The Journal The Authority on Global Business in Japan

We hope that when you read this, the Diet deliberations on Japan’s ratification of the Trans-Pacific Partnership (TPP) agreement are well underway, with a clear path forward to passage.

A few weeks ago, I visited my native Pittsburgh where I spoke at our office on TPP, Abenomics, and opportunities for US companies in Japan to a group of local Fortune 500 executives and other internationally minded Steelers fans.

There is certainly interest in trade in America. Thousands of Pennsylvania companies export directly or indirectly to future TPP member countries across a wide range of sectors, including chemicals and precision equipment. In manufacturing alone, close to 200,000 Pennsylvanians are employed in the production of exports by companies large and small.

The TPP’s elimination of over 18,000 tariffs across the TPP zone will create enormous opportunity for those companies and their current and future employees.

Pittsburgh is known for its steel manufacturing, but the largest employers in the region are now in the new economy and healthcare. The complete elimination of tariffs on data transferred to Japan and other member countries will create opportunities in telemedicine (and its interactions with pharmaceutical products and medical devices industries), disruptive technologies, smart grid, virtual utilities, and demand management. Those innovators will seek more graduates in computer science, electrical engineering, physics, and artificial intelligence.

Abenomics’ Third Arrow successes include corporate governance reform (which the American Chamber of Commerce in Japan strongly advocated for many years, and now supports via our Director Database program), the restructuring of the JA agricultural cooperative system and related price supports, and the disaggregation of Japan’s electricity generation, transmission, and distribution system, which until now were controlled by Japan’s regional utilities.

The reform of the electricity supply system creates opportunities for new market entrants, both Japanese and non-Japanese. In response to Japan’s attractive feed-in-tariffs, we have already seen dozens—if not hundreds—of foreign renewable energy developers enter the Japanese market, most notably in solar. We have not seen entry as widely as hoped in wind, but more recently there has been a surge in biomass, for which high-quality fuel with a low life-cycle carbon impact can be imported from the US.

Electricity reform will create many opportunities for Japanese and foreign companies ranging from equipment and software suppliers to virtual utilities, power resellers, and service suppliers. The Shinzo Abe administration’s plan to expand residential sector energy efficiency and demand response efforts will also create a range of opportunities for suppliers of a variety of innovative goods and services, leading to more high-value added, highly skilled jobs in the United States, Japan and elsewhere.

The Abe administration has already put forward eleven pieces of legislation to implement the reforms needed to meet the high standards required by the TPP. The administration seems to be sincere in its efforts to use the TPP to build out the Third Arrow.

If TPP ratification and Abenomics both stay on track, it seems likely that centers of technological excellence in Japan and the United States will continue to hire and to thrive, with follow-on benefits in the development of new technologies and the employment of technicians, scientists, and engineers . . . whichever football team they support.

The views and opinions set forth herein are the personal views or opinions of the author; they do not necessarily reflect views or opinions of the law firm with which he is associated.

Eric Sedlak is vice-president, ACCJ–Tokyo, and a cross-border financial and corporate transactions lawyer with more than 20 years of experience practicing in Japan.
The TPP’s elimination of more than 18,000 tariffs will create enormous opportunity.