a policy ambition.

Then there’s the impending general election itself. It would be an extremely courageous decision for the prime minister to push the TPP issue at this time when the party could expect a very strong reaction from a majority of farm voters and certainly from the agricultural cooperative organisation (JA), with the prospect that the DPJ would lose all its rural and semi-rural seats.

Lastly, Noda has more urgent decisions on his policy agenda. His government needs to pass legislation for issuing deficit-financing bonds so that it does not run out of money. It also needs to address the issue of disparities in vote values in the Lower House election system if the results of the next general election are not to risk being declared invalid by the Supreme Court. Passage of a supplementary budget containing stimulus measures is also in the wings. These more pressing policy issues will demand all of Noda’s energies and political adroitness if they are to be successfully navigated.

Aurelia George Mulgan is a professor at the University of New South Wales, Australian Defence Force Academy, Canberra.