More trade partnerships are needed, not less, Yasushi Takase, Ambassador of Japan to Mexico, said.in his opening presentation at Mexico Automotive Summit 2018 on the Wednesday, alluding to the current trade rhetoric between the US and China.
“It is very unfortunate that several countries adopt protectionist tendencies and leaders talk about easy-to-win trade wars,” Takase told the audience at the Hotel Sheraton María Isabel in Mexico City. He pointed out that Japan would like to enter more partnerships with other countries that share the ideal of free trade.
Takase underlined that his country’s aging population, in particular, poses a series of challenges that trade can help overcome. “Our population and labor force are shrinking, which could harm our potential growth rates in the future,” he said. “Productivity will take a hit and our growth will diminish.” He said that to increase productivity, Japan needs to be open and more connected with its economic partners.
The ambassador pointed out that Mexico not only is Japan’s second-oldest economic partner but also has become a key partner for Japan in the process of promoting free trade in the world. He said that both countries have gone the distance during the negotiations and implementation of the CPTPP (TPP-11). “Since the exit of the US from TPP, Japan led the negotiations of TPP-11 with Mexico,” said Takase.
He added that TPP started as an agreement between Brunei, Chile, Singapore and New Zealand with the eventual entrance of the US, Australia, Peru, Vietnam and other countries and only later did Japan join to total 12 members. But when the US withdrew from the agreement in January 2017, responsibility for a final deal fell on the shoulders of Japan and Mexico.
“We needed to continue working hard toward reaching an agreement,” Takase said. “The Japanese Minister of Economy came to Mexico in January and talked with his Mexican counterpart Ildefonso Guajardo and both countries agreed to collaborate together toward the signing of the agreement.” For instance, Mexico played a key role in persuading Canada to join TPP-11 despite the US leaving the agreement, he added.
Takase said that key goals that Japan pursues when negotiating deals such as TPP-11 include establishing new, high-standard trade rules that promote a more dynamic economy in the region. He says that while a TPP with the US as a member would comprise 40 percent of the world’s GDP, 30 percent of the global trade volume and a total market of 800 million people, TPP-11 is still attractive. Takase pointed out that this agreement comprises 13 percent of the world’s GDP, 15 percent of the global trade volume and a market of 500 million people.
TPP11, which is currently in the process of being ratified, not only eliminated tariffs close to 100 percent in terms of trade-value and item-basis, Takase said. “We also established high-quality rules on trade and investment to suit the needs of the 21st century in areas such as investment, services, intellectual property and e-commerce.” Once six of the 12 signatory countries ratify the agreement, it will enter force. “Mexico, Japan and Singapore have gone ahead and this agreement could enter force next year,” he concluded.
Mexico Automotive Summit 2018, organized by Mexico Business Events, is also the launch event for the fifth edition of Mexico Automotive Review, a publication by Mexico Business Publishing.
Follow the livestream of the event here.