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Japan joins TPP free trade talks
Aggregated Source: Shanghai Daily: Business

JAPAN joined United States-led trade talks yesterday, adding its weight to a pact that covers two-fifths of the world economy but raising further doubt over whether negotiators can prise open sensitive sectors such as farm goods and state-linked firms.

Tokyo's entry, which takes to 12 the number of countries in the Trans-Pacific Partnership (TPP), is a key plank of Prime Minister Shinzo Abe's plans to shake up Japan's economy and return it to growth after years of stagnation. His "Abenomics" agenda won a further mandate on Sunday when his coalition won a strong majority in a parliamentary election.

A major goal of US President Barack Obama's administration, the TPP aims to tear down barriers in areas such as government procurement and set standards for workers' rights, environmental protection and intellectual property rights.

But it faces tough resistance in several countries, including Vietnam and Malaysia, where state-linked enterprises and selective handouts of government contracts are entrenched and politically sensitive.

Japan's entry adds another layer of complexity.

"They'll come up with some agreement, but whether it'll be as deep as they want it to be is another question," said Jayant Menon, a senior economist at the Asian Development Bank. "Malaysia and Vietnam will never agree to the rules they want on state-owned enterprises."

Japan, which joins the talks in Kota Kinabalu city ahead of Abe's visit this week to Malaysia, Singapore and the Philippines, is putting its heavily protected agriculture sector up for negotiations. Joining the TPP would account for about two-thirds of the potential gross domestic product increase brought about by "Abenomics", according to JP Morgan.

But even after Abe's resounding poll victory he will remain under pressure from his conservative, ruling Liberal Democratic Party to resist US calls for Japan to slash high tariffs. US lawmakers stressed last week they want a deal that opens Japan to US autos, farm products and insurance firms.

Japanese sources said the government had yet to see the TPP texts and would only use the Malaysia round to assess the direction of talks on areas such as farm tariffs.

Hopes of finalizing the deal by October, when Obama attends the Asia-Pacific Economic Cooperation summit in Indonesia, have faded. Sources say the end of this year or some time in 2014 is now more realistic.

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