- The Washington Times - Sunday, November 17, 2013

The recent federal partial government shutdown and the ongoing bickering in Washington between Democrats and Republicans could scare away potential trade partners in Asia, business leaders say.

The Obama administration is hoping to complete an ambitious multilateral trade agreement with Japan, the world’s third-largest economy behind the U.S. and China, and with several other Asian countries by the end of the year. Known as the Trans-Pacific Partnership, the pact would link the markets of 13 Asian and Western economies that account for 40 percent of the world’s GDP.

The trade deal has been touted as a win-win on both sides of the Pacific, but Japanese business leaders have taken note of the tensions in Washington, and are concerned that any further partisan standoffs would hamper the investment climate here. It is unlikely this would derail the trade agreement altogether, but it could cause delays.

Speaking to reporters at the U.S. Chamber of Commerce recently, Charles D. Lake II, chairman of the U.S.-Japan Business Council, called the recent government shutdown “unsettling.”

“It has an impact,” he warned.

Americans from the U.S.-Japan Business Council met last week at the Chamber with the leaders of the Japanese counterpart organization — the Japan-U.S. Business Council — to discuss the Trans-Pacific Partnership as part of a 50th anniversary conference. Both sides said they were optimistic a deal could be completed in the coming months, but they also released a joint statement indicating that the tensions in Washington have not gone unnoticed.

“The councils strongly urge the U.S. Congress and administration to take into account the unsettling effect the recent debt ceiling extension had on global markets and confidence in the United States as an investment destination and avoid similar situations in the future,” the statement read.

Hiromasa Yonekura, chairman of the Japan-U.S. Business Council, said that the recent government shutdown doesn’t worry him as much as the overarching ideological differences between Democrats and Republicans that tends to affect everything else in Washington.

“When the administration makes a decision, it may be dragged and dragged by politics,” he said at the conference. “That worries us.”

During the government shutdown, some tea party Republicans suggested the U.S. government should default on its bills to force President Obama to listen to them. They averted that scenario with a short-term deal, but will be faced with the challenge once again early next year. It is possible the government could default on its bills at that time.

Mr. Yonekura noted that if the U.S. were to default on its bills, “that would be a tremendous problem.” In that case, “you would have stupid political leaders,” he said.

However, Mr. Yonekura also indicted that the Japanese business community doesn’t believe it will come to that. “I don’t think it worries the Japanese business community too much,” he said.

Business leaders from both countries also spent time during the conference discussing currency manipulation and the opportunities that the shale gas revolution in the U.S. presents.

Some have suggested Japan has been manipulating its currency lately, but American and Japanese business leaders at the conference agreed that was not the case.

“It is the councils’ view that this policy does not constitute currency manipulation, but is similar to what the Federal Reserve and other central banks have done to support domestic recovery and price stability, a position taken repeatedly by the G-7,” the group said in a statement.

Business leaders from both countries also seemed excited about the opportunities to drill for shale oil and gas in the U.S.

Mark Norbom, vice chairman of the U.S.-Japan Business Council, said the U.S. is making “very good progress” on this front. “It’s a big thing for both of our economies,” Mr. Norbom said.

Meanwhile, Mr. Lake said he is optimistic that despite the tensions in Washington, the Obama administration can complete the Trans-Pacific Partnership “if not by December, certainly, we hope, by early next year.”

• Tim Devaney can be reached at tdevaney@washingtontimes.com.

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