The Trans-Pacific Partnership agreement must be ratified to provide both economic and geopolitical benefits to the United States, Japan and the Asia-Pacific region.
PRESIDENT Obama’s visit to Japan reminds us all of the strategic importance of U.S.-Japan relations. With legislators in both countries scrutinizing the text of the Trans-Pacific Partnership (TPP), now is the time for our two respective business communities to stand up and vocally support this landmark 12-nation agreement, which would boost both economies and foster closer ties between our two nations.
Despite heated rhetoric over the TPP coming from the American presidential campaigns, there is a very strong case for ratification.
The goal of the agreement is not only to lower barriers to trade and investment across the Asia-Pacific region, but also to set high-standard trade and investment rules that are conducive to 21st-century commerce. The agreement is an important part of our cooperative efforts to promote the values we share as allies, across the region and around the world — namely freedom, democracy and the rule of law.
The TPP would bring significant economic benefits for both our countries. The World Bank estimates that, by implementing the agreement, Japan would see economic growth rise by 2.7 percent by 2030, with exports growing by $23.2 billion annually. The United States would see a boost in gross domestic product of 0.4 percent — not an insignificant amount — while its exports would grow by $9.2 billion per year. On the other hand, delaying the launch of the TPP by even one year would represent a $94 billion permanent loss to the U.S. economy, according to a recent report by the Peterson Institute for International Economics.
The TPP could contribute to strengthening our integrated and increasingly interdependent economies. Some 637,000 U.S. jobs are supported by our bilateral trade. With significant tariff reductions and the removal of barriers to entry as the result of TPP, this two-way relationship should deepen considerably.
And it’s not just trade. Both the United States and Japan maintain significant amounts of foreign direct investment in each other’s countries — and throughout the TPP region. Japanese companies contribute to support some 1.7 million jobs in the United States. The TPP’s strong investment rules will go a long way toward creating new opportunities and facilitating investment by American and Japanese companies throughout the TPP region. It means that the TPP would provide more opportunity for Japanese and American companies to contribute to each other’s economies, including furthering job creation.
Perhaps the TPP’s most important benefits would be to link the economies of the United States and Japan with 10 other Asia-Pacific partners and to establish ambitious “rules of the road” for 21st-century commerce. Already, several other countries have expressed interest in joining the agreement, which both the U.S. and Japan have described as open and dynamic. Expanding the TPP to encompass other countries would bring even larger benefits for both the U.S. and Japan through expanded new market access and the spread of the TPP’s high-level rules, a vital source of the competitiveness of our economies.
So the economic benefits from the agreement — for the United States, Japan and the region — are significant and undeniable. But perhaps even more important, there are vital geopolitical implications for the TPP. Confronting threats and uncertainty in various parts of Asia, including the Korean Peninsula, the United States and Japan need to reinforce and deepen their cooperation with other regional actors. Closer relations through expanded trade, shared rules and values, based on our long-standing alliance, help us do just that.
Our countries also must continue their strong partnership in making progress on shared global challenges, such as climate change, nuclear nonproliferation and the threat of global pandemics. Trade is a bedrock component of a strong, vibrant, bilateral relationship, as well as creating regional stability in the Asia-Pacific region.