TPP (Trans-Pacific Strategic Economic Partnership) is probably the biggest economic issue that's facing Japan at the moment. Whether or not Japan joins the framework would have a huge ramification that would last generations.
Looking at media reports, I get the impression that majority of Japanese elites are for the framework. And the government seems to be treading to that direction, too. I was also pleasantly surprised to receive the following message from a friend in Russia.
"i really like Nodas role regarding the TTP. It could be a departure of Japanese protective mercantilism (in my humble opinion a partial cause of the long recession) and let the country re-assert some regional leadership which in this case would be very broadly welcomed by other Asian nations. I just hope he does not meet to steep an opposition internally to this initiative so that the TTP goes ahead asap, als as a counterweight to Chinese dominance in the region."
Now, I totally understand this idea of Japan being stagnant due to its inability to reform itself. I get so often frustrated by the way Japanese businesses protect their interests by building up virtual firewall around the country, making lots of stuff commonly accessible in the world unavailable to Japan. So many things in Japan are insanely expensive. And that's clearly due to the excessive protectionism. In other words, they are protecting corporate interests by sacrificing consumers.
However, I remain skeptical about TPP as to if the ratification of such a treaty would be a good thing for Japan. Concerns I have are:
1) Very high price of yen
Yen is right now at the highest level against US dollar and many other currencies since the WWII. If it's a result of natural cycle of economic ups and downs, then it's not a big deal. But I fear the US is artificially lowering the value of their currency by printing more dollars and that they are really in for a major currency war. I admit that Japan is also printing yen and intervening to the market, but the scale seems to be different. And after all, the US as a nation is indebted to other nations, so it makes perfect sense for them to print money, whereas Japanese debts are owned by Japanese and that makes printing more harmful to the population. My guess is that the US dollar will keep going down against yen at least until Japan enters into its own major fiscal crisis. And if that's the case, TPP could simply help the US export more to Japan, whilst what little advantage Japan could get from TPP will be easily canceled out by the appreciation of yen.
2) Why TPP and not FTP?
Free trade agreements do not need to take form of multi-lateral framework. "If" Japan wants to liberalize trade more with the US, it could do so with bilateral FTP. And that, I think, would make it easier for Japan to negotiate with the US. Multi-lateral negotiations require high-skill diplomacy but Japan is not really known for sophisticated diplomacy. Most Japanese politicians have problem speaking English and have poor international negotiation skills. Americans are better at these things and they can work with Australia, etc to push an agreement that's disadvantageous to us.
If Japan wants to have a multi-lateral talk with Asian nations, it's better to do so without the US. That would make negotiations a lot easier. Some say Japan has in the past tried to negotiate certain economic agreements with Asian nations, particularly with SE Asia, but it was the US that pressured Japan not to proceed. The US wants to be included in any of such multi-lateral talks, but that wouldn't help Japan.
3) Unfair domestic competition
TPP would bring about more intense competition, and that would surely create certain burdens to the Japanese society. If this burden is shared equally by all Japanese, that's fine. But it is quite possible that the most burden would be placed upon non-regular workers, small businesses, and the youth. That's exactly what happened after the burst of Japanese bubble economy. Facing economic difficulties, Japanese businesses had to streamline, but firing regular employees was/is quite difficult in Japan, so companies instead hired less youth as regular employees and more as non-regular workers. Non-regular workers are generally paid far less than regular workers even if they do very similar work. At the same time, young regular workers were forced to work many hours unpaid, and despite that, salaries increased rather slowly compared to what elder generations experienced. All that would have been ok if the burden was shared with elder employees too, in the form of pay-cut, etc, but that didn't take place very often. The other party that has suffered from unfair burden sharing is small/medium companies. Big corporations have demanded their subcontractors to bear economic burdens more than they have themselves. The government has helped big corporations in many ways whilst small/medium corporations less often received such help. As a result, we see today a massive gap between regular and non-regular workers; between senior and young generations; and between big and small corporations. My fear is that TPP would intensify this situation even more. For me, the priority should be to make competition fairer inside Japan than across borders. Japan should stop excessive protection of regular workers, older generations and big corporations. Salaries of regular workers and older generations must be allowed to go down, and the government should stop subsidizing big corporations and let noncompetitive ones go bankrupt. Helping the strong won't make the economy stronger. Without fair domestic competition and with lots of privileges, people are using their energies to keep what they've already got instead of trying something new. That's not capitalism. And that I think is the major reason Japan has lost two decades and is likely to lose more.
It's really hard to say if TPP would help Japan in the long run. After all, competition is worth fighting only if you could win more than you lose.
Ideally, it's best to reform Japan before it engages in more intensive international competition. Without making Japanese compete fairly with one another inside Japan, the country is likely to stagnate even longer. And the chance of Japan winning international competition would be slimmer.
Some say TPP would force Japan to compete and would help its nation get rid of protectionism that's prevalent inside many industries. That's probably true to some extent though I find it pathetic to think that Japan needs outside pressures to reform itself. And there will also be things that won't change despite TPP. Lots of burdens will keep being placed upon weaker stratum of the society. TPP isn't a big enough factor to change Japan so much. You need revolution for that. And revolution could mess things up so much in other ways.
So I don't know if TPP would be a good thing. There will be winners and losers. I think I'll be one of the winners because I am used to international environments. But if Japan as a whole loses, I will certainly be sad.