Thursday, July 30, 2009

The DPJ will bring the ships home — and open Japan's economy to the US?

After weeks of signs that the DPJ might wholly embrace the foreign policy status quo, Hatoyama Yukio announced on Wednesday that, when the current special measures law for the deployment of Maritime Self-Defense Forces (MSDF) refueling ships in the Indian Ocean in support of coalition activities in Afghanistan expires in January, a DPJ-led government would not extend the mission or draft a new law. Hatoyama's statement met with the approval of the Social Democratic Party, the DPJ's likely coalition partner — not surprisingly, because it is perhaps the first indication of how the SDPJ could be able to manipulate the DPJ if they enter into government together. The SDPJ claims that it is untroubled by the DPJ's new realism and that it is highly likely that the party will join a DPJ-led coalition should the DPJ win next month, but we've just gotten a glimpse at the dynamics of such a coalition, at least on foreign policy.

This is not particularly surprising, nor, I would argue, is it particularly troublesome. As I've argued previously, the DPJ's extensive agenda requires its lasting long enough in power to implement it, which means compromising with the SDPJ long enough to score some legislative victories to bring into the 2010 upper house election campaign. Taking the refueling mission off the agenda is an easy concession to make, and barring an international crisis, ensures that the DPJ can focus on matters of greater concern to the Japanese public in the months leading up to the election.

As for the refueling mission itself, I expect that the Obama administration would not make much of a fuss in response to a DPJ government's decision to bring the ships home, provided that the DPJ replaced the symbolic MSDF mission with something more substantive in support of coalition activities in Afghanistan. As Richard Holbrooke suggested on a visit to Tokyo in April, "something more substantive" does not have to be boots on the ground. Indeed, the Obama administration would prefer real economic and political assistance to the Afghanistan and Pakistan governments over the token contributions that satisfied the Bush administration as far as Japan was concerned. If the DPJ wins, it better have an idea of what it will offer instead by January.

It appears that the Obama administration may be both a blessing and curse for the DPJ. In the Obama administration the DPJ faces a US administration that has more often than not showed itself to be not particularly alarmed by the possibility of a DPJ victory and interested in a more "hands-off" approach to Japan than the Bush administration's. At the same time, however, the DPJ has had to abandon the rhetoric on the alliance it used when George Bush was still president. With Bush the DPJ could have run a campaign like Gerhard Schröder's in 2002 and done quite well. Not so with Obama. If the DPJ wins, I am convinced that the mere existence of the Obama administration will pressure the DPJ to be more constructive in the US-Japan relationship. Treating the Japanese government with respect and dignity — as the equal partner that the DPJ wants Japan to be, whatever the reality of the underlying power dynamics — seems to take gaiatsu in a whole new direction.

It is in this context that I find the DPJ's call for negotiations of a US-Japan FTA of considerable interest (discussed here). If the DPJ is serious about this proposal — serious to the point of actually making it a priority and expending political capital on it — it would give some substance to the DPJ's desire to focus on the non-security aspects of the relationship while contributing to the structural transformation of the Japanese economy and weakening the power of the bureaucracy. Naturally the fight over a US-Japan FTA would be brutal, especially in agricultural policy. In that sense, this proposal must be viewed in tandem with the party's proposal for direct income support for farmers. As Ozawa Ichiro has argued, trade liberalization and direct income support should go hand in hand, supporting farmers as Japan liberalizes its markets. For the same reason the agriculture lobby responded vociferously to the DPJ's manifesto (documented by Nakagawa Hidenao here). But not just the agriculture lobby: the LDP went on the offensive against the idea of a US-Japan FTA, issuing a statement that detailed the dire consequences of agriculture trade liberalization with the US.

In the event that the DPJ concludes an FTA with the US that liberalizes agriculture, it is estimated that the importation of prodigious amounts of agricultural products from the US will snatch away the domestic agricultural market with an impact on the scale of trillions of yen...This would inevitably be a lethal blow, which would be equal to selling out Japanese agriculture.

The DPJ, the LDP argues, stands for the destruction of Japanese agriculture and is a "dangerous political party."

The LDP's nōrin zoku are convinced that the DPJ has handed them a gift with which to save their seats, if not the LDP. But is this a glimpse of the LDP's future? What future is there for the LDP if the election hits reformists in urban and suburban areas disproportionately harder than LDP members in the rural areas attached to the traditional agriculture machine? I suppose that would be one way for the LDP to clarify its internal contradictions. But if the LDP shrinks to a rural base, it loses in the long term. Indeed, Koizumi's vision for the party was arguably intended to prevent this outcome, because an LDP that can depend on votes in aging, depopulating rural districts is an LDP with a bleak future.

But regardless, I'm not sure that this plan is an election loser for the DPJ in rural areas. At this point, an FTA with the US is single proposal that would take years of negotiations and might not even include serious concessions on agriculture — Kan Naoto responded to the LDP's complaints by suggesting that the DPJ would demand that rice and other major crops be treated as an exception. The DPJ's direct income support plan, however, is a major piece of the manifesto and has been one of the party's most prominent proposals for years. The LDP, meanwhile, has been shedding support from farmers for much of this decade and is still trying to shed the party's association with Koizumi Junichiro, who is widely blamed for Painting the DPJ as plotting to destroy Japanese agriculture might help, but it assumes that farmers have very short memories.

Perhaps this issue provides an answer to the pressing question of what to do with Ozawa should the DPJ win next month. The problem with Ozawa is that if he is allowed to remain outside the cabinet, he will undermine the party's plan to include major party politicians in the cabinet and will be in a position to freelance in ways that could hurt the government. If he is in the cabinet in an executive position — deputy prime minister, for example — Hatoyama would be vulnerable to the criticism that he is Ozawa's puppet. If he were given an ordinary ministerial post, it would be a waste of his considerable political talents. If he were given a minister-without-portfolio position, it would give him too much freedom. Accordingly, perhaps a special post should be created for Ozawa: minister with the special mission of negotiating a US-Japan FTA. This job would be inter-ministerial, involving cooperation at minimum with the foreign minister, the agriculture minister, and the economy, trade, and industry minister; it would have both domestic political and foreign policy components, enabling Ozawa to both negotiate directly with the US and to make the case directly to the Japanese public of the importance of the FTA. Accordingly, it would be a specific mission, to keep Ozawa occupied (and therefore not devising schemes independent of the government) while still using his considerable political talents. Given the political sensitivity of an FTA with the US, it may take someone of Ozawa's stature to manage it. And if the DPJ is serious about this proposal, appointing Ozawa would send a costly signal of the party's intentions about negotiating an FTA (and ensure that Japan had a tough pol representing it in talks).

To return to the question of the alliance, Washington should be aware of the LDP's response to the DPJ proposal. From one side of its mouth the LDP criticizes the DPJ as a danger to the US-Japan alliance for wanting to bring Japanese forces home and reopen the realignment of US forces in Japan; from the other it warns that the DPJ will kill Japanese agriculture by allowing in cheap US agricultural goods. In other words, token, symbolic contributions that involve the JSDF? The alliance has never been closer. Negotiations for a US-Japan FTA that would have dramatic consequences for the bilateral relationship and probably the global trading system? Traitors!

The LDP's reaction has me convinced that the DPJ may be on the right track with this proposal. I am no less dubious about the possibility of concluding such an agreement — especially given the obstacles in Washington — but it might be worth the effort.


Sogo Nihon said...

The traditional sense of the word alliance is on a sickbed somewhere with all the other cold warriors who still think that an institution whose sole purpose is to fight (a military) is the best way to create peace and stability in the world.

I'm not the first one to say this, but if Japan can realize how it can contribute to the goal of peace and stability in accordance with its constitution, it can radically change the dynamics of the US-Japan alliance by putting the ball in the US' court.

An alliance will always include military elements--that is undeniable--but the methods to achieve the goals of peace and stability need to radically change in the context of the US-Japan alliance. Participation in ISAF (not necessarily JSDF participation) will benefit the US more than a Japanese gas station in the Indian ocean.

PaxAmericana said...

Does anyone know the DPJ's position regarding all the dollar debt Japan holds? In many ways, the real support of the US is holding dollars. Also, does anyone know how to find out what assets the Post Office now holds? Did it switch to a higher proportion of dollar assets after the privatization?

Tobias Harris said...

It is not clear what exactly the DPJ's position is on US dollar holdings, although Nakagawa Masaharu, the shadow finance minister, has spoken on the subject a few times. (See here:

When Nakagawa has talked about the possibility of selling dollar holdings, however, he stressed that he was speaking personally, not as a party spokesman. And in any case, there is talk that the finance minister post would go to a more senior party leader should the DPJ win.

AC said...

Given his past behavior and shabby treatment of US officials, including the last ambassador, I really have to wonder whether the US would be interested in negotiating anything with Ozawa, let alone an FTA that exempts rice. Perhaps tasking Ozawa with a mission doomed to failure would be a good way for Hatoyama to get him out of the way, though.

Anonymous said...

From your discussion, I am wondering whether the Obama administration will attempt to force a tradeoff between security and economic-trade issues on whoever wins the election next month. By this I mean that there will be less pressure on Japan to contribute to the security partnership but more pressure on economic-trade concessions. This is made more plausible by the budgetary pressures higher profile domestic initiatives (like health care reform) will have on Obama's agenda and less emphasis on new initiatives on foreign affairs.

Anonymous said...

There are reasons why there are no FTAs between the biggest trading partners... I suggest you check that first before your continue dreaming about an USA-JPN EPA/FTA.

Tobias Harris said...

Dear Anonymous,

I have fully acknowledged the difficulties involved in negotiating and implementing a US-Japan FTA. I'm not the one dreaming about it. My discussion of it is premised on the idea that the DPJ means what it says about pursuing one.

Incidentally, your statement about no FTAs is factually wrong, at least in the case of the US. What do you call NAFTA, and the US-Canada FTA that preceded NAFTA? Last time I checked the US and Canada have one of the world's most extensive trading relationship. Obviously geography matters, but it is simply not true to say that there are no FTAs between biggest trading partners.