The major issue which both Australia and Japan would like to be able to resolve is the Free Trade Agreement negotiations. These negotiations have been tortured, with liberalization of agricultural goods being the chief problem. The negotiations, which began in 2007, were most recently this February and marked a return to the table after nearly ten months hiatus. Yet the official negotiators from Japan and Australia were still unable to make a break through, prompting Trade Minister Kaieda Banri to call for the negotiations to be resolved at the political level. This is an appropriate response, as the Agreement was initially proposed by Prime Minister Abe Shinzo as part of a political calculus of the benefits of such an agreement to both countries. It is in this context that Gillard is making her four day long visit to Japan, a visit aimed to resolve at the political level the issues still outstanding in the FTA.
But while success would be quite a coup for either leader, there are good reasons to doubt that visit may be in vain.
The DJP is imploding over the issue of trade liberalization. Kan Naoto has been leading with a concept of “re-opening Japan”, the flagship of which has been the joining Trans-Pacific Partnership. It is important to understand that Japan-Australia FTA is perceived as a litmus test for the viability of including Japan in the TPP process. Thus Japan’s membership in the TPP will come only when others are convinced that Japan is serious about comprehensive liberalization of trade – including the political sensitive agricultural sector.
But already the Party has split on the TPP issue. The former Minister of Agriculture, Forestry and Fishery Yamada Masahiko is leading a group of parliamentarians bitterly opposed to the TPP. The group, which is called the “Serious Consideration of the TPP”, is nearly 180 Diet-men strong and announced its establishment on the 24 February. Moreover, the Group has organized a series of public hearings on the dangers of the TPP led by a prominent economist Uzawa Hirofumi which directly undercuts the Kan administration’s public information session in the rural regions which address the benefits of agricultural reform. The opposition to the TPP is also a stalking horse for opposition to an Australia-Japan FTA which includes agriculture. Indeed, Yamada Masahiko (Ozawa faction) is strongly opposed to such an FTA and has written publicly about the costs of signing onto an FTA with Australia.
Kan’s leadership of the DPJ is also in question. While there is no obvious challenger to leadership of the Party, the most recent public polling showed low support for the Kan administration (21%). The fact that Kan Naoto might well lead the Party to defeat in the next election has made it difficult for Kan to prevent individual parliamentarians from taking up local issues at the cost of national strategy. While the announcement of an FTA with Australia, as a prelude to joining and eventually acceding to the TPP, might help Kan somewhat recover political momentum, it is unlikely to make a major difference and as such Kan is likely to focus his efforts and what remains of political capital elsewhere. Moreover, although the current administration wishes to reverse the current situation of rural votes (which overwhelming, even passionately oppose FTAs) holding a disproportionate influence (a rural vote can be worth an ‘unconstitutional’ 2.5 urban votes), were an election to be called it is likely that the DJP would lose its majority and hence government.
In conclusion, it is unlikely that Kan Naoto and the leading DPJ have the political will (or coherence) to be able to meet the expectations of Julia Gillard and the ALP on the degree and type of liberalization within the FTA. Rather, the summit is likely to produce an agreement on Japanese investment into Australian rare earth and some other bureaucratic matters (replacing Mclean).
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