The Journal The Authority on Global Business in Japan

As the Diet gets back to work, Prime Minister Shinzo Abe could be forgiven for reveling in his fourth consecutive national election victory. July’s election for the House of Councilors gave Abe’s Liberal Democratic Party (LDP) a simultaneous majority in each house of the Diet for the first time in 27 years. While no new election is required until December 2018, there is talk of Abe calling a snap election for the House of Representatives in January to transform that lead in the polls into parliamentary seats. A fifth victory would keep the LDP in the driver’s seat until at least 2021.

Japan is thus enjoying a rare period of political stability. With the United States having endured the most bruising presidential election in recent memory—and the European Union grappling with the implications of Brexit—Japan is like an island of democratic calm.

As businesses know, political stability matters. For Abe, the security of his position provides a firm base from which to take forward the policies set out in the Japan Revitalization Strategy and the LDP policy platform. His first priority will be passage of the giant FY2016 supplementary budget, with a headline figure of ¥28 billion—including several billion in new money. This will take place in parallel with deliberation on the allocation of several billion more in the main FY2017 budget, which is to be disbursed starting next April.

LDP majorities in Diet committees should help the Abe administration enact a number of key policies, including deregulation of labor markets, controlled lifting of the ban on casinos, and national support for information and communications technology (including the sharing economy, Big Data, artificial intelligence, and the Internet of Things). Naturally, the Tokyo 2020 Olympic and Paralympic Games are increasingly becoming part of national policy and spending plans—a trend that will accelerate as the opening ceremony draws closer.

Even so, barring a major surprise, the highlight of the current Diet session should be Japan’s ratification of the Trans-Pacific Partnership (TPP) agreement. If Abe succeeds in passing the deal, that will put pressure on the administration of US President Barack Obama to do the same in its final days. If the United States fails to do so, it risks losing the best chance in decades to liberalize Japan’s markets on US terms, and to bring 12 Pacific nations closer together. US businesses active in Japan (and other TPP member states) still have work to do. They must remind US policymakers how the TPP will help them expand and grow in the Asia–Pacific area, and how failure to ratify the deal would leave US companies in the region at a disadvantage.

Japan’s public affairs are entering a vital period: a stable and empowered Japanese government with the means, motive, and opportunity to pursue its reform agenda; the allocation of not one but two multi-billion-yen public-spending packages; intensification of preparations for the Tokyo 2020 Olympic and Paralympic Games; and the tantalizing possibility of TPP passage during the last days of the Obama administration. The next few months will be critical for those companies and industries from the United States and elsewhere that have a stake in Japan and care about Japan’s openness to foreign investment, goods, and services.

Jakob Edberg is president and CEO of GR Japan K.K., and vice-chair of the ACCJ Globalization Committee
The highlight of the current Diet session should—barring a major surprise—be Japan’s ratification of the Trans-Pacific Partnership (TPP).