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The Trans Pacific Partnership (TPP): Why is it important for Japan?

Updated on June 26, 2017
Rasani Yashwanth profile image

Lived and worked in many countries such as France, Colombia, Philippines, India, Japan and others. Has been writing for 3 years.

The Trans Pacific Partnership (TPP) is an unratified agreement drafted by 12 signatory countries located on the Pacific Rim. Also known as the Pacific Trade Deal, this is one of the largest groups in the world with major economies in it. The signatories include United States, Japan, Canada, Mexico, Australia, New Zealand, Chile, Peru, Malaysia, Singapore, Brunei and Vietnam. After a well-known series of negotiations, the TPP is all set up to be ratified soon in the upcoming discussions. However, there is also resistance in some countries such as the US against the TPP deal. Aimed at achieving trade balance and a tariff free zone, TPP could potentially become the world`s largest economic group and pose serious challenges to China and European Union (EU). If ratified, the group would constitute for 40% of the world`s GDP and almost a third of world`s trade, thus dominating the global economy. Other potential countries such as Indonesia, India, Colombia, Sri Lanka, Philippines, South Korea, Thailand, Bangladesh and Taiwan have shown interest in joining the TPP in the future. However, a major Pacific Rim economy, China, seems to be not amused at this deal.

Benefits of the TPP

The TPP has a lot of benefits for all the member countries especially of creating a liberal trade zone with low tariffs and high Intellectual Property (IP) protection. However, there is a rising concern over some of the major issues such as possible military co-operation that are kept secret. According to some of the documents that are leaked to media, the main focus seems to be on economic growth, innovation, environmental protection, labor laws, jobs and investments. It is said that the trade barriers between these countries are going to be significantly reduced. It also focuses on low tariff expedited movement of goods and services with creation of multi-national jobs. It is expected that the deal would significantly benefit the small and medium level companies as they could easily get access to multiple resources from any of these countries.


Japan is one of the major economies that is pushing for this deal to be ratified soon. There are currently thousands of tariffs on Japanese products entering North America. Currently, the US is in an economic treaty with other North American countries called NAFTA (North American Free Trade Agreement). The TPP is going to be a much better option than NAFTA as it allows trans-pacific movement that could potentially bring diverse goods and multi-level talent across. On the other hand, the Latin American countries have MERCOSUR (Mercado Comun del Sur) free trade zone while the South East Asian countries have ASEAN (Association of South East Asian Nations). Due to its isolated location, Japan has never been in a Free Trade Zone albeit it tried a few times over the last decade with Korea, China and South East Asia. Due to historical tensions between them, those deals did not ratify as expected. This made Japan look for the help of US to form a group to increase its trade.

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Rivalry between China and Japan

China has become the world`s leading economy challenging the US, EU and Japan for years. Japan and China have been aggressively getting into trade deals with South East Asian countries to gain dominance over booming Asian market. Japan is a country that believes in liberalized border-less economy just like major Anglo-Saxon countries. However, Japan could not enter into a solid Free Trade Zone (FTZ) albeit it has a few agreements with countries in South East Asia. Japan has tried to create a FTZ with Korea and China in the name of 'China-Japan-Korea Free Trade Agreement (CJK FTA). It has also tried to create a common monetary system in the name of Asian Monetary Fund (AMF) in competition to the International Monetary Fund (IMF). Those plans did not go really well as countries such as China and the US have seen Japan to be aggressive in its approach.

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During the world war 2, the Japanese occupation of Korea and parts of China has caused serious resentment towards Japan among Chinese and Koreans. Any attempt by Japan to gain dominance over Asian market is seen as a threat by China and Korea. The United States has only been the major trading partner of both Japan and China over decades. Although China wants a stable relationship with the US to maintain its growing economy, the political interventions by the US in Asia over territorial disputes has put China in a stalemate. China has been involved in territorial disputes with Japan, Vietnam and Philippines in the South China Sea. The inclusion of Vietnam and Japan in the TPP has made China realize that the TPP is majorly an anti-China trade league. The TPP`s manifesto has made it clear that the members will also focus on conflict resolution including territorial disputes. However, the US has mentioned that China could join the TPP if it wants to.

Donald Trump`s America

The TPP is believed to be beneficial for the US as it focuses on increased trade activity and creation of jobs. However, many Republicans in the US see the TPP as a threat that might put American workers in jeopardy. They believe that millions of Americans could lose their jobs to foreign workers. The TPP makes it easy for member countries to perform any type of economic activity in any of their territories without bureaucratic or trade barriers among them. The newly elected President of United States, Donald Trump, has recently declared that he would scrap the deal on the first day of his office on January 20, 2017. With that statement, Japan has immediately reacted saying that its a misinformed decision. Japan`s Prime Minister Shinzo Abe has mentioned that the TPP is meaningless without the US.

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Donald Trump`s dislike towards the TPP has given China a breather. China has already been in discussions with many Pacific Rim countries including Japan. In case of the US not joining the treaty, China would easily take its place on the global arena. A partnership deal with China as center will be more powerful than ever before. However, Japan`s reluctance to join a Chinese dominated treaty might temporarily halt the new ratification and initiate new discussions. Nevertheless, China`s aggressive diplomacy could make Japan join the Chinese led TPP, if other signatories pressurize Japan. Although there are some genuine concerns among people regarding the future of their jobs, the TPP actually could help both the US and its main allies such as Japan, both economically and politically on a global scale.

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© 2017 Yashwanth Kumar

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    • lions44 profile image

      CJ Kelly 7 weeks ago from Auburn, WA

      Thanks for the hub. TPP is vitally important to the U.S. Unfortunately, many don't understand it economic and strategic importance in terms of balancing China's growing power. It's especially sad that our President can see its benefits ( or won't). The U.S. has to lead, not withdraw from the world stage.