U.S. Agrees To Japan’s Entry Into Trans-Pacific Partnership Agreement

international_trade57131757Today, the Acting U.S. Trade Representative announced that the U.S. has agreed to let Japan enter negotiations on the Trans-Pacific Partnership Agreement, subject to consensus agreement by the other 10 members of the TPP. U.S. Ambassador Demetrios Marantis noted that this agreement results  from lengthy consultations with Japan that were aimed at resolving specific issues between the U.S. and Japan:

Since November 2011, the United States has been engaged in consultations with Japan focused on Japan’s readiness to meet the TPP’s high standards for liberalizing trade and investment, and to address specific bilateral issues of concern in the automotive and insurance sectors, as well as other Japanese non-tariff measures.

With Japan’s entry into the TPP, the 12 countries would account for nearly 40 percent of global GDP and about one-third of all world trade, according to the USTR.

The sticky issues have been and probably will continue to involve the automotive and insurance industries and other non-tariff measures.

In a statement, the USTR said that Japan agreed to double the number of U.S. motor vehicles allowed into Japan under its Preferential Handling Procedure (PHP), which provides U.S. manufacturers with a less complex certification method.

In return the U.S. would phase out its tariffs on Japanese automotive imports.  But that’s not going to happen quickly. Their agreement says that the phase-out will equal the longest staging period for any product in the TPP, and the phase-outs would occur at the end of that period. Since the TPP negotiations haven’t been completed for all products, the exact time frame isn’t yet known.

The U.S. and Japan will hammer out other automotive issues in a bilateral agreement between them to be included in the TPP

In the insurance area, the main issue is U.S. companies’ ability to compete with Japan’s state-owned insurance enterprises – Japan Post Insurance. According to the statement, “both governments have agreed to address level playing field issues in the TPP negotiations, as well as through parallel negotiations to the TPP talks.”

The two countries also discussed other non-tariff barriers that impede free trade between the countries, which will be addressed in negotiations parallel to the TPP:

  • Transparency: Improve opportunities for stakeholder input, including through the Public Comment Procedure and by increasing access to ministry-appointed advisory councils.
  • Investment: Facilitate meaningful opportunities for mergers and acquisitions into Japan, including by strengthening the role of truly independent directors
  • Intellectual Property Rights (IPR): Strengthen the protection of and enforcement measures for intellectual property rights, including with respect to copyright and related rights, technological protection measures, and civil and criminal enforcement procedures; and uphold certain core principles with respect to its system of protection for geographical indications, including protecting prior trademark rights, safeguarding the use of generic terms, and ensuring due process.
  • Standards: Provide greater flexibility and transparency in standards setting and use, including with respect to their use in regulation, and adopt greater acceptance of international standards.
  • Government Procurement: Improve the bidding process and take steps to hinder bid allocation.
  • Competition Policy: Address a range of procedural fairness issues in the investigatory, pre-decision, and appeals processes.
  • Express Delivery: Address level playing field issues related to international express services offered by Japan Post.
  • Sanitary and Phytosanitary Measures (SPS): Pursuant to the rights and obligations of the WTO/SPS Agreement, accelerate and streamline risk assessments related to common food additives, and address other issues related to fungicides and gelatin/collagen for human consumption.

Last September, the TPP members agreed to the entry of Mexico and Canada into the negotiations. The current members are Australia, Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore, the United States, Vietnam, Canada, and Mexico. The next round of TPP negotiations will take place in Lima, Peru, May 15-24, 2013.