Economic Partnership Agreements and Japanese Banks Warrant Further Study

When viewed through the lens associated with trade deals negotiated using the Association of Southeast Oriental Nations (ASEAN), Australia, and the Trans-Pacific Relationship (TPP), Japan has shown recent willingness to engage in global free industry. However, is there any indication these deals are striking the chord where it issues most, with Japan’s services sector, which comprises 70% of their economic activity?

Japan has been a long-term supporter associated with multilateral trade mechanisms (Patton 2011). The key reason for this support is it’s caution against discriminatory trade arrangements that would impact its export-oriented industrial sectors (Yoshimatsu 2012). As such, Japan’s long-held view has been that its needs were served through multilateral World Trade Organization (WTO) processes. Only since the 2000s has it turned its attention to bilateral and local agreements (Sasaki 2012).

Japan’s late entry into the economic relationship agreement (EPA) game contributed to its early trade contracts being limited in protection and timid in aspirations. Japan’s approach with nations like Singapore, Mexico, and Malaysia appear based on five main qualities: bilateral rather than regional, developing nations as partners, modest industry and investment coverage, safety of sensitive sectors, and also the inclusion of economic cooperation components (Pekkanen, Solís, and Katada 2007).

Joining the actual TPP negotiations in 2010 signaled a policy direction change for Japan, because in the TPP Japan was not the bigger, wealthier partner able to effectively control agreement negotiations (Ellie 2013). The conclusion of the 7-year trade negotiations with Australia in 2014 also indicated further Japoneses willingness to be comprehensive in its trade commitments.

In particular, the starkest of changes between Japan’utes early trade deals and it is latest ones are in the help area. In its early offers, Japan doused criticism of modest trade access by promoting, as well as providing finance for, various technical transfers to its creating nation partners (Tamura 2007). More recently, however, the liberalization of expense and trade in services in addition to improved rules for electronic commerce and government procurement are specifically included in Japan’s worldwide trade arrangements. Services final results have come into focus.

The reason for this focus might be the family member strength of Japan’s main services sector, the financial industry. The 2008 global financial crisis, which resulted in the largest company failures in history, barely damaged the Japanese financial services sector. Japan had already suffered its “lost decade” of stagnation and company failures following the asset percolate in the 1990s, and rigid conditions imposed in two waves of subsequent banking reform in 1996 and 2002 meant that Japan’s major banking institutions to that point had been known as “dull” (The Economist 2011, p. 2).

Yet, it was the Japanese banks’ lack of interest in mezzanine and other derivative products that gave them an advantage during the global financial trouble. In late 2008 and for the first time since the Japanese asset price bubble burst in 1991, Japoneses companies took major buy-ins in European and American banks and financial services companies (Montgomery and Takahashi 2011). In addition, the Japanese banks’ share of global syndicated loans moved up from 6% in 2007 to 14% in 2012 (Dvorak as well as Fukase 2013).

Therefore, the question to ask gets, was the re-emergence of the Japoneses banks as a globally significant force connected to the timing from the government’s changes in its approach to EPAs? Are the now stronger Japoneses banks lobbying for more services access in EPA negotiations? The reply is, well, maybe.

Unlike the farming sector, Japan’s banking field rarely comments on EPAs. Indeed, one point that differentiated Japan’utes early approach to free industry negotiations from other advanced nations was that Japan did not appear interested in pushing for mandatory obligations on financial services (Katada and Solís 08). Japan’s approach stood out because peculiar given that finance had been among the main benefits sought by Japan’s earliest free trade agreement partners. Furthermore, the direct link between expense outflows from a home country’s banking institutions (in the form of foreign direct expense) and inflows into free industry agreement partner countries indicates that Japanese banks themselves might be expected to have a direct commercial interest in the outcomes of EPA negotiations (Poelhekke 2012).

Looking more closely in the specifics of the early trade offers, Japan’s first completed Environmental protection agency, with Singapore, was the subject of energetic lobbying by Japan’s leading company group, Keidanren, to include financial providers liberalization in the agreement. However, when Mexico negotiated the second EPA with Japan, there was a full exemption for financial providers, which was rare among EPAs (Fink as well as Molinuevo 2008).

Still, although the banks tend to be long-term contributors to Keidanren, it is not clear how the Japanese banks themselves have engaged with Environmental protection agency negotiations. What is clear, however, is that the banks should be motivated to support trade outcomes. For example, the concentration of the Japanese export sector results in a small number of very large multinational firms conducting a great deal of trade: these large companies remain directly connected to their house banks (Volz and Fujimura 2009). The big Japanese exporting firms tend to be dependent on both the trade finance and the export- and investment-related information provided by Japanese banks (Inui et ing. 2013). This direct link with the traded economy would appear to be sufficient incentive for that banks to support initiatives that cause more trade and investment.

Further, the banks remain affected by slow growth in the Japanese domestic marketplace. Even though there is an increasingly aggressive international banking environment, expanding overseas is one of the few paths to growth left for that Japanese banks (EIU 2012).

In summary, the literature reveals little about how contemporary Japanese banking institutions integrate EPAs into their commercial factors. However, there appears to be a prima facie determination for the banks to do so. Therefore, because of the size of major Japanese banks and the importance of the services sector to Japan’s future growth, how Japanese banks work with EPAs is a field that appears to justify further research.

Japanese banks’ appetite for economic partnership contracts is republished with permission through Asia Pathways