PRIME Minister Shinzo Abe announced yesterday that Tokyo will seek to join talks on a US-led Pacific free trade pact that proponents say will help tap vibrant regional growth, open Japan to tougher competition and create momentum for reforms needed to revive the long-stagnant economy.
"Emerging countries in Asia are shifting to an open economy one after another. If Japan alone remains an inward-looking economy, there would be no chance for growth," Abe said. "This is our last chance. If we miss this opportunity, Japan will be left behind."
The government estimates that joining the Trans-Pacific Partnership will boost Japan's gross domestic product by 3.2 trillion yen (RM103.9 billion), or 0.66 percentage points, offsetting the negative impact on agriculture by boosting exports in other sectors and domestic private consumption.
"Abenomics" has been playing to rave reviews in the Tokyo stock market and with voters, about 70 per cent of whom support the prime minister.
Business executives and economists say the real test, though, will be whether Abe buckles down to more controversial reforms such as deregulation, which can hurt vested interests.
"TPP could be a trigger for Japan to implement deregulation in various sectors by using external pressure," said Hideo Kumamo, chief economist at Dai-ichi Life Research Institute.
"It is being seen as a way to stimulate the economy by making the nation more competitive."
The US and 10 other countries are pushing for a deal by year-end and possibly as soon as an Asia-Pacific leaders summit in Bali in October.
Much of the attention has focused on political hot-button issues such as scrapping tariffs on farm products and textiles.
But negotiators are also grappling with thorny matters such as rules on disputes between companies and governments, state-owned enterprises, copyright protection, access to financial and other service sectors, cross-border transfer of electronic data and protection for workers from trade-related fallout.
Hurdles remain to Japan's entry to the talks.
Tokyo must first hold bilateral meetings with existing members and be supported by a consensus to "keep up the good momentum" as the countries prepare for the next talks in Peru, said Singapore negotiator Ng Bee Kim.
Other countries in the trade talks include Canada, Mexico, Australia, New Zealand, Chile, Peru, Vietnam, Malaysia and Brunei.
Meanwhile, the Parliament approved Haruhiko Kuroda as the next governor of the Bank of Japan yesterday, paving the way for more vigorous monetary stimulus sought by Abe as part of his economic revival plan.
He had handpicked Kuroda, a vocal advocate of greater BoJ stimulus, as the bank's new chief.
The Parliament's opposition-dominated upper house also approved government nominees Kikuo Iwata and Hiroshi Nakaso as Kuroda's deputies, a day after the trio sailed through a vote in the lower house where Abe's ruling party has majority.
Kuroda was approved in the upper house with 186 in favour and 34 against, and Iwata won approval with 124 in favour and 96 against. Nakaso received 199 ayes and 22 no votes. Reuters