ACLI Comments on Japan's Interest in Joining TPP

For TPP Negotiations, Primary Objective is Level Competitive Playing Field

WASHINGTON, Jan. 13, 2012 /PRNewswire-USNewswire/ -- The American Council of Life Insurers (ACLI) submitted a statement today at the request of the United States Trade Representative (USTR) regarding Japan's expression of interest in joining the Trans-Pacific Partnership Trade Agreement (TPP).  While supportive of Japan's interest in TPP, the submission notes longstanding issues with regard to Japan Post Insurance (JPI) and insurance cooperatives (kyosai) for which TPP offers resolution opportunities.

JPI, through its holding company Japan Post Holdings, is wholly-owned by the Government of Japan.  Under the Postal Privatization Law it was in the process of moving toward partial privatization in 2009 when new legislation was enacted to freeze the sale of government shares in the world's largest life insurer.  It is unclear at present whether that process will resume. 

ACLI recommends that the U.S. government take no position on whether JPI should or should not be privatized and instead use the TPP process to ensure that JPI—whether publicly or privately owned—does not continue to enjoy government-bestowed privileges which distort competition.

For the TPP negotiations, ACLI states that the primary U.S. objective should be the establishment of a level competitive playing field in Japan's insurance market, the world's second largest. To ensure this is achieved, ACLI respectfully requests the U.S. government to seek an agreement with the Government of Japan that would, among other things, "provide for no new or modified product offerings by JPI until equivalent conditions of competition have been established," an objective shared by the Japanese private sector and by Japan's other major trading partners.

In its submission, ACLI notes the strides that Japan has made, particularly in establishing an independent and professional regulatory body —the Financial Services Agency (FSA). The submission, however, flags two problematic situations in connection with JPI and kyosai that remain as serious challenges on which U.S. and domestic Japanese insurers are allied:

• JPI enjoys a number of statutory, regulatory and other governmental privileges which distort and undermine competition with the private sector, including Japanese providers.
• Kyosai enjoy regulatory advantages over U.S. and other domestic Japanese insurance suppliers.  Many of these kyosai are not regulated by the FSA.

The statement adds, the "TPP process offers the U.S. a unique opportunity to address both of these situations in a comprehensive manner," "to ensure that competition is fair" and that "consumers are protected and provided a choice of products that best meet their needs."

ACLI's statement can be accessed via www.acli.com

SOURCE American Council of Life Insurers