:00:00. > :00:00.sank in 1912. Now on BBC News it's time for
:00:00. > :00:09.talking business with Linda Yueh. Will the US pivot towards Asia?
:00:10. > :00:11.President Obama aims to do so by creating the biggest free`trade area
:00:12. > :00:19.in the world, linking America to Asia. Here in Tokyo, I am Linda Yueh
:00:20. > :00:50.and we are Talking Business. A warm welcome to the programme. A
:00:51. > :00:52.centrepiece of the second term of US President Obama is his Asia pivot
:00:53. > :00:55.strategy. He wants to rebalance America's foreign and economic
:00:56. > :01:00.policy away from the Middle East and Europe, towards fast`growing Asia.
:01:01. > :01:05.It is not just a geopolitical rebalancing, economics is at the
:01:06. > :01:07.heart of it. However, after failed attempts to travel to the region
:01:08. > :01:10.last year, he's hoping a four`country tour of Japan, Korea,
:01:11. > :01:23.Malaysia and the Philippines will get the centrepiece of that policy
:01:24. > :01:26.going. Which is to create the biggest free`trade area in the world
:01:27. > :01:33.linking 12 countries around the Pacific Rim in what he is calling
:01:34. > :01:37.the Trans`Pacific Partnership. The key to getting the TPP agreed will
:01:38. > :01:47.be whether the US can negotiate with Japan. `` what the US can negotiate
:01:48. > :01:53.with Japan. I went to find out what that would take. Springtime. The
:01:54. > :02:04.promise of a new beginning. But before you can reap, you have to
:02:05. > :02:09.sow. 80`year`old Shigeo Endo is preparing his rice fields as he has
:02:10. > :02:17.for over half a century. Farmers like him have been protected by the
:02:18. > :02:23.government. There is a 700 `` there is 878% tax on imported rice. He
:02:24. > :02:30.does not want to see that end. TRANSLATION:
:02:31. > :02:34.We cannot compete with countries like Australia or Canada which farm
:02:35. > :02:39.on a large scale. If terrorists are abolished, people will go with what
:02:40. > :02:46.is cheaper. `` if terrorists are abolished. I think Japanese farming
:02:47. > :02:49.`` if taxes are abolished. I think Japanese farming will be fatally
:02:50. > :02:54.wounded. He and his family have been shielded
:02:55. > :03:01.for decades. It is a sore point for the Americans and the proposed
:03:02. > :03:09.agreement. But the Trans`Pacific Partnership, TPP, is not just about
:03:10. > :03:16.trade. It is the key to Obama's strategy to align the US more
:03:17. > :03:21.towards Asia. But that makes no difference to these protesters.
:03:22. > :03:26.These are the most vocal critics of the TPP. Japan and the US are major
:03:27. > :03:31.trading nations who trade in not with each other so of course there
:03:32. > :03:36.are some benefits in having more free trade. What is so special about
:03:37. > :03:44.this one? Is it more about who is not at the table? Abe put his hat in
:03:45. > :03:54.the ring because he wanted to prove to the United States that he was a
:03:55. > :03:59.reliable alliance partner. So I think Japan will look at TPP not
:04:00. > :04:04.just because of `` is not just through the `` not just for the
:04:05. > :04:13.economic but also political is users such as China's ambitions for the
:04:14. > :04:17.region. They celebrate the arrival of the new season. President Obama
:04:18. > :04:24.wants to celebrate a new spring, a new era, even the second opening of
:04:25. > :04:30.Japan. Prime Minister Abe is hoping for trade to deliver growth. With so
:04:31. > :04:36.much at stake, both Abe and Obama will hope to deliver progress. But
:04:37. > :04:40.it will be baby steps. So the Trans`Pacific Partnership is a key
:04:41. > :04:50.part of Obama's Asia pivot. It is also what the Japanese describe as
:04:51. > :04:55.the facilitation of the second opening of Japan. Expectation are
:04:56. > :04:59.high that a great deal could revive the Japanese economy. Two mile over
:05:00. > :05:04.these issues, I caught up with the Dean of the Asian development bank
:05:05. > :05:08.Institute. Is there something special about the relationship with
:05:09. > :05:14.the United States, President Obama will be talking about trade and a
:05:15. > :05:18.new trade deal. I think the visit of President Obama is very important
:05:19. > :05:26.because North Korea is a fisting our region. `` is existing in our
:05:27. > :05:32.region. There economic situation is very different from South Korea and
:05:33. > :05:38.Japan. So it is important for him to visit our country. Secondly, we have
:05:39. > :05:45.trade disputes about automobiles. Many people in Japan prefer free
:05:46. > :05:51.trade. But farmers are very cautious about the mobility of goods and
:05:52. > :05:54.services. With China rising as a partnership but the TPP excluding
:05:55. > :06:02.China, is there something about the positioning that would benefit the
:06:03. > :06:09.US and Japan? I think, because China is different from Japan and US
:06:10. > :06:16.relationships. Japan and US is free exchange of mobility. But China
:06:17. > :06:21.still based `` is still based on dollar`denominated currency. So the
:06:22. > :06:29.first step for China is gradually changing its currency basket to
:06:30. > :06:34.gradual depreciation. Also, the capital inflow and outflow has to be
:06:35. > :06:39.mobilised. Is there something about excluding China that will make it
:06:40. > :06:45.difficult for this region? Because it is so integrated into the supply
:06:46. > :06:54.chain? In the short`term, China has to change its rate policy. It used
:06:55. > :07:00.to be `` it needs to lower its exchange rate and come to the
:07:01. > :07:04.optimal basket currency system. At the same time, free mobility of
:07:05. > :07:11.capital for China will be another thing. So it will take several
:07:12. > :07:16.years, but in those fluctuations, we should come to the same table with
:07:17. > :07:21.the others. Is this supporting the reforms that the Prime Minister has
:07:22. > :07:25.already done? Last autumn, he has decided to cut back on the actual
:07:26. > :07:31.subsidy system because it is part of making the economy more
:07:32. > :07:35.competitive. So sometimes countries use trade agreements to push through
:07:36. > :07:40.hard domestic reforms that increase productivity of their economy. Is
:07:41. > :07:44.this one of the reasons why he's pointing to free trade is important
:07:45. > :07:48.to boost growth? I think that frequent addition is very
:07:49. > :07:56.important. Farmers have to face, edition. However `` farmers have to
:07:57. > :08:06.face competition. But it is a gradual adjustment. So you think
:08:07. > :08:09.that would be the main benefit, to increase the competitiveness of the
:08:10. > :08:15.agricultural sector. Would that be enough to boost the aggregate `` the
:08:16. > :08:19.Japanese economy? Not necessarily. We are faced with an ageing
:08:20. > :08:28.population. We have to utilise those old people, and female participation
:08:29. > :08:32.in the labour force. Those are the two important issues. The third one
:08:33. > :08:36.is that banks and financial institutions are sometimes reluctant
:08:37. > :08:40.to make loans to start`up companies because it is risky. So the banks
:08:41. > :08:47.should not necessarily provide money, but we can open them to
:08:48. > :08:52.crowdfunding `` to crowdfunding so that the general public can support
:08:53. > :08:55.them. So it sounds to me as if you don't think trade could play a big
:08:56. > :09:05.part in turning around Japan's fortunes. We used to have a very
:09:06. > :09:11.high ratio of export. Now it is only 10% of the economy. Of course free
:09:12. > :09:16.trade is important, but changing the domestic economy is also important.
:09:17. > :09:21.The Trans`Pacific Partnership includes ten other countries
:09:22. > :09:24.including Japan and the US. So how would a free`trade area affect a
:09:25. > :09:32.middle`income country like Malaysia, one of the Paul Nations ``
:09:33. > :09:39.one of the four nations on Obama's itinerary. I went to find out. On
:09:40. > :09:43.the verge of becoming rich, Malaysia was once a fast`growing economy.
:09:44. > :09:48.Before it was struck by financial crisis. There is hope that a
:09:49. > :09:55.free`trade agreement will get it moving again but there are big
:09:56. > :10:00.challenges to overcome. This media entrepreneur wants to see his
:10:01. > :10:05.country tackle them. What is the difference between... Private
:10:06. > :10:10.businesses like him see the future lying beyond Malaysia's borders.
:10:11. > :10:15.Operating in a country of only 30 million, he needs overseas markets
:10:16. > :10:21.to grow. The challenge for Malaysia is that we have been a medium`sized
:10:22. > :10:27.country for a long time. It is time for us to catch up with the rest of
:10:28. > :10:31.the world. We need to tackle corruption, that is what is holding
:10:32. > :10:37.us back. We need to get our act together and move on. Those at the
:10:38. > :10:43.very top of already benefited from Malaysia's growth. But the country
:10:44. > :10:47.as a whole can win if it opens up trade and links with the biggest
:10:48. > :10:57.markets in the world. The problem is there will be some who lose. Ethnic
:10:58. > :11:00.Malays have been protected by the government through affirmative
:11:01. > :11:04.action programmes which give them ownership of key industries. It is
:11:05. > :11:08.where the accusations of cronyism stem from. The US has pushed for
:11:09. > :11:20.reforming those policies as the price for admission into its
:11:21. > :11:24.free`trade area. It is a concern for others. They are generalising the
:11:25. > :11:35.issues without understanding complexities. Trade deals take years
:11:36. > :11:42.to agree. As the US negotiates with the big players in Asia like Japan
:11:43. > :11:48.it is not a dance of equal part was. The little guy does not get to lead.
:11:49. > :11:55.The president is crucial for any negotiations. But he does not have
:11:56. > :12:07.the final word on trade. Any deal must be ratified by the US Congress.
:12:08. > :12:12.This report from New York. This is the UPS sorting facility and can
:12:13. > :12:17.tuck it. Thousands of packages making their way through here every
:12:18. > :12:24.day. If the US agrees on a free`trade deal with other countries
:12:25. > :12:33.it could get us there. We would see tremendous growth. We have seen that
:12:34. > :12:40.in past trade agreements. Like the US ` the Singapore trade agreement.
:12:41. > :12:46.US`Chile. A 20% increase in volume with those. But past agreements have
:12:47. > :12:52.taken manufacturing jobs out of the US. Which is why not all businesses
:12:53. > :13:00.will get behind a trade partnership linking nearly 60% of local GDP.
:13:01. > :13:06.Businesses alike forward, maker of the iconic mustang. It could have
:13:07. > :13:14.our business. It could take jobs away from American workers. It could
:13:15. > :13:18.use it to manipulate other countries currencies. Exporting employment
:13:19. > :13:24.problems to other parts of the world. We do not think that this
:13:25. > :13:29.rate. American manufacturers often complain that countries engaging in
:13:30. > :13:32.currency manipulation by keeping it artificially low has had a
:13:33. > :13:39.devastating impact on the American manufacturing sector. In last year
:13:40. > :13:46.is a state of the union address President Obama made specific
:13:47. > :13:50.mention of the TPP. To boost exports, support jobs, level the
:13:51. > :13:57.playing field in the growing markets of Asia, we intend to complete
:13:58. > :13:59.negotiations. Tonight I am and sink talks on a comprehensive
:14:00. > :14:05.transatlantic trade and investment partnership. `` announcing. Trade
:14:06. > :14:13.that is fair and free supports millions of American jobs. But this
:14:14. > :14:17.year, no reference to the deal. Getting fast`track authority to pass
:14:18. > :14:22.deals with the crucial to extracting concessions from Japan and other
:14:23. > :14:26.countries. But getting that through a divided Congress is unlikely. A
:14:27. > :14:34.sign that the biggest obstacle for the president could be right here at
:14:35. > :14:37.home. Before it gets to the US Congress
:14:38. > :14:42.there are still a number of issues to sort in the transpacific
:14:43. > :14:51.partnership. To discuss the prospect I got up with a professor at Keele
:14:52. > :14:59.University, and it chief strategist at CES or a. It is more competent
:15:00. > :15:04.than it looks. What we're talking about at the moment is principally
:15:05. > :15:11.agriculture. Because we cannot talk about the other measures. For Japan
:15:12. > :15:16.and the US agriculture is a certain percentage of GDP, Japan wants to
:15:17. > :15:26.open up the hermetically sealed US auto market. 2.5% in tariffs. 25%
:15:27. > :15:29.with trucks. Until we can get something moved on fast`track gauche
:15:30. > :15:35.nations then the rest of the things cannot discussed. Fast`track is
:15:36. > :15:38.obviously down to President Obama not having defaulted to put forward
:15:39. > :15:44.a trade deal with the Congress and it working. There are a few dead it
:15:45. > :15:54.were just great through. `` whereas a few dead. `` whereas if he did. It
:15:55. > :16:00.would be an improvement of the investment climate. That is
:16:01. > :16:09.definitely important for the Japanese economy. That is not the
:16:10. > :16:16.rhetoric we are getting. It sounds like the impasse over agriculture.
:16:17. > :16:21.It appeared likely one year ago that they would give away a lot of the
:16:22. > :16:26.protection for agriculture. When you look at it farmers to not have a lot
:16:27. > :16:31.of power. The average age of a Japanese farmer is 66. Within five
:16:32. > :16:38.years about one third will have retired. Who will they go to and
:16:39. > :16:41.from the government? The opposition has called very little political
:16:42. > :16:49.support. It is an urban party, not... What I am getting at is, you
:16:50. > :16:58.are describing a scenario that does not seem to fit what is happening.
:16:59. > :17:06.Who would give away agriculture as a negotiating eight when you anything
:17:07. > :17:13.in return? That is the problem. Cannot get anything in return until
:17:14. > :17:20.you have FDA. It could be reversed. Because Congress can pick apart the
:17:21. > :17:26.agreement? Essentially this is a problem of American impotence. They
:17:27. > :17:29.were unable to turn up to the original negotiations because they
:17:30. > :17:34.were arguing about the debt ceiling. Now they think they have had their
:17:35. > :17:38.power taken away from them. They present this as if it is
:17:39. > :17:41.factionalism within Japanese politics but actually it is
:17:42. > :17:46.President Obama who cannot get support from his own party, the
:17:47. > :17:52.Democrats. It is his own faction that is holding us back. The US
:17:53. > :17:59.Congress may blackmail at the last moment even if negotiators agree. So
:18:00. > :18:07.that be a difficulty in making a big decision. But at the same time,
:18:08. > :18:14.Japan and other countries can influence to some extent US
:18:15. > :18:18.politics. That is a sort of thing Japan should do. That is the kind of
:18:19. > :18:26.claim the Japanese seder pedalling. That somehow TPP will provide the
:18:27. > :18:38.structural reforms. It will raise competitiveness. Driving at over 2%.
:18:39. > :18:43.It is a small sector already. 1.3% of GDP. It does not really generate
:18:44. > :18:49.growth. That is it different issue but it is very symbolic course will
:18:50. > :18:55.stop TPP will affect overall activities of the Japanese farmers.
:18:56. > :19:03.Is that not the conundrum? You are being held up over agriculture as a
:19:04. > :19:10.bargaining chip but the reality is most of the other parts of TPP and
:19:11. > :19:20.deep trade integration? It means introducing competitiveness. Is that
:19:21. > :19:38.not ultimately why TPP would not advance, there are certain groups
:19:39. > :19:44.that will be hurt by it? Even if we have a replacement of major tariffs
:19:45. > :19:52.with domestic subsidies, some sort of ending of obligations, still we
:19:53. > :20:00.could do that. It just does not seem like a gun to get much of an
:20:01. > :20:07.agreement. `` you are going to get. Until President Obama has the
:20:08. > :20:12.authority... He may not. It is quite possible. If it falls apart there
:20:13. > :20:20.are lots of other trade treaties being talked about. This is being
:20:21. > :20:24.held up as special. Because it is not talking about agriculture. It is
:20:25. > :20:33.supposed to be a intellectual dropped, state interest... That is
:20:34. > :20:40.important. The problem is getting an agreement, Japan, US, Europe, they
:20:41. > :20:44.have such low import tariffs. If your agriculture it agriculture it
:20:45. > :20:49.is 1.3 for Japan, two for the US. Not a lot of protection. What you
:20:50. > :20:57.are trying to get out of this is some sort of agreement on
:20:58. > :21:01.intellectual property but the whole thing is being held up because the
:21:02. > :21:08.Americans cannot hold up the part of the agreement. Do you think we will
:21:09. > :21:18.get the TPP in the foreseeable future? Within a couple of years? I
:21:19. > :21:21.think you are pessimistic. We still have the possibility to get through
:21:22. > :21:32.negotiations this week or next month. It is not just a bilateral
:21:33. > :21:40.deal. Nicholas? What has got to Japan moving faster is watching a
:21:41. > :21:42.lot of FC is get tied up by Korea. Japan wants the stunt particularly
:21:43. > :21:48.for the protection of state`owned enterprises, intellectual property,
:21:49. > :21:55.it is being held up by stupid things. It will ultimately get done.
:21:56. > :21:57.But I would have thought that it is slow`moving for the time being.
:21:58. > :22:07.Until the authorities reached decisions. Whether it is members of
:22:08. > :22:11.the US Congress, companies in Malaysia, Japanese farmers, they are
:22:12. > :22:17.among the obstacles to realising a giant free trade area in the
:22:18. > :22:21.Pacific. They are also standing in the way of President Obama achieving
:22:22. > :22:27.his Asia have it with less than two years lecturing his term. `` Asia
:22:28. > :22:34.pivot. And the stakes could not be higher. That is all we have time
:22:35. > :22:45.for. Check out the website, or contact me on Twitter.
:22:46. > :22:50.Through the course of today an area of low pressure is basically
:22:51. > :22:57.wrapping itself around the British ales. That is the cloud you see
:22:58. > :23:01.here. Heavy and persistent rain into eastern coasts. Showers and the
:23:02. > :23:02.south`west. Overnight, they will