Why Obama and Abe should take lead on TPP
April 1st, 2014
02:50 PM ET

Why Obama and Abe should take lead on TPP

By Michael Green and Matthew P. Goodman, Special to CNN

Editor’s note: Michael Green is senior vice president for Asia at the Center for Strategic and International Studies and a professor at Georgetown University. He served on the National Security Council staff in the George W. Bush administration. Matthew P. Goodman, a former member of the NSC staff in the Obama administration, is chair in political economy at CSIS. The views expressed are their own.

Barack Obama has described himself as America’s first Pacific president. Prime Minister Shinzo Abe has pledged that Japan “is not now and will never be a tier-two country.” Before they meet in Tokyo this month, the two leaders have a unique opportunity to prove these words true by resolving their differences over the Trans-Pacific Partnership (TPP).

The 12 Asia-Pacific economies in the TPP negotiations are working toward a comprehensive, high-standard, “21st century” trade agreement. A TPP deal among a group of countries representing some 40 percent of the world economy would give a significant boost to global growth and jobs and help shape the rules of the international trading system for years to come.

The United States and Japan are by far the largest participants in TPP, accounting for three-quarters of the group’s economic heft. A TPP deal would effectively amount to a bilateral free trade agreement – a prize that has eluded the two countries for decades as they have sparred over trade and, more recently, pursued FTAs with other countries.

The stakes for both Japan and the United States could not be higher. First, the economic benefits of a successful TPP agreement would be substantial. The Peterson Institute for International Economics has estimated the annual income gains to the United States and Japan by 2025 at $76.6 billion and $104.6 billion, respectively.

Second, both countries have a shared interest in updating and upholding the rules of international trade and investment to meet 21st century realities. Washington and Tokyo have long been champions of intellectual property rights (IPR) protection, strong labor and environmental standards, and transparent regulatory practices. Through TPP, they have a chance not only to strengthen global rules in these areas, but also to create disciplines on new issues such as digital commerce and state-owned enterprises (SOEs).

Finally, TPP has enormous strategic significance for both countries. It would strengthen the U.S.-Japan alliance, embed the United States more deeply in the Asia-Pacific region, and underscore American and Japanese leadership in the region. By setting the gold standard for other major trade negotiations, including the Transatlantic Trade and Investment Partnership, as well as multilateral talks in Geneva, it would also reinforce the two countries’ leadership on the global stage.

The TPP negotiations have been slow going, with over 20 rounds and several missed deadlines since the talks were launched four years ago. Substantial progress has been made across most of the agreement’s 29 chapters, but differences remain on IPR protection, state-owned enterprises disciplines, environmental standards, and market access. One of the biggest remaining issues – of importance to most countries in the room – is greater access to Japan’s protected agriculture market.

The domestic politics of TPP are difficult for all 12 participating countries, not least Japan and the United States. Abe faces a formidable agriculture lobby and an array of pressing policy challenges, from restarting nuclear power to carrying out structural reform under his program of “Abenomics,” each of which will cost substantial political capital.

For his part, President Obama faces a U.S. Congress where the leadership of his own party has made clear they aren’t yet willing to give him trade promotion authority to complete TPP and where relations with the Republican leadership are toxic. The president has been reluctant to push for TPA ahead of mid-term elections in November, when the Democratic majority in the Senate is on the line.

But despite the difficult politics, now is the time for the two leaders to spend some political capital on TPP. They should both renew their commitment to the deal and show the flexibility needed to close the remaining gaps in the negotiating room.

President Obama should signal publicly – ideally through a speech on U.S. soil before he travels to Asia in late April – that TPP is critical to his strategy of “rebalancing” to the Asia Pacific and that he’s willing to push Congress for TPA after the mid-terms. This would reassure those at home and in the region who doubt his commitment to the rebalance and to trade, and also give other TPP negotiating partners confidence that Washington will uphold its end of the bargain if they reveal their bottom line now.

Meanwhile, letting TPP drag on indefinitely doesn’t serve the interests of Abe. His popularity, though still strong by Japanese standards, is already declining and likely to sink further as a consumption tax hike takes effect in April and he moves ahead on nuclear power. Abe should instruct his negotiators to move substantially closer to TPP’s principle of comprehensive liberalization, especially on agriculture, while he and his government have the political capital to do so.

In doing this, Abe can take comfort that the near-term economic benefits of TPP are greater than widely believed. In addition to improving Japan’s long-term competitiveness, a TPP deal would give a substantial boost to confidence, likely causing the Japanese stock market to soar as foreign investors who have become increasingly disillusioned with Abenomics pile back into the market.

Political leaders rarely have as promising an opportunity to achieve multiple objectives as President Obama and Prime Minister Abe have over the next few weeks. Coming together on TPP would help create growth and jobs in both countries, uphold the global rules-based order, and secure the two men’s legacies as visionary Asia-Pacific leaders.


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Topics: Economy

soundoff (34 Responses)
  1. Clarence Dolan

    TPP is a sellout to the greediest 1 per cent, including CNN owners

    April 1, 2014 at 3:01 pm |
  2. chrissy

    @ Clarence, are you sure you meant it was a "sell out" to the greediest 1 percenters or an enhancement to even greater wealth for them?

    April 1, 2014 at 5:03 pm |
  3. elwoods

    Green, and Goodman have drunk the oligarchy cool aid. The TPP is government of corporations, by corporations, and for corporations. The american people will never know what's in it when the Congress votes on it. Anyone who is in bed with Pete Peterson is part of the problem, not the solution. Fareed Zakaria has joined the neocon band wagon in blaming everything on Russia, and CNN is becoming another propaganda organ for the one percent and corporate America.

    April 1, 2014 at 7:18 pm |
    • No sell-out to Asians

      The one percent you are talking about are not 'Corporate America' – the one percent are the blood-thirsty 'Asian-chinese-korean-lobby' that wanna destroy 'Corporate America', i.e. bankrupted Detroit, and want to push Americans their 'hyundai-kias' down. C'mon, Americans – Corporate Americans: STOP the Asians now!

      April 2, 2014 at 6:27 am |
      • ✠ RZ ✠

        There ya go! We just need to become a little more like redneck Amish hillbillies and stop buying all their crap. Tell em to go to Hechi and eat Siitake!

        April 2, 2014 at 8:34 pm |
  4. EU, NATO - no TPP

    The FRANCE president Francoise Hollande would be the perfect leader for New World Order.

    April 2, 2014 at 2:46 am |
  5. Joey Isotta-Fraschini©

    I think that TPP, any Twenty-first Century World Order, and many invisible forces are moved by a Power much Higher than my vote.
    I am comfortable with that.

    April 2, 2014 at 6:57 am |
  6. Joey-Isotta Fraschini©

    Just look at that picture. The president and the man beside him are waiting for their pepperoni pizza.

    April 2, 2014 at 8:13 am |
  7. chrissy

    I personally prefer my pizza with extra pepperoni, mushrooms, and green olives.

    April 2, 2014 at 8:15 am |
  8. elwoods

    I like Pizza Hut's $10 pizza. I always order the large thin and crispy pepperoni pizza with veggies. Truly marvelous.

    April 2, 2014 at 8:17 am |
  9. Clarence Dolen

    TPP would be a better organization if they ate more pepperoni pizza.
    I usually get a $5.00 pepperoni pizza from Little Ceasars, but hey, that's me.

    April 2, 2014 at 8:20 am |
  10. banasy©


    April 2, 2014 at 8:22 am |
  11. chrissy

    Lol @ banasy ikr? Surprised hes still being left unattended myself!

    April 2, 2014 at 9:23 am |
    • Jeff Roem

      Fooked you Chrissy. Banasy hasn't said Facepalm in two years, once I started stealing her name and using it. I also used it under stuart, rupert, and all of my other names. I stole Joey's name here today. Didja notice?

      April 2, 2014 at 11:25 am |
  12. palintwit

    Sarah Palin's ability to communicate with dung beetles has made her the darling of not only the tea party, but dung lovers everywhere.

    April 2, 2014 at 10:19 am |
    • Jeff Roem

      I love Sarah Palin the dumber the better so they don't know how mentally ill I am.

      April 2, 2014 at 11:28 am |
      • Jerry Falwell

        My, my such tea part lingo from you Jeff. You must be a fan of Sarah Palin.

        April 2, 2014 at 11:30 am |
      • Jeff Roem

        I just said I was can't you read?!

        April 2, 2014 at 11:32 am |
  13. banasy©

    I think he needs a special room, chrissy, that is well padded.

    April 2, 2014 at 10:42 am |
  14. j. von hettlingen

    Last year, China was studying the possibility of joining the Trans Pacific Partnership trade talks. However it's not certain whether China would be welcome, as it is a US-led trade pact, which acts as a counter-balance to China.
    Ja pan's participation in the TTP would lead to its trade liberalisation. It's going to be unpopular and costly, yet Abe might just be the person to make it happen.

    April 2, 2014 at 10:56 am |
  15. Jeff Roem

    Having ruined This Just In by acting like a child and stealing names there, I will now make my illness known here on GPS by doing the same here. Look for my other amusing names Jerry Falwell, any historical name I can debauche, Quinton, Felix Unger, and so on, and for me to make stupid references to pizza. That's how you 'll know my work.

    April 2, 2014 at 11:22 am |
  16. Cathy W.

    J.R. please leave

    April 2, 2014 at 3:11 pm |
    • Joseph McCarthy

      No. I'm here to stay. Just like herpes.

      April 2, 2014 at 8:59 pm |
  17. Jeff Roem

    I really do like pepperoni pizza...a lot.

    April 2, 2014 at 3:13 pm |
  18. ✠RZ✠

    Does this mean we can buy whole of Yapanese crap on credit to go with the piles of Chinese crap we bought on credit all of which we don't even really need?

    April 2, 2014 at 4:19 pm |
    • Joseph McCarthy

      What an uneducated post!! My, my, RZ, you sound very un-American. It is our patriotic duty to buy as much as we can to support our Chinese allies!!

      April 2, 2014 at 8:48 pm |
      • ✠RZ✠

        Heck with that mister, the next car I buy is gonna be a Chrysler made right here in... Italy ?

        April 3, 2014 at 2:36 am |
  19. banasy©

    @RZ ..I guess so.

    April 2, 2014 at 5:10 pm |
  20. Timmy Suckle

    I kissed my way up to CEO at a health insurance company. Now I take over $1,000,000 of your health care dollars for NO VALUE ADDED to your health care. And that’s just me. Now think about how many other CEOs, VPs, Directors, Managers, etc. are at my company alone. Now multiply that by thousands of others at hundreds of other health insurance companies. From 10 to 25% of your health care dollars go towards administration that adds NO VALUE to your health care. But my company’s PAC dollars will continue to fool you little people into thinking that a single payer system will be bad. Little people like you are so easy to fool. Little people also don’t realize that a single payer system is the ONLY system that would allow little people (as an entire country) to negotiate better health care prices. Little people don’t realize that the Medical Cartels already know that. And that is the reason why the Medical Cartels spend so much PAC money from the hospitals and doctors lobbying against a single payer system. Some little people say that a single payer system would cost you little people more. But if that were true, then wouldn’t the hospitals and doctors WANT that extra money? Yes they would. So why do the Medical Cartels lobby against a single payer system? It’s because the Medical Cartels know it would allow little people to negotiate better health care prices. And that’s what the Medical Cartels are afraid of. Period.
    But us big wigs at insurance companies, hospitals, and pharmacy companies don’t ever need to worry about health care no matter what it costs. We get our health care paid for one way or another by you little people. And we get the little people that work at our companies to contribute to our PACs. And us big wigs say it’s to protect the little peoples’ jobs. But in reality it would be in the little peoples’ best interest to NOT contribute to the PAC. Again, little people are so easily fooled. I won’t ever have to worry about losing my job with so many little people being brain washed by the Medical Cartels’ PAC money. Not only that, the Medical Cartels’ PAC money is used to elect so many republicans that will never allow a single payer system. Republicans have always fought against any meaningful health care reform. But that’s what our Medical Cartels’ PACs pay them for. Politicians can be bought so easily.
    Pretty soon the only people that will be able to afford health care is us big wigs. And that’s the way it should be. We don’t want you little people using up the resources when we need them. And once again, I thank you little people for capping my SS tax at the $117,000 level. Now I only pay 1.17% SS tax and you little people pay 6.2%. Also, thank you for extending my tax breaks. I’m using the extra money on my vacation houses.

    April 2, 2014 at 10:16 pm |
  21. No, no, no, ...

    ... no 'Corporate Asia' here, please.

    April 3, 2014 at 9:29 am |

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