John Whelan: Time to get ready for wider trading horizons
Ireland needs to elevate its trading relationship with Japan, already a key gateway to Asia for Irish exporters.
Looking ahead is difficult at the best of times, but particularly so just now.
However, Mitsuru Kitano, the Japanese ambassador to Ireland, shared his thoughts with me in a recent letter on free trade, next year’s Tokyo Olympics, and why realising a digital society offer the most promising road ahead for Ireland and Japan in a post-Covid, post-Brexit world.
Anyone who ventured into central Tokyo while the pandemic lockdown was in effect this year may have felt a twinge of recognition watching .
The producers of this splashy Netflix drama, made in 2019, must be ruing the money and effort spent on achieving its signature effect – a city devoid of people – which they could have had free in 2020.
Cities across the globe have become ghost towns. Despite Brexit and the Trump administration’s penchant for burning international agreements, the way forward from the devastation created by Covid is in opening up economies and their cities again to trade freely.
Japan has not historically been that active in free trade talks internationally – but that has now changed. In 2019, it signed a free trade deal with the EU, benefiting Ireland significantly. Just last month, it was the prime mover in signing a Regional Comprehensive Economic Partnership (RCEP) agreement with 14 other Asia and Pacific countries, including China and Australia, who have been slinging trade tariffs and quota barriers at each other for the past two years.
This was the first major action by Japanese prime minister Yoshihide Suga and may be seen as a route to better relationships with China.
The agreement is Japan’s first trade agreement with China and will create Asia’s biggest free trade zone, encompassing about a third of the world’s population, with a combined GDP of €21.4 trillion.
The agreement will give a much-needed bolster to 15 pandemic-weakened economies by reducing tariffs, strengthening supply chains with common rules of origin, and codifying new e-commerce rules.
Japan’s foreign minister Toshimitsu Motegi pressed home the value of the agreement to Ireland in a substantial telephone conversation with Foreign Affairs minister Simon Coveney in the weeks after the signing.
However, whatever the value of the RCEP to Irish trade, there is no doubting that its completion is a strong message affirming Asia’s role in supporting the multilateral trade system, which Ireland relies heavily on and which has been undermined by the Trump administration.
In 2021, the challenge of repairing trade relations globally will now shift to US President-elect Joe Biden.
Whereas it is unlikely the Biden administration will seek to join the RCEP agreement, it may opt to re-float and expand the Trans-Pacific Trade Agreement, scuppered by Donald Trump in 2017.
Chinese President Xi Jinping also stated last month his country would “actively consider” signing up for the expanded agreement. This could prove a useful route to reducing the trade war with China.
Fast on the heels of signing the Comprehensive Economic Partnership Agreement, Japan’s prime minister not only created the post of Japan’s minister for digital transformation but also ordered its new holder to rush off and draw up a blueprint for the country’s first digital agency.
Ireland’s state of digitisation, across both the private and public sectors, is an inelegant patchwork, much like Japan’s. Parts of both are world class, parts are dreadful and the stitching that binds it all together is, at best, haphazard, such as the roll-out of broadband.
The difference is, however, that Japan has now acted decisively to tackle the matter, whereas despite a national survey in 2018 to garner opinion of the shape of a new digital strategy for Ireland, the Government, despite many promises, has not yet launched one.
No wonder the UN's 2020 e-government digital development index has rated Ireland in 28th position, well behind top-ranked Denmark and the mid-ranked UK.
We already know the pandemic has changed the way people work, shop and play, with demand for digital payments increasing as much as 81% in the past year. The big question for business is, will these changes last?
Assessing which behaviours will revert and which will stay is a vital issue for many businesses intent on devising a strategy for 2021. The convenience and ease of digital commerce is now tried, tested and proven for many – including amongst older consumers.
Digital government has played a central role in addressing the Covid crisis internationally. In Ireland, the Government has been slow to embrace digital technology, both to support business recovery and to better manage future surges in the pandemic.
Japan has been a long-term investor in Ireland and a key market in Asia for our exporters. We need to elevate our relations to a further stage, as stated by Japan’s ambassador to Ireland and identify promising areas for co-operation over the years to come.
• John Whelan is managing partner of international trade consultancy The Linkage Partnership
