The administration of U.S. President Donald Trump has made it clear that it has no intention of revisiting its decision to withdraw from the Trans-Pacific Partnership free trade deal.
This comes as a heavy blow for the government of Prime Minister Shinzo Abe, which has worked harder than any previous administration to strengthen Japan's alliance with the United States. In addition, the "third arrow" of structural reforms — including trade liberalization — is indispensable to complete his Abenomics policies.
Postwar Japan's productivity enhancement has been the result of an interplay by which the government has exploited foreign pressure (gaiatsu) for trade liberalization to generate domestic pressure (naiatsu) for structural reform. Since the late 1990s, however, Japan, as it struggled through two "lost decades" and protracted deflation, has failed to achieve genuine trade liberalization and fallen behind both the West and many emerging economies as a result.