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Japan's Abe scores central bank win, aims at trade

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(Globalpost/GlobalPost)

Japan's hard-charging prime minister got his pick installed as central bank chief Friday, then readied to tackle the powerful farming lobby by committing the world's number three economy to pan-Pacific trade talks.

Shinzo Abe has surprised many since his December election, racing through his first few months in office with an economic pragmatism that has borne fruit and confounding those who tried to paint him as an out-of-touch nationalist.

Fresh from victory in parliament's upper chamber, where lawmakers backed Haruhiko Kuroda for the Bank of Japan's top job, he was preparing to tell the country it needed a seat at the trade negotiating table.

"I will hold a news conference at 6:00 pm (0900 GMT) and announce joining the talks" on the Trans-Pacific Partnership (TPP), he told senior officials of his Liberal Democratic Party (LDP), according to a party official.

Supporters of the TPP say it would give Japan's flagging economy a boost -- the government estimates by as much as 3.2 trillion yen ($33 billion) over a decade -- and increase consumer choice.

They say opening up Japan's cosseted markets is vital if its stumbling economy is going to pick up speed, a key campaign promise from Abe.

But opponents claim it could be a body blow to the country's ageing farmers, possibly removing the sky-high tariffs that have sheltered them and sending many to the wall, changing the face of the countryside in the process.

Japan's rural heartland is a crucial source of support for Abe's brand of conservative nationalism and any suggestion that farmers will lose their unparalleled protection could be politically costly for him.

In a bid to head off these objections, Abe's administration has furiously spun a joint statement issued in Washington after summit talks with US President Barack Obama.

The statement said the two countries recognise "bilateral trade sensitivities, such as certain agricultural products for Japan and certain manufactured products for the United States".

Tokyo has been keen to give the impression that this could mean products such as rice, which enjoys import tariffs approaching 800 percent, are off the table.

On Thursday, the LDP's task force on the TPP asked Abe to ensure exemptions on sensitive items -- rice, wheat, beef, dairy products and others -- adding they want Japan to withdraw from talks if these are endangered.

But the task force also said "if Japan doesn't participate in negotiations, it will not be able to take advantage of growth in the Asia-Pacific region".

For their part, US auto manufacturers are nervous about Japanese rivals having unfettered access to the huge American market.

The TPP -- which forms a vital plank in President Obama's vaunted "pivot" to Asia -- has been on the global agenda for years, but a succession of politically weak leaders have been unable to commit Japan to involvement.

The fact that Abe appears ready to take the plunge, say observers, is a sign of the momentum he has gathered in the less than three months since he came to power in landslide elections.

He hit the ground running on taking office on December 26 and his tough talk on the need for more monetary easing, coupled with threats to change the law governing the independence of the Bank of Japan, succeeded in driving down the painfully strong yen.

Friday's upper house approval for Abe's slate of central bank chiefs -- Kikuo Iwata and Hiroshi Nakaso also got the nod as Kuroda's deputies -- is a further boost for his campaign for aggressive monetary easing, which he sees as necessary if Japan is to escape more than a decade of deflation.

The BoJ's new management team, which was approved by the lower house on Thursday, is set to take up their positions next week with the focus now squarely on their first policy meeting next month.

"High hopes are resting on the ability of the Bank of Japan's new leadership to revitalise the economy," London-based Capital Economics said in a note.

Kuroda, 68, is thought likely to back the premier's prescription of big spending and aggressive monetary easing, vowing during confirmation hearings to do "everything possible" to reverse years of falling prices.

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http://www.globalpost.com/dispatch/news/afp/130315/japans-abe-scores-central-bank-win-aims-at-trade