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