Editorial: Trade deal with Japan could prove too costly

New Zealand Prime Minister John Key and His Excellency Shinzo Abe Prime Minister of Japan

Opinion

Japan's Prime Minister, Shinzo Abe, must have noticed a striking difference between New Zealand and Australia when he visited the countries on consecutive days this week. In New Zealand he found a firm commitment to a comprehensive trade agreement, the Trans Pacific Partnership. In Australia he was able to sign a soft bilateral "free trade" agreement, settling for much less on agriculture than other food producers hope to gain from the TPP. Australia is not a team player on trade - it is prepared to undermine collective efforts when offered a lesser but exclusive deal. Japan's attitude is more important.

It is a country in economic and demographic decline but it is still one of the world's largest economies, second only to the United States among the 12 nations negotiating the TPP. Its side-deal with Australia was disappointing, bearing out New Zealand's expressed doubts that admitting Japan to the talks was a good idea. But elsewhere hopes persist that Mr Abe is serious when he uses the TPP as leverage for much needed and long overdue reforms of Japan's economy.

With an ageing and declining population - the average age of its protected small farmers is now 70 - Japan's traditional resistance to immigration, foreign-owned business, women in the workforce, competition in staple foods and much else is said to be breaking down. The fact that Mr Abe's party has won another election after taking the country into the Trans-Pacific talks is a sign that public opinion may be coming around.

The economy is not the only element of Japan that Mr Abe is trying to reform, however. He wants to "reinterpret" the pacifist constitution that prevents Japan's armed forces, self-defence forces, contributing to allied military actions abroad.

Though the constitution was largely a creation of the American postwar occupation, the US has long since urged Japan to adopt a more active military role in collective security. Japanese public opinion by all accounts remains wary. Pacifism was deeply ingrained in the population by the shock of Hiroshima and defeat.

Mr Abe is right, Japan ought to be able to contribute to allied military operations and come to the aid of its friends if necessary. He would have found no opposition to that ambition from the New Zealand or Australian governments this week. But nor would he have found them keen, as he seems to be, to use the TPP for a strategic geopolitical purpose. Both countries value a relationship with China as much, if not more, than their relationship with Japan.

They certainly have more reason to value their Chinese dealings. China's mineral imports enabled the Australian economy to avoid the last recession and its appetite for milk formula has given New Zealand its best export receipts in recent years. As the first country to conclude a free trade agreement with China, New Zealand is the last prospective member of a TPP to want to use that project to isolate and antagonise China.

Sadly, that may be the project's main value to both the US and Japan. President Barack Obama would certainly find it easier to sell an agreement to his Congress on strategic gains than on economics.

That was possibly what Mr Abe had in mind when he claimed after his meeting with John Key on Monday that Japan brought "strategic" value to the TPP.

If that value comes at a cost to the economic quality and product coverage of a possible agreement, New Zealand should walk away. As one of the instigators of this globally important project, we should not compromise its integrity for the sake of an agreement. We are just one small voice but we can use it if the big players settle for strategic games.