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Japan Participation in Trans-Pacific Trade Agreement Seen As Threat By Detroit

Although Japan and Korea are regional neighbors, only a few hundred miles apart, due to trade regulations, Japanese automakers Honda and Toyota have found it more cost-effective to export U.S. built models to Korea than ship them across the Sea of Japan. Now, Japan is poised to be part of the Trans-Pacific Partnership trade talks to take place in July, Reuters reports. The other nations involved in the TPP talks are Canada, Mexico, Peru, Chile, Vietnam, Malaysia, Singapore, Brunei, Australia and New Zealand.

Recently-elected Japanese prime minister Shinzo Abe has made a free trade pact with the United States a key part of his so-called "Abe-nomics" policy. Abe stood up to Japan's powerful farm lobby, which vehemently oppose a free-trade deal with the U.S. on fear of cheaper agricultural imports.

Opposition to Japan's participation in the trade talks is also coming from the U.S. auto industry, which points out Japan's notoriously closed automotive market, in which foreign brands have just a six-percent market share. Both the United Auto Workers and the American Automotive Policy Council have expressed their opposition to Japan being part of the trade talks, or have asked for assurances to address barriers to U.S. auto exports.

U.S. trade representative Demetrios Marantis said Japan agreed to separate negotiations in parallel with the TPP talks to address regulatory and non-tariff barriers believed to be obstacles to the sale of U.S.-built vehicles in Japan. Of the Japanese auto manufacturers, currently Mazda stands to gain the most from this agreement, with the majority of its models sold in the U.S. sourced from Japan. However, construction is underway on a plant in Mexico that will supply markets in the Western Hemisphere.

Source: Reuters