【Editorial】 Trans-Pacific Partnership agreement and regulatory reform – issues that could undermine national sovereignty (Oct. 23, 2015)


The Trans-Pacific Partnership free-trade talks have two major premises: elimination of tariffs on all items in principle and creation of high-level trade and investment rules. A broad agreement reached under the TPP has sent shock waves among farmers as it virtually meant total liberalization of the agriculture industry, but at the same time, the agreement on rules will influence other industries and people’s lives. In addition, Japan and the United States are expected to sign a bilateral agreement which states that the Japanese government will ask for opinions of foreign investors in conducting regulatory reform and make them subject to discussion at the Regulatory Reform Council. The final document is still under preparation, but it contains a serious risk of infringement of national sovereignty.

The summary of the TPP agreement is made up of a part about key features followed by 30 chapters. Except for preferential access provided through elimination and reduction of tariffs on goods, most of the chapters deal with rules on such sectors as financial services, investment, intellectual property, government procurement, state-owned enterprises and sanitary and phytosanitary measures. The government claims that the agreement will allow free exchange of people, goods, resources, services and information within the region, boosting Japanese companies’ business abroad and improving productivity of the nation’s economy as a whole.

Concerns lie over the possibility that the government might give priority to benefiting global enterprises and make light of ensuring people’s safety. U.S. President Barack Obama apparently led the discussions on trade and investment rules for the sake of U.S. companies.

The Japanese government stressed it has managed to solve problems that people had worried would be brought about by rewriting rules under the TPP on issues such as food safety, investor-state dispute (ISD) settlement provisions, copyright protection and medical services. When the government held the first meeting to explain the contents of the TPP agreement to the public on Tuesday, Oct. 20, government officials eagerly tried to wipe away what they called “misunderstandings” people have over the scheme. They said the agreement does not include rules that would require changes in the system of labeling genetically modified foods, nor does it have any influence on the nation’s medical system including the universal public health insurance scheme. They also said the ISD settlement provisions in the agreement includes strong safeguards to prevent giving excessive power to companies, as called for in the Diet resolutions. However, we cannot fully evaluate the effectiveness of trade agreements like the TPP deal unless we carefully examine and verify the negotiation process, the agreement itself and its supplementary notes, bilateral agreements and exception clauses.

What worries us most is the list of documents Japan has exchanged bilaterally with other nations that participated in the negotiations. The summary of documents, released along with the TPP agreement, describes specific issues discussed under parallel bilateral agreements, although still not finalized, that supplement the TPP deal. When Japan decided to join the free-trade talks in 2013, the U.S. called on Japan to “achieve meaningful and tangible outcomes” in the parallel bilateral negotiations regarding pending issues, namely what it calls non-tariff barriers in nine sectors including insurance, investment and sanitary and phytosanitary measures. One of the exchanged documents enumerates the areas within the nine sectors where the two countries reached agreement in the parallel negotiations. In the area of investment, the document states that the Japanese government will receive opinions of foreign investors on regulatory reform and submit them to the Regulatory Reform Council. This is apparently designed to better reflect intentions of U.S. firms. It will, for example, enable American life and non-life insurance firms to officially urge the Japanese government to review agricultural co-operatives’ credit and mutual aid services and their system of offering services to non-farmer members. The document also shows that in the area of sanitary and phytosanitary measures, the two governments have come to consensus on issues concerning postharvest agricultural chemicals and food additives.

The government should quickly disclose all the details of the TPP agreement, including the documents exchanged between Japan and the U.S., and let the Diet start deliberating them. Without such action, no matter how much the government insists that Japan’s sovereignty and interests are protected, it doesn’t sound convincing at all.

(Oct. 23, 2015)

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