AJISS-Commentary
The Association of Japanese Institutes of Strategic Studies
IIPSRIPSInstitute for International

The Japan Institute ofResearch Institute for

Policy Studies

International Affairs

Peace and Security(Secretariat)

Editor:No. 173

Akio Watanabe

26 March 2013

Editorial Board:

A Golden Opportunity for Japan’s Regional
Integration Policy: TPP, RCEP, and CJK

Hideki Asari
Masashi Nishihara
Taizo Yakushiji

Online Publisher:
Yoshiji Nogami
President, JIIA

Takashi Terada
Several regional integration frameworks haveemerged in the Asia-Pacific region since 2010, but
their contents, rules, and membership composition
are all different, culminating in a tangle of regional
integration initiatives. With Association ofSoutheast Asian Nations (ASEAN) aiming toestablish an economic community in 2015, fourdifferent regional integration frameworks will soon
be under negotiation in Asia and the Pacific,
including an FTA among China, Japan and South
Korea (hereafter CJK FTA), the Regional
Comprehensive Economic Partnership (RCEP)
comprising the 16 countries of ASEAN+6, and aUS-led Trans-Pacific Partnership (TPP).
The views expressed in this piece are the author’s own and should
not be attributed to The Association of Japanese Institutes ofStrategic Studies.AJISS-Commentary
The Association of Japanese Institutes of Strategic Studies

The principal factor behind the emergence of the tangle of regional
integration initiatives in the Asia-Pacific is that the US and China have beenpromoting competing regional integration concepts, reflecting their respective
preferences over issues to be covered. Though the US long remained on thesidelines of East Asian integration initiatives, it is now seeking high-quality“WTO-plus” regional integration through TPP, while China’s commitment toregional integration frameworks such as RCEP is strongly oriented towards
developing countries and would contain more exemptions in the form of tariffelimination duties, with few deregulation requirements that would demand thereform of domestic economic systems. As ASEAN has also shown an interest inRCEP, in which the speed and level of liberalisation would be based on thestandard that developing countries generally prefer, the dissimilarities in these
integration models in the Asia-Pacific region make any future merger of TPP andRCEP difficult. This also means the US and China will continue to compete
against each other over trade and investment rule-making in East Asia and thePacific.
While these regional integration initiatives are more intermingled, only
Japan thus far has shown an interest in participating in TPP, RCEP, and CJKFTA. Japan is also set to begin FTA negotiations with the EU, which has alsodeclared the commencement of FTA negotiations with the US, with an aim todisseminate trade and investment policy norms based on those of Westerncountries.
Importantly, TPP, RCEP, and CJK will offer different potential benefits toJapan, given Japan’s relatively unique economic structure in East Asia. Japan’smarkets and exports differ substantially from those of China and many membersof ASEAN: Japan continues to specialise in high added-value commodity
exports, its international-oriented business sectors have expressed a great dealof interest in the liberalisation of services and investment in the region, its
machinery and automobile companies have extended their production networks
broadly across the Asia-Pacific region, and the strong competitiveness of its
manufacturing products, as demonstrated by an average tariff rate of less than
3% at home, illustrates the openness of domestic markets. Given the trade andhttp://www.jiia.or.jp/en/commentary2

AJISS-Commentary
The Association of Japanese Institutes of Strategic Studies

market features that Japan enjoys, the cost of non-participation in the TPP would
be high, failing to secure maximum trade and investment benefits as morecountries sign on to form a “critical mass”. In fact, liberalisation of the service andinvestment sectors, for example, is quite unlikely to make significant progressunder RCEP and CJK FTA, partly because China would strongly resist this typeof liberalisation which would require transparency about business activities in its
state-owned companies.
On the other hand, Japan does a significant volume of trade with major
Asian countries such as China, South Korea, India, and Indonesia, none ofwhom currently participate in TPP, and, as mentioned earlier, many Japanesecompanies have set up a wide range of production networks involving thesecountries. In addition, these non-TPP members in Asia tend to protect some of
their key industries (e.g., China imposes a 25% tariff on automobiles), so
progress in RCEP or CJK FTA is also important as a tool to open these key
markets to Japanese exports.
Accordingly, this complex profusion of regional integration initiatives
presents a “golden opportunity” for the Japanese economy. To take advantage ofthis opportunity, Japan should consider measures to enhance the quality of
RCEP and CJK FTA. An effective approach to adopt is to not regard these three
integration frameworks separately, but rather binds them together to link theircontents as much as possible. Japan would need to outline a single
comprehensive integration strategy. To be able to ascertain the content andprogress of negotiations on RCEP and CJK FTA in view of TPP negotiations on
trade and investment liberalisation, for instance, it is imperative that Japan takethe initiative by carefully examining those “WTO-Plus” items being pursued inTPP, – state-owned enterprises, intellectual property, government procurement,competition policy, the environment and labour standards, etc, –to determine
what kind of WTO-plus issues are negotiable in RCEP and CJK, and ensure thatthese two FTAs involve and implement high-quality integration agendas bybuilding a coalition with like-minded countries such as Singapore, Japan’s first
FTA partner. Accordingly, close and frequent contact among the negotiators forthe three integration frameworks is undoubtedly essential. Given the need for a

http://www.jiia.or.jp/en/commentary3

AJISS-Commentary
The Association of Japanese Institutes of Strategic Studies“control tower” capable of overseeing these three negotiations, it is imperative
that, the current negotiation structure of a vertically-divided ministerialorganization be revamped for the sake of effective economic diplomacy, as seenin the current deliberation towards the establishment of a National SecurityCouncil.
Some political trends are favourable for Japan. Traditionally, farming
lobbies, which have mobilised financial and voting influence to maintain hightariffs on key agricultural products such as rice and raw sugars, have acted as amajor impediment to Japan’s attempts to pursue regional integration. Their
opposition to Japan’s participation in TPP has thus been very powerful. However,
the re-election of Shinzo Abe as Prime Minister in November 2012 changed thepolitical landscape radically and rapidly. Abe’s decision to promote monetaryeasing schemes as a tool to help Japan overcome deflation, which has stalledthe Japanese economy for many years, contributed to Abe’s high degree ofpublic support. This means that farming lobbies and politicians from rural
constituencies will find it difficult to confront Abe (some of them need to rely on
his popularity to win in the upcoming House Election in July). Thus, the domestic
political situation also presents a golden opportunity for Japan’s pursuit ofregional integration, while Abe maintains a strong will to commit Japan to TPP,
RCEP, and CJK FTA.

Takashi Terada is a professor of international political economy in Asia andthe Pacific at Doshisha University.

http://www.jiia.or.jp/en/commentary4