News Analysis: Japan left high and dry as Trump pulls plug on TPP deal

Japan's hopes of seeing the expansive Trans-Pacific Partnership (TPP) free trade agreement involving 11 other nations come to fruition and significantly boosting regional trade between countries involved and potentially bolstering global gross domestic product have come crashing down after the United States pulled out of the deal.

U.S. President Donald Trump in one of his first tasks as the nation's new president signed an executive order permanently removing the U.S. from the TPP negotiations and as the biggest signatory to the deal, in doing so, has effectively quashed the pact from launching in the form it was intended.

In his run up to being elected, Trump had made no secret of his intentions to scarp the deal, calling the pact "the worst deal ever" with his words after signing the order canceling America's participation echoing his former sentiments.

Ditching the deal that had been approved by the 12 countries involved when former U.S. President Barack Obama was in office, Trump called the presidential memorandum "a great thing for the American workers."

Although Japan has prior to and since Trump taking office as president vocally rallied to have the U.S., who accounts for 60 percent of the signatories' GDP alone, remain on board, with a personal visit from Prime Minister Shinzo Abe and pleas from other high-ranking Japanese officials for Trump to come around to Japan's view of the TPP of being of "great strategic and economic significance", Japan, it would seem, has been left high and dry.

"We believe that President Trump recognizes the importance of free and fair trade, and we want to take the time to seek his understanding on the strategic and economic significance the TPP holds," Deputy Chief Cabinet Secretary Koichi Hagiuda told a press conference Tuesday, reiterating the government's long-held position.

However, despite media reports that other nations may be considering continuing with a similar pact without the participation of the U.S., Japan's involvement seems unlikely, with Hagiuda saying that Japan is "not considering proceeding with the TPP without the United States."

The unlikelihood of Japan pushing forward with a TPP-like deal without the U.S. was also underscored by the the position of chief negotiator for the TPP being left vacant, with Hiroshi Oe, who had held the position since May last year, being reassigned to the Foreign Ministry on Tuesday.

Despite Hagiuda saying the move was "not prompted by the U.S. withdrawal from TPP," analysts believe that Japan, having also been admonished by Trump for engaging in trade practices described by the new president as "unfair to American companies", particularly regarding Japan's dealings in auto trade, will now fall back and reassess its next move and broader trade alliances with the U.S.

Whether the comments were warranted or not is somewhat down to conjecture, as despite Japan trying ardently to protect its own "sacred sectors" like agriculture from abolishing tariffs that would have battered part of the nation's farming industry that has long enjoyed exponentially high tariffs on rice imports from overseas, for example, Japan had, in fact, removed non-tariff barriers on importing U.S. automobiles.

This move was deemed a huge boon for the U.S. and was highlighted as such by the U.S. Commerce Department in a 2016 report on the matter, with its applause for Japan readjusting its position, running somewhat contrary to Trump's remarks, observers here said Tuesday.

In response, albeit it too late, Japan's trade minister hit back at Trump saying that Japan had in no way been involved in unfair practices that might harm American interests, including its labor force, or for U.S. automakers to sell their vehicles in Japan.

"Japan is not imposing tariffs on American cars or conducting any unfair trade practices," trade minister Hiroshige Seko told reporters Tuesday.

For Abe's part, the hawkish leader may possibly be more concerned with Japan's continued security alliance with the U.S., rather than FTA's, with sources close to the matter saying his administration is, in light of Trump reneging on the U.S. signing the pact, considering other regional FTA's and further bilateral deals with the U.S., in the meantime.

"I believe President Trump understands the importance of free and fair trade, so I'd like to pursue his understanding on the strategic and economic importance of the TPP trade pact," Abe told a lower house parliamentary session this weak, adding that he was keen to "strengthen the U.S.-Japan security alliance, based on mutual trust with Trump."

"When we met last time, I believed him to be trustworthy, this belief has not changed today," said the Japanese leader, with reference to his meeting in November with Trump.

Abe told the parliamentary session that Japan would continue to fully try to explain exactly how its companies have helped bolster the U.S. economy and helped create jobs, rather than take them away.

Sources close to the matter, however, with Trump's seemingly unwavering mantras of "America First" and "Made in America", believe that Japan may be toeing the line for now or risk facing unilateral border tax from the U.S. on its exports, which would further damage Japan's already ailing export-led economy.

Had the TPP deal come to fruition Japan's economy stood to grow by around 0.66 percentage point, or around 3.2 trillion yen (28.25 billion U.S. dollars) in 10 years, according to some conservative estimates, but critics of the deal were quick to point out that Japan would have somehow had to have keep its tariffs on rice and other fragile agricultural sectors for up to 10 years, a scenario that seems highly unlikely under a Trump leadership.

Economists here previously said that according to the government's own estimates, the flood of cheaper imports by participation in the TPP would cause around a 3 trillion yen drop in the value of domestic agriculture products, from the current 8 trillion yen.

But agriculture aside, the industrial sector had warmly welcomed the deal and the Japan Business Federation, Japan's largest business lobby also known as Keidanren, hailed the TPP as being a monumental godsend for Japan's flagging economy.

The Japan Association of Corporative Executives was also a huge proponent of the TPP deal, although, since its inception, the TPP has not been without its significant hurdles, and notably, Japan was one of the last countries to get onboard, which slowed down the deal's proceedings under Obama.

Some economists here are already suggesting that the pact would have ended up being more about managed trade rather than free trade and questioned the lack of transparency of the overall process.

Experts have also claimed that, along similar lines, not all the deals inked would see tariffs eliminated following pledges made in earlier negotiations, with the details of the accord, in fact, a diluted version of the original grand vision.

The TPP which involved Japan, Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam, if ratified, would have accounted for some 40 percent of global gross domestic product and more than 30 percent of global trade, with economists estimating that combined growth could have been worth in access of 28 trillion U.S. dollars. Endit