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2016 Vol.3
An Outline of the TPP and Its Effect on the Japanese Economy

2016/08/09

With the WTO Doha Round negotiations stalled and progress in trade liberalization at the global level come to a standstill, countries have actively been making free-trade agreements (FTAs). In recent years, particularly, mega FTAs—large FTAs with a number of participating countries—have been attracting attention. Representative of mega FTAs is the TPP signed in February 2016. The TPP is characterized by its rule-making on trade and investment and a high degree of trade liberalization (elimination of tariffs in principle), and is classed as a twenty-first century trade agreement. A wide range of areas are subject to TPP negotiations, the goals of which are to make cross-border movements of goods, people, capital, and information as smooth as possible through the elimination of tariffs and other measures and to make the competitive conditions of the free trade zone as fair as possible. The TPP is intended to increase the participants’ productivity and economic growth by promoting competition. In the case of the Japanese economy, the TPP is expected to reduce the value of agricultural production due to increased cheap imports but raise real GDP in the long run through vitalized trade and efficient customs procedures. In response to the basic TPP agreement, the government of Japan prepared the General Principles of Comprehensive TPP-Related Policies. The document includes not only policies for agriculture, forestry, and fisheries, but also supportive measures for promoting the utilization of the TPP, for example, by creating a system to provide information and consultation to small and medium-sized firms. Future challenges include effectively promoting these policies and measures in a way that satisfies the needs of firms. Against this backdrop, whether the results expected of the TPP will materialize depends on firms’ success in taking advantage of the TPP to improve their performance.

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