How big are the benefits of TPP for Japan?

The 12 countries involved in the Trans-Pacific Partnership talk have reached a tentative agreement this week, promising to liberalize trade and investment on a multilateral basis. For Japan, the TPP is widely expected to benefit its economy through boosting exports. Thanks to the reduction of tariff rates, Japanese manufacturers will be given the opportunities to increase sales in the TPP-covered markets, especially in the US that Japan currently doesn't have a bilateral free trade agreement with. Comparatively, Japanese exporters will be in a better position to compete with the Chinese and Taiwanese counterparts, given that China and Taiwan are not included in the TPP and haven't established FTA networks on the broad basis. 

That said, the positive effects on exports shouldn't be overstated. The traditional tariff barriers in international trade are already low nowadays because many free trade agreements have been in place. Japan has signed bilateral FTAs with the ASEAN countries, some of which are also the TPP members. Meanwhile, South Korea - one of Japan's major trade competitors - has sealed FTAs with both the ASEAN and the US. Trade competition from the Korean rivals would remain intensive, including in some key sectors like automobiles and electronics. 

In fact, the TPP negotiators want to distinguish the deal from the previous FTAs in terms of tackling the tough, non-tariff issues, such as common standards in the areas of services investment, e-commerce, intellectual property, labor and environment. To Japan, a meaningful element should be the further opening of its domestic services market to foreign investors, which will help to attract FDI, boost productivity and support the economy's long-term growth outlook. Deregulation in the services sector should also be viewed positively as a progress in structural reforms, or the 3rd arrow of Abenomics. In this regard, concrete details of the TPP will remain to be seen. Note that revisions will remain possible in the final deal and implementation could take a long time as the ratification process will be complicated.