Policy Proposals Trade, Investment, EPA/FTA Joint USCIB-Keidanren policy statement on Trans-Pacific Partnership The Trans-Pacific Partnership Will Strengthen the Japan-U.S. Alliance
Keidanren (Japan Business Federation)
USCIB (the United States Council for International Business)
President Barack Obama's visit to Japan reminds us all of the strategic importance of U.S.-Japan relations. With legislators in both countries scrutinizing the text of the Trans-Pacific Partnership, now is the time for our two respective business communities to stand up and vocally support this landmark 12-nation agreement. Both our countries stand to benefit immensely -- in terms of economic welfare, with tremendous benefits to our businesses of all sectors, consumers, and workers, as well as in strategic terms. Despite heated rhetoric over TPP coming from the American presidential campaign, there is a very strong case for ratification.
The goal of the agreement is not only to lower barriers to trade and investment across the Asia-Pacific region but also to set high-standard trade and investment rules that are conducive to 21st-century commerce. The agreement is an important part of our cooperative efforts to promote the values we share as allies, around the region and the world — the rule of law, democracy and freedom.
TPP will bring significant economic benefits for both our countries. The World Bank estimates that, by implementing the TPP agreement, Japan will see economic growth rise by 2.7 percent by 2030, with exports growing by $23.2 billion annually. The United States will see a boost in GDP of 0.4 percent — a not insignificant amount — while its exports will grow by $9.2 billion per year. Overall gains across all 12 TPP countries should amount to an additional 1.1 percent of GDP per year. However, according to a recent report by the Peterson Institute for International Economics, delaying the launch of the TPP by even one year would represent a $94 billion permanent loss, or opportunity cost, to the U.S. economy.
The TPP could contribute to strengthening our integrated and increasingly interdependent economies. Two-way trade between the U.S. and Japan totaled $290 billion in 2012 (the latest year for which comprehensive data is available). Leading U.S. exports to Japan include agricultural products, machinery, medical devices and aircraft. Some 637,000 U.S. jobs are supported by our bilateral trade. For its part, Japan's top exports to the U.S. are automobiles, machinery, electronics devices and steel products. With significant tariff reductions and the removal of barriers to entry as the result of TPP, this two-way relationship should deepen considerably.
And it's not just trade. We both maintain significant amounts of foreign direct investment in each other's countries and throughout the TPP region. Japanese companies contribute to support some 1.7 million jobs in the United States. TPP's strong investment rules will go a long way toward creating new opportunities and facilitating investment by American and Japanese companies throughout the TPP region. It means that the TPP will provide more opportunity for Japanese and American companies to contribute to each other's economy including further creation of jobs.
Perhaps TPP's most important benefits will be to link the economies of the United States and Japan with ten other Asia-Pacific partners, and to establish ambitious "rules of the road" for 21st-century commerce. Already, several other countries have expressed interest in joining the agreement, which both our countries have described as open and dynamic. Expanding TPP to encompass other countries would bring about even larger benefits for both the U.S. and Japan, through expanded new market access and the spread of TPP's high-level rules, a vital source of competitiveness of our economies.
While opposition to ratification of TPP has become more vocal in the United States, overall public opinion remains strongly pro-trade. We were heartened by a recent Pew Research poll showing that 51 percent of U.S. respondents believe trade agreements have been good for the country, compared to 39 percent who believe they have been bad.
So the economic benefits from the agreement — for the Unites States, Japan and the region — are significant and undeniable. But perhaps even more important, there are vital geopolitical implications for TPP.
Confronting threats and uncertainty in various parts of Asia, including the Korean Peninsula, the United States and Japan need to reinforce and deepen their cooperation with other regional actors. Closer relations through expanded trade, shared rules and values based on our alliance help us do just that.
Our countries also must continue their strong partnership in making progress on shared global challenges like climate change, nuclear non-proliferation and the threat of global pandemics. Trade is a bedrock component of a strong, vibrant bilateral relationship, as well as regional stability in the Asia-Pacific region.
As President Obama visits East Asia, a high-level delegation of Keidanren, a leading business association in Japan are travelling through Washington, D.C. and several other American cities to make the case for closer economic ties between our two nations. For all these reasons, we strongly urge our respective legislatures to ratify the Trans-Pacific Partnership without delay. Doing so will help create a brighter future for us all.
The joint statement appeared in The Seattle Times on May 27th, 2016 as op-ed by Keidanren Vice Chair Kunio Ishihara and USCIB President/CEO Peter Robinson.