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Various Congressional Democrats Oppose Japan’s TPP Bid

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Pacific Money

Various Congressional Democrats Oppose Japan’s TPP Bid

Members of Congress from Obama’s own party have concerns about Japan’s TPP interest.

It’s well known that Japanese Prime Minister Shinzo Abe, who announced Japan will join the Trans-Pacific Partnership (TPP) negotiations on Friday, will face an uphill battle in bringing Japan’s economy in line with the TPP’s strict trade requirements, given the expected opposition from powerful industy groups, many of which are strong backers of Abe’s political party.

Now it appears Abe will have a sympathetic ally in President Barack Obama.   

Thirty-five members of the House of Representatives and eight Senators wrote to President Obama on Thursday to express their opposition to Japan joining the Trans-Pacific Partnership negotiations.

All forty-three lawmakers that signed the letter are members of the president’s Democratic Party.  The thirty-five House members account for just under 18 percent of the entire Democratic caucus in the House of Representatives.

“Japan's significant, long-standing, and persistent economic barriers put in place to block our exports and support theirs have hurt American workers and businesses for decades,” the Congressional Democrats wrote in the letter, which is primarily concerned with Japan’s automobile exports hurting American car companies.

“Nowhere is the closed nature of Japan's markets more evident than in the auto sector, where Japanese policies and practices have been carefully honed – over generations – to keep out American and other foreign cars and parts,” the lawmakers write.

Although Japan does not impose formal tariffs on foreign-made vehicles imported into the country, the U.S. lawmakers cite a lengthy list of barriers they argue Japan has put in place to protect its domestic car industry, including: currency manipulation, discriminatory taxes, government incentive programs for consumers who purchase Japanese-made cars, and erroneous safety, noise and environmental regulations, among others.

According to the letter’s signees, the result of this has been that “for every automobile that America exports to Japan, Japan exports over 120 automobiles to the United States.” This, the lawmakers claim, has been a huge contributor the huge and growing trade imbalance between the U.S. and Japan.

America’s auto industry and labor union have traditionally been strong backers of Obama’s Democratic Party. The industry also holds special, symbolic importance for the current administration, owing to the president’s strong support for an $80 billion bailout of the auto industry in his first year in office, which saved America’s major car manufacturers from bankruptcy. The proposed bailout was highly controversial and came under withering criticism at the time from many, including Mitt Romney, who later ran against Obama in the 2012 election.

The administration felt its position on the bailout was vindicated when the car manufacturers made a quick turnaround, became profitable again and began paying back large portions of the government loans.

This was used to great effect in securing Obama’s reelection last November; one of the most memorable lines of the campaign was Vice President Joe Biden’s often repeated refrain that because of Obama’s leadership, “Osama bin Laden is dead and General Motors is still alive.”

More tangibly, the auto bailout is credited with helping Obama win the state of Ohio, one of the most crucial swing states in American Presidential elections, as many autoworkers live in that state.

The U.S. currently charges an import duty of 2.5 percent on foreign made cars, as well as a 25 percent tariff on foreign made trucks. Because of the North America Free Trade Agreement (NAFTA), these duties do not apply to most Canadian and Mexican made automobiles and, if the TPP is concluded, presumably to parties to that trade agreement as well.

Since Japan uses non-tariff means to protect its auto industry, the TPP would presumably have far less impact on opening up Japan’s domestic market to American car companies.

Although the letter is likely to revive memories of the 1980s when there was widespread concern in the U.S. about Japan’s growing economic power, various Congressional Democrats are not alone in worrying about a free trade agreement (FTA) with Japan.

In agreeing to enter into their own free trade talks with Japan, many member states of the European Union stipulated that reductions in Europe’s formal duties be tied to Japan’s elimination of non-tariff barriers, and that safeguards be put in place to prevent a “surge” of Japanese cars from flooding European markets.

EU member states are also insisting on a clause being included in the FTA that allows the EU to terminate the agreement after one year if it judges that Japan has not made enough progress on reducing non-tariff barriers.

Unlike in the EU case, however, President Obama has a strong strategic interest in Japan signing on to the TPP, as the proposed FTA is the economic cornerstone of America’s rebalance to Asia.  To date the talks have included ten nations besides the U.S.: Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

According to the Washington Post, Japan’s GDP is slightly larger than these ten other nations combined. 

Zachary Keck is assistant editor of The Diplomat. He’s on Twitter: @ZacharyKeck