Young people in Japan like to talk about people’s personalities, by saying that someone is “Yin” (dark) and another is “Yang” (light). According to Oxford Reference, “Yin-Yang” is the “two great opposite but complementary forces at work in the cosmos.” Suga Yoshihide, Japan’s new prime minister, worked in close tandem with Abe Shinzo for nearly eight years, like “Yin-Yang.” Although Suga’s name is little known internationally, he helped the former Prime Minister promote his political agenda, particularly on domestic policy issues. He insists that he will continue Abenomics policies while setting up his own political priorities, such as regulatory reform.
Suga also assures that he will follow Abe’s foreign policy, but that is not straightforward in the rapidly changing world with the Covid-19 pandemic and escalating tensions between the US and China. Moreover, Abe’s successful foreign policy, particularly on trade issues, was a product of his experience in diplomacy and his personal relations with world leaders, both of which Suga has to build almost from scratch. That said, he will be able to benefit from the groundwork laid by his predecessor, at least for now.
In fact, former Prime Minister Abe’s legacy on trade is significant. Most notably, Abe successfully built a personal relationship of trust with President Donald Trump and made the Japan-U.S. alliance stronger than ever. Although his desire that the US would come back to the Trans-Pacific Partnership (TPP) was not realized, Japan reached a bilateral trade agreement and a digital trade agreement with the U.S. in October 2019, accompanied by a joint commitment from both countries to “refrain from taking measures against the spirit of these agreements.” Japan expects that this commitment prevents the U.S. from making good on its threat of imposing additional tariffs on its automobiles and automotive parts for national security reasons.
Abe’s contribution was also notable in building and reinforcing plurilateral and multilateral economic arrangements. One of the highlights of his administration was the successful conclusion of the G20 Osaka Summit in June 2019. On trade issues, Abe declared the launch of the “Osaka Track”, to demonstrate the G20 Leaders’ commitment to promote international rule-making on trade-related aspects of electronic commerce at the World Trade Organization (WTO). The concept of “data free flow with trust” (DFFT), which he revealed during his speech at the 2019 Davos Conference, was expected to be a key component in the upcoming digital trade negotiations.
Finally, he played a critical role in keeping the TPP deal alive among the remaining 11 members after the withdrawal of the US. The TPP 11 entered into force among Mexico, Japan, Singapore, New Zealand, Canada and Australia in December 2018, and later joined by Vietnam.
Prime Minister Suga insists that he will inherit and promote these diplomatic efforts by Abe, but he has a tough road ahead. The most important and yet most difficult task for him is to further strengthen the alliance with the US, whoever wins the November presidential election. If Trump wins, Suga would be able to take advantage of Abe’s personal ties with him, but he would have to deal with potential and actual unilateral trade protectionist measures. He could also be pressured to strike a “phase two” deal to expand the scope of the bilateral trade agreement to cover other areas, such as automobiles and trade in services. Biden would not be any easier to work with. He has generally supported free trade initiatives, but his focus on job creation during the election campaign could direct him toward a protectionist trade policy.
It is also challenging for Japan to maintain and develop constructive relationships with China. While Japan shares national security concerns about China with the US, it has been taking a more conciliatory approach toward China. It was expected that a state visit of Chinese President Xi Jinping, originally scheduled for April 2020 but later postponed indefinitely due to the Covid-19 pandemic, would enhance Japan-China relations. However, as the tension between the US and China is escalating and criticism is mounting within Japan against the enactment of the Hong Kong National Security Law, rescheduling the visit could be controversial. How to handle the visit is a sensitive issue for Suga domestically and internationally.
Japan also faces an ongoing trade dispute before a WTO panel, brought by South Korea concerning Japan’s export control on certain high-tech goods. Although Japan denies that the trade measures have anything to do with another dispute with South Korea regarding South Korean Supreme Court judgments ordering Japanese companies to pay compensation for wartime labor, it is evident that the resolution of the latter is critical for resolution of the former. While Suga is unlikely to change Japan’s stance that the ball is in South Korea’s court, he might need to consider taking the next step if the political stalemate leads to economic consequences.
Suga will also have to take over Abe’s unfinished plurilateral and multilateral initiatives. A positive sign can be seen for the future expansion of the TPP 11. The UK recently expressed its interest in joining the TPP 11, which could encourage other economies, such as Thailand, to follow suit. In the meantime, the prospect of the Regional Comprehensive Economic Partnership (RCEP) is clouded by India’s last year’s announcement of withdrawal. While Japan remains hopeful that India will return to the initiative, China, one of the RCEP negotiating partners, suggests that the agreement should be concluded even in the absence of India. Suga will soon have to decide whether to proceed without India for the sake of signing the agreement by the end of 2020. WTO reform is another urgent matter that Suga will have to address. In particular, restoring the WTO dispute settlement mechanism is crucial for Japan’s pursuance of rule-based trade policy.
Abe, in his recent interview with The Yomiuri Shimbun, indicated his willingness to serve as a special diplomatic envoy of the Suga administration. The Suga-Abe tandem appears to continue, but it is now Suga who stands on the front line. According to traditional Chinese medicine, people become sick when the balance of “Yin-Yang” is disturbed. Suga’s leadership will be tested in a stormy trade climate.
The opinions expressed are those of the author. They do not reflect the opinions or views of ISPI.
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