Shinzo Abe participant in World Economic Forum Annual Meeting 2014
"Third Arrow": Growth strategy and structural reform
On 15 March 2013, Abe announced that Japan was entering negotiations to join the Trans-Pacific Partnership (TPP). This was interpreted by analysts as a means through which the government could enact reforms to liberalize certain sectors of the Japanese economy, most notably agriculture, and was criticized by farm lobbies and some sections of the LDP. Economist Yoshizaki Tatsuhiko described the TPP as having the potential to act as the "linchpin of Abe's economic revitalization strategy" by making Japan more competitive through free trade. In February 2015 the Abe government struck a deal to limit the power of the JA-Zenchu body to supervise and audit Japan's agricultural co-operatives, in a move designed to facilitate TPP negotiations, improve the competitiveness of Japan's farming sector and curtail the influence of the agriculture lobby.Abe revealed the first measures related to the "third arrow" policies in June 2013, which included plans to establish deregulated economic zones and allow the sale of drugs online, but did not include substantial measures related to the labor market or business reform. These measures were less well-received than the first two arrows had been since Abe took office, with the stock market falling slightly and critics arguing that they lacked detail; The Economist, for example, judged the announcement a "misfire". Analysts did note, however, that Abe was waiting until after the July Upper House elections to reveal further details, to avoid an adverse reaction by voters to potentially unpopular reforms. At the annual meeting of the World Economic Forum (WEF) in Davos in 2014 Abe announced that he was ready to act as a "drill bit" to break through the rock of vested interests and "red tape" to achieve structural reforms of the economy. He cited reforms in agriculture, energy and health sectors as evidence of this, and pledged to push forward with the TPP, a Japan–EU trade deal and tax, corporate governance and planning reforms.Abe announced a package of structural reforms in June 2014, that The Economist described as "less a single arrow than a 1,000-strong bundle" and compared favorably to the 2013 announcement. These new measures included corporate governance reform, the easing of restrictions on hiring foreign staff in special economic zones, liberalizing the health sector, and measures to help foreign and local entrepreneurs. The plans also included a cut in corporation tax to below 30 percent, an expansion of childcare to encourage women to join the workforce, and the loosening of restrictions on overtime. In December 2015, the government announced corporation tax would be reduced to 29.97 percent in 2016, bringing the cut forward one year ahead of schedule.
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