Abe’s Path on Trade

By Nicholas Szechenyi

Shinzo Abe. Source: DayBlakelyDonaldson’s flickr photostream, used under a creative commons license.

Prime Minister Shinzo Abe of Japan led his ruling coalition to a solid victory in elections for the Lower House of the Diet (parliament) on December 14. Despite sagging public approval ratings and recent data suggesting the Japanese economy was in recession, Abe called a snap election to seek a mandate for his growth strategy known as “Abenomics.” Abe’s Liberal Democratic Party (LDP) lost a few seats but together with the Komeito (Clean Government Party) secured a two-thirds majority in the chamber.

Turnout was at a record low and some observers questioned the degree of public support for Abenomics. A Yomiuri Shimbun poll published November 16 appears to support that analysis. When asked to choose among possible reasons for the LDP’s convincing victory, only 7 percent of respondents chose support for Abe’s economic policies. Most popular, at 65 percent, was the relative attractiveness of the LDP compared to other parties, perhaps signaling resignation at the lack of viable alternatives. Abe called the snap election to take advantage of this dynamic — his campaign slogan was “This is the only path” — and can now benefit from a window of political stability in which to advance his agenda. The question is whether he will continue to prioritize economic revitalization or shift to other priorities with the pressure of an election behind him.

Structural reform — the “third arrow” of Abenomics (the other two being monetary easing and fiscal stimulus) — is widely considered the most important ingredient for economic revitalization and Abe’s policies in this area will command particular attention in the months ahead. Trade liberalization, specifically under the auspices of the Trans-Pacific Partnership (TPP) negotiations, is central to his reform agenda and strengthening the economic pillar of the U.S.-Japan relationship. Japan and the United States have been engaged in bilateral trade negotiations linked to TPP and issued a joint statement last spring indicating a “path forward” but sensitive issues remain unresolved. Trade politics have complicated the negotiations and both governments will have to make the case for TPP domestically to see this project through.

President Obama recently previewed an engagement strategy on TPP and Trade Promotion Authority (TPA) in the wake of the U.S. midterm elections and Abe presumably has more bandwidth now to discuss TPP in economic and strategic terms, as he did when announcing Japan’s entry into the negotiations in March 2013. If economic reform is the only path for Japan to achieve sustainable growth, leadership on this issue will be an important step in the right direction.

Mr. Nicholas Szechenyi is deputy director and senior fellow for the Japan Chair at CSIS.

Nicholas Szechenyi

Nicholas Szechenyi

Nicholas Szechenyi serves as senior fellow and deputy director of the Japan Chair at CSIS.

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