A U.S. government official has suggested that preliminary discussions be held on three trade issues before Japan formally participates in negotiations on the Trans-Pacific Partnership free trade arrangement.
The lack of progress in those preliminary discussions, as well as virulent opposition to the TPP within the ruling Democratic Party of Japan, are the primary reasons Prime Minister Yoshihiko Noda is not expected to formally announce Japan's participation in the TPP talks when he meets with U.S. President Barack Obama on April 30.
The U.S. focus on the three trade issues was brought to light on April 20 when a report was presented to DPJ lawmakers by three party officials who visited Washington earlier in April for discussions with Demetrios Marantis, a deputy U.S. trade representative.
Marantis suggested that discussions be held on the three trade areas as a means of gaining support in the U.S. Congress for Japanese participation in the TPP talks.
The most contentious of the three trade areas is insurance, especially in light of legislation recently passed by the Lower House that would continue to give the central government a major say over Japan Post Insurance Co. The legislation is expected to pass the Upper House and become law, mainly because it is being supported by not only the DPJ, but also the opposition Liberal Democratic Party and New Komeito.
U.S. officials are concerned that fair competition would not be possible against an entity that has the clear backing of the Japanese central government. The legislation would not obligate Japan Post Holdings Co., created through government funding, to sell off all shares in Japan Post Insurance.
Moreover, the legislation has provisions that would allow Japan Post Insurance to freely move into new business sectors once Japan Post Holdings Co. sells off more than half its stake.
Such a development could prove to be a major threat to such insurance companies as Aflac Inc., the largest provider of supplemental insurance in the United States, especially if Japan Post Insurance should decide to move into cancer insurance.
Aflac currently has a more than 70-percent stake of the Japanese market in cancer insurance.
Moreover, the Japanese subsidiary of Aflac is now led by Charles Lake, who at one time was in charge of Japan affairs at the Office of the U.S. Trade Representative.
The two other trade areas mentioned by Marantis were automobiles and beef.
However, Japanese officials were suggesting that the United States focused on those two topics just to pick a fight since there was little likelihood that Japan could concede anything.
For example, while U.S. officials criticized the low market share of automobile imports in the Japanese markets, there are no tariffs on foreign vehicles imported into Japan.
With the beef issue, the health ministry has already begun procedures to relax restrictions on U.S. beef imports that were implemented following the outbreak of bovine spongiform encephalopathy, or mad cow disease, more than a decade ago.
The insurance issue is another matter, however, and the United States is expected to continue to raise concerns about government involvement in Japan Post Insurance.
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