The Journal The Authority on Global Business in Japan

Ministry of Economy, Trade and Industry

Does TPP optimism remain?

Members of the Japanese government are wavering between watchfulness and optimism concerning the eventual fate of the Trans-Pacific Partnership (TPP), regarding which the nominees of America’s two major political parties have voiced a cautious stance. Opposition has increased in the US, and Congressional approval during President Barack Obama’s remaining months might not be forthcoming. Meanwhile, both candidates are seen as pragmatic, and whoever is elected is expected to seek revisions rather than reject it outright.

The Democratic Party platform made public on July 25 states: “All trade agreements, including TPP, should meet the standards of job creation and national security.” Nominee Hillary Clinton has pointed out the possibility of renegotiations to address such weaknesses as the effects of currency exchange manipulation on trade.

The Republican Party platform announced on July 18 includes the caution that “important trade agreements should not be approved during the lame duck Congress.” At the nominating convention on July 21, Donald Trump rejected the TPP, vowing he would “not sign it.”

Quite a few in government ministries and agencies, however, take an optimistic view of the candidates’ remarks. When President Obama was vying for the Democratic nomination in 2008, there were calls for revising the North American Free Trade Agreement (NAFTA). But once in office, those calls fell silent. Similarly, in 1992, Democratic nominee Governor Bill Clinton voiced opposition to NAFTA, but became a supporter as president and the agreement was passed.

Ministry of Internal Affairs and Communications

DoCoMo’s difficulties in India

NTT DoCoMo sought compensation for shares in a communications subsidiary it had been allocated based on a contract with the Mumbai-based Tata conglomerate. The International Court of Arbitration ruled that Tata should pay $1.172 billion (about ¥121 billion). At a press conference on July 29, DoCoMo President Kazuhiro Yoshizawa announced that Tata was defying the ruling, and as a result DoCoMo has requested seizure of Tata assets in London and India.

It is believed that the failure of DoCoMo’s investment in India will affect the company’s strategy. An unnamed high-ranking bureaucrat at the Ministry of Internal Affairs and Communications remarked apprehensively, “While it’s between people in two different countries, if this goes on as is, it might have a negative effect on Indo–Japanese relations.”

According to DoCoMo, Tata claimed it sought approval for sale of the shares from the Reserve Bank of India (RBI), but the bank did not grant permission.

In 2009, DoCoMo invested some ¥264 billion in Tata’s mobile phone subsidiary, in which it held 26 percent of the shares. But the business continued to flounder due to heavy competition. When DoCoMo pulled out in April 2014, it requested that Tata abide by the terms of the contract and buy back the shares. But due to non-compliance, it requested arbitration by the court in January 2015.

Following its initial investment of ¥264 billion, DoCoMo subsequently invested ¥11 billion in an affiliate in 2010 and, to bolster the network, remitted about ¥14.6 billion in 2011. The mobile subsidiary accumulated debts of ¥96 billion, and at the end of March 2014 DoCoMo reported accrued losses of ¥220 billion.

Up to now DoCoMo’s overseas ventures have met with a string of failures. They include a ¥409 billion investment in KPN Mobile of the Netherlands, ¥186 billion in Hutchison 3G of the UK in 2000, and ¥1.2 trillion in AT&T Wireless in the US in 2001, making for accrued losses of some ¥1.5 trillion. By 2005, it had withdrawn from all three ventures.

While DoCoMo has disposed of the investment quagmire, Vice President Akira Terasaki, a former director general for policy planning at the Ministry of Internal Affairs and Communications, had been regarded as a man of ability. [But] smiling with a sense of bitter irony, a veteran bureaucrat at the Ministry of General Affairs remarked, “The domestic mobile market has matured, and although SoftBank and KDDI have been investing abroad, DoCoMo’s overseas deployment has been locked out, despite Mr. Terasaki’s having come on board.”

Keizaikai magazine
In 2009, DoCoMo invested some ¥264 billion in Tata’s mobile phone subsidiary, in which it held 26 percent of the shares.