How is Japan navigating changes in global trade and its evolving economic relations with the United States, as well as the domestic expectations for Japan on the international stage? Those were the issues of focus at an event held in collaboration with the Social Science Research Council’s New Voice from Japan initiative, which seeks to introduce young and upcoming scholars in Japan to the world and tries to involve academics in the policy process.

Takamasa Sekine, associate professor at Nagoya University of Commerce and Business based his presentation on two questions: Has Japan “shifted from passive rule take to active rule maker” in terms of global trade and what is the impact of Japan’s new trade policies on the U.S.–Japan trade relationship?

Traditionally, Japan has been passive when it comes to formulating trade rules. While it has concluded 16 Free Trade Agreements (FTAs) so far, most of them are simply to cope with the rules within the World Trade Organization’s (WTO) framework. But Japan’s approach to FTAs is now changing and is in the process of implementing three “mega FTAs”–namely, the Trans-Pacific Partnership (TPP), the EU- Japan Economic Partnership Agreement, and Regional Compressive Economic Partnership.

Sekine focused on the TPP and said it had a ”great impact on the economy Japan.” as it contains some “advanced and new rules,” especially regarding state owned enterprises. Many of these enterprises survive because they receive subsidies from the government, and while the WTO doesn’t account for such subsidies, the TPP does. In essence “the TPP has many new innovative rules and that’s why Japan is trying to promote this agreement.” According to Sekine, Japan has played a strong leadership role in the formation of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) or TPP 11, and as a result of Japan’s leadership countries such as Colombia, Indonesia, and even the United Kingdom have expressed their desire to join the Agreement.

Sekine, said that while the CPTPP could become one of the largest FTAs in the world, “it seems like it is becoming nearly too late for the United States to come back to the TPP… this is because once the TPP 11 becomes effective, the United States can only come back to the system as an applicant… as a rule taker.” After the United States withdrew from the TPP, the remaining 11 members decided to suspend several provisions which the United States had pushed for, specifically those relating to intellectual property rights. In order to re-activate these suspended provisions, all 11 members will have to give their consensus which may be difficult to achieve.

Despite the United States leaving the TPP, the remaining members want it to come back as it was “strategically important for creating international trade rules” and countering China. Sekine says even if the “TPP can survive, without the United States it may lose its strategical meaning.” Hence, he recommends the CPTPP revise the consensus rule so that suspended provisions of the original agreement can be brought back easily.

Sekine used the examples of automobile exports and beef imports to explain the impact of Japan’s new trade initiatives on the U.S.-Japan bilateral relations. Sekine said the Japanese export of automobiles to the United States would face a higher tariff rate and have an adverse impact on Japan’s automobile industry, however Japan could alleviate it’s loses by increasing imports to CPTPP members, especially Australia. Similarly, Japan can continue to impose a tariff on the beef it imports on the United States.

Sekine concluded by stating that “Japan is showing strong leadership by creating regional trade rules, however Japan’s recent trade policy has a kind of negative impacted on the U.S.–Japan trade relationship because… it is putting the U.S. in a difficult position.” He recommended that the future of the U.S.–Japan trade relationship be constructed around the TPP.

Akai Ohi, adjunct lecturer at the University of Tokyo, Hosei University, and Showa Women’s University, sought to provide a framework for to understand Japanese politics, especially the politics of reform over the last three decades.

During the Cold War, Japan followed the 1955 System “in which the ruling Liberal Democratic Party (Conservative) was in power, and Japan’s Socialist Party (Progressive) was in the opposition for a very long time.” Ohi characterized the conservatives by their “support for the capitalist system and the U.S.–Japan alliance.” The Progressive side on the other hand, “preferred egalitarian social policies and an … isolationist constitution.”

Ohi stated that the “confrontation between the Liberal Democratic Party and the Socialist Party” was not simply an ideological confrontation, and “both sides had a stable base of support in civil society.” While the Liberal Democratic Party received support from the corporate sector and rural agricultural regions, the Socialist party “had a space of support in the trade unions.” But this confrontation came to an end in the 1990’s after the “progressive side almost disappeared” with the end of the Cold War. “Since 1990’s therefore, all major political parties in Japanese politics are more or less conservative, in the sense that they all accept the free market economy and the U.S.–Japan alliance.”

According to Ohi, the era of fierce ideological confrontation has ended, but political divisions still persist. In his view, the “broader conservative trend has been divided into two kinds of conservatives: conventional conservatives and reformist conservatives.” These two types of conservatives are “remarkably different.” The conventional conservatives “stick to pork-barrel politics, and  consensus-oriented  decision making among bureaucrats, politicians, and the public sector.” The reformist conservatives on the other hand, “try to dismantle pork barrel politics by strong political will and leadership.”

Japanese politics has been a tussle between these two types of conservatives over the last 30 years. The government of the reformist conservatives engage in the “politics of reform,” which is characterized by “strengthening top down decision making, and… administrative and economic reform to organize governmental offices and to reduce regulations.” Over the last three decades, there have been three waves where reformist conservatives advanced their political agenda–namely, the administrations of Morihiro Hosokawa (1993-94), Ryutaro Hashimoto (1996-98), and Junichiro Koizumi (2001-06).

In 2009, there was full scale change of government as the Democratic Party of Japan took power. Ohi said it is hard to define them in the reformist trend. While it they initiated “institutional reform to strengthen political leadership,” which can be seen as a continuation of the earlier reformist conservative policies, the new government also had “a social democratic tendency.” Ohi calls Shinzo Abe’s administration which has been in place since 2012 a “turning point for reformist agenda.” This is because “he pretends to continue the reformist agenda such as de-regulation, and privatization, but in reality, he stays away from it. He is not so keen to execute those kinds of reforms, and this stance can be seen in his famous economic policy Abenomics–dynamic mixture of pork barrel politics and quasi neo-liberal politics”

Overall, the reformist conservatives have become dominant over the conventional conservatives through a process of “two steps forward and one step backwards.” However, the former progressive wing of Japanese politics is once again gaining traction, and according to Ohi, one may see a “three cornered confrontation among the reformist conservative, conventional conservative and the third pole which people might call progressive, liberal, left or constitutional“ in the near future.

The views expressed are the author's alone, and do not represent the views of the U.S. Government or the Wilson Center. Copyright 2018, Asia Program. All rights reserved