Japan’s Prime Minister Shinzo Abe (centre) stands with Deputy Prime Minister and Finance Minister Taro Aso (right) and Economics Minister Akira Amari before a photo session at his official residence in Tokyo. Amari said yesterday he is not willing to renegotiate the Trans-Pacific Partnership (TPP) after US Democratic presidential candidate Hillary Clinton said she opposed the free trade pact.
Japanese Economics Minister Akira Amari said yesterday he is not willing to renegotiate the Trans-Pacific Partnership (TPP) after US Democratic presidential candidate Hillary Clinton said she opposed the free trade pact.
Amari, speaking to reporters, urged US lawmakers to back TPP and said going back on the deal now could hurt US credibility.
The trade pact is a central tenet of US President Barack Obama’s focus on Asia, but Japanese Prime Minister Shinzo Abe has also made TPP a pillar of his plan to make Japanese companies more competitive.
“If we go back now, many countries will be left wondering what was all the effort for to agree this deal in the first place,” Amari said.
The US, Japan and 10 other Pacific Rim countries on Monday agreed the TPP, which aims to liberalise commerce in 40% of the world’s economy by reducing or eliminating tariffs on almost 18,000 categories of goods.
Lawmakers in the US and other TPP countries must approve the deal, which took five years of negotiation. Initial reaction from US Congress members, both Democrat and Republican, has ranged from cautious to sceptical.
Now that Clinton has come out against TPP, there are concerns US lawmakers may try to change the terms. Abe is trying to breathe new life into his economic agenda after almost three years in office, but his announcement earlier this month of plans to raise nominal gross domestic product and improve the welfare system disappointed many economists.
In June, Abe said he would lower Japan’s corporate tax rate, which is among the highest in the world at nearly 36%, to somewhere below 30% to boost corporate activity.
The government is still no closer to deciding how quickly it will lower the corporate tax rate, but is prepared to slash red tape to make it easier for companies to increase capital expenditure, Amari told reporters.
Abe’s administration is at a crossroads. There is a risk that the economy could fall into a recession in the third quarter, which could refute Abe’s argument that his structural reforms have fundamentally improved the economy. The government should consider how to spend higher-than-expected tax revenue to help the economy instead of using that money to lower the public debt burden, Amari said.
This suggests the government wants to keep its options open in case more fiscal stimulus is needed to spur growth.
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