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US gives Japan nod for mega trade pact

Shaun Tandon
Japanese Prime Minister Shinzo Abe meets with reporters at the prime minister's official residence in Tokyo on April 12, 2013. The United States gave Japan the green light Friday to enter talks on a Pacific trade agreement, in the latest step forward for a pact that would account for 40 percent of the global economy.

The United States gave Japan the green light Friday to enter talks on a Pacific trade agreement, in a key step forward for a pact that would account for nearly 40 percent of the global economy.

The two countries announced concessions for Japan to join negotiations on the 11-nation, US-driven Trans-Pacific Partnership, despite opposition from some US manufacturers and labor groups and Japan's powerful farmers.

"I want our participation in the negotiations to come into force quickly so we can play a critical role in defining the rules" of the pact, Japanese Prime Minister Shinzo Abe told reporters in Tokyo.

Under the Trans-Pacific Partnership guidelines, all 11 nations engaged in the negotiations need to approve before Japan participates. Japan must still win over Australia, Canada, New Zealand and Peru.

Japan's entrance into talks "is good for the US, it's good for the Trans-Pacific Partnership as a whole, and it's very good for the multilateral trading system itself," senior White House official Mike Froman told reporters.

Acting US Trade Representative Demetrios Marantis said Japan had made promises to ease the concerns of US automakers, which fear being crushed at home by their Japanese competition under a free trade deal.

Japan agreed that US tariffs on Japanese cars would be phased out at the latest possible time allowed by a future accord.

The car tariffs would also "substantially exceed" the levels in the free trade agreement between the United States and South Korea that went into force in March 2012 after exhaustive talks, Marantis said.

In turn, the United States will talk to Japan about non-tariff barriers it believes keep out US cars, such as untransparent regulations, and Japan would raise from 2,000 to 5,000 the number of cars certified each year under a fast-track program.

The US Congress must ultimately approve a free trade agreement and Japan's entrance has faced opposition from several members of President Barack Obama's Democratic Party.

Representative Sandy Levin, the top Democrat on the House Ways and Means Committee critical to passing any trade bill, said Japan's 3,000-car certification increase was so small it was "a meaningless gesture."

Levin, from the auto state of Michigan, said any US tariff reduction should be linked to action by Japan to open its market.

"For decades, Japan has had and been using to their economic advantage the most closed auto market in the world," Levin said, noting that imported cars' market share in Japan was far lower than in the United States.

But the Obama administration's acceptance of Japan was welcomed by Republicans and some Democrats including Senator Max Baucus, who chairs the key Senate Finance Committee.

Baucus, from the ranching state of Montana, called Japan's participation "an extraordinary opportunity" and hailed Tokyo's recent moves to accept more US beef imports.

The US Chamber of Commerce, the largest business lobby, praised Japan's inclusion.

But the Alliance for American Manufacturing, which includes the United Steelworkers union, said the administration made an "incredibly irresponsible" decision that has "already given Japan a blank check to cheat."

Obama has championed the Trans-Pacific Partnership as a way to boost the US economy through trade and to build a US-driven order in a fast-growing region where China -- which is not part of the talks -- is gaining clout.

Abe, despite criticism within his Liberal Democratic Party, has embraced the Trans-Pacific Partnership as a way to ensure that the world's third largest economy stays relevant amid the rapid changes in Asia.

On a visit in February to Washington, Abe and Obama left open the possibility of excluding agriculture in an eventual deal -- a key demand of Japanese farmers who enjoy sweeping protection from foreign competition.

Nations in the talks that have approved Japan's participation are Brunei, Chile, Malaysia, Mexico, Singapore and Vietnam.