YOKOTA AIR BASE, Japan — Japan should push ahead with negotiations to form a free trade bloc with the U.S. and 10 other Pacific Rim nations, Sen. John McCain told a group of U.S. and Japanese students in Tokyo on Wednesday.
The trade deal is an important part of the Pacific pivot — announced by President Barack Obama in November 2011 — that focuses U.S. military, diplomatic and economic attention on a region that is rapidly becoming the most powerful engine of the global economy. Proponents of the trade pact say it would pry open U.S. access to difficult markets, create consistent rules and contribute to regional security.
“Our political debates are not about whether to place greater emphasis on the Asia-Pacific region but about how best to do so,” McCain told students participating in the 65th Japan-America Student Conference.
Massive cuts to the U.S. defense budget have put a damper on U.S. efforts to rebalance military forces to the Pacific.
“Some of our friends in Japan and the region are questioning if they can still count on America,” McCain said.
However, Japan’s decision last month to join the Trans Pacific Partnership is evidence that U.S. trade efforts are on a more positive track.
Implementation of the agreement would create a free-trade zone encompassing many of the region’s most advanced economies to include Australia, Brunei, Malaysia, New Zealand and Singapore. The pact would also include Chile, Canada, Mexico and Peru.
“This (trade pact) has the potential for becoming one of the only tangible long-lasting symbols of the rebalance,” said Jeffrey Hornung, associate professor at the Asia-Pacific Center for Security Studies in Hawaii.
Obama has said the pivot and the trade pact are not aimed at China, but it’s clear that the free trade deal will include rules that directly challenge many of the practices that the Chinese have been using to grow their economy at the expense of others, he said.
And just as China is challenging U.S. military power by acquiring an aircraft carrier, stealth jets and drones, it’s also competing on the trade front by signing bilateral free trade agreements and a pact with the Association of Southeast Asian Nations that comes into full force by 2015.
Hornung said the Trans Pacific Partnership is a chance for the U.S. — which is pushing for rules on transparency, intellectual property, the environment and labor rights — to put its stamp on trade rules in Asia. If it can be negotiated, other Asian nations, such as South Korea, will seek to join.
“The TPP has the potential of becoming the rule-making body in the Pacific for trade in the 21st century,” he said. “It would really show America’s commitment to trade in the region.”
Negotiators are pushing for an agreement by the next Asia-Pacific Economic Cooperation (APEC) meeting in Bali in October, he said.
The agreement is likely to boost already-strong trade links between the U.S. and Japan.
Ichiro Fujisaki, Japanese ambassador to the U.S. in 2008-12, recently noted that Japan is already a major importer of U.S. corn, wheat, soybeans and pork.
Since Japan’s nuclear accident in 2011, it has generated 47 percent of its electricity from liquefied natural gas, and it would like to import the fuel from the U.S., where hydraulic fracturing is bringing plentiful new supplies on line.
The economic links track robust security cooperation. Japan is second only to the U.S. in terms of its investment in reconstruction in Iraq, Afghanistan, Pakistan and the Palestinian territory, Fujisaki said. Surveys show that four in five Japanese feel an “affinity” toward the U.S. while a similar number of Americans rate Japan a “trustworthy partner,” he added.
Trade pact negotiations will involve sensitive issues, such as agriculture, an area where both the U.S. and Japan provide major subsidies for farmers.
“Whenever you have one of these trade agreements, some part of the economy that has been protected by special interests is going to suffer,” McCain said while adding that the U.S. has benefited enormously from every free trade agreement that it has signed.
The pact would likely benefit consumers in the Pacific by giving more people access to agricultural products at cheaper prices, he said.
Matthew Goodman, a former White House coordinator for APEC who works at the Center for Strategic and International Studies in Washington, said America’s Pacific rebalance is not sustainable without an economic component.
“The region doesn’t just want us there as a military power,” he said.
The European Economic Community was created, partly as a means of binding nations that had fought two catastrophic wars in the 20th century. The fear that any breakup might increase the risk of conflict is one reason that Germany has funded multiple Greek bailouts in recent years.
Goodman said there’s a parallel history of conflict in Asia that is still playing out in rivalries over islands in the South and East China seas.
While China wouldn’t be excluded from joining, the pact would set rules that are too tough for it to comply with now, including protection of intellectual property — which likely would raise issues with the military there actively engaged in cyber espionage against foreign business, he said. China’s state-owned enterprises, which are given favorable treatment, would also need to be reformed.
Marc Mealy, vice president for policy at the US-ASEAN Business Council in Washington, said U.S. businesses think Washington should focus as much on trade and investment as the military aspects of the pivot.
“The (trade agreement) would represent a game change,” he said. “We would open up greater U.S. investment in some of the fastest-growing economies in Asia.”
The agreement would give U.S. firms greater opportunities to expand financial services, information technology, telecommunications and aerospace exports, he said.
Nothing in the pact directly addresses exports of defense hardware, but its rules could help U.S. defense contractors seeking to sell their wares to friendly governments in Asia, Mealy said.
International Institute for Strategic Studies reported this month that Asian countries spent more on defense in 2012 — $287.4 billion — than European nations.