We examine the influence of political economy reforms on the TPP negotiations using a two-level game analysis. Our main conclusions are summarized as follows. First, the political reforms implemented to strengthen executive policy making decrease the tariff rates in Japan and raise the possibility of the TPP’s conclusion. However, the influence on the political approval rating of the government depends on the content of political reforms. Political reforms aimed at intensifying the influence of the advisory committee would raise the political approval rating of the government. On the other hand, those aimed at reducing the protectionist political pressure would decrease the political approval rating of the government.
Second, agricultural policy reforms—from tariff protection to direct payments (production subsidies)—decrease the tariff rates in Japan and raise the possibility of the TPP’s conclusion. However, these reforms would decrease the political approval rating of the government. If the tariff reduction by using income compensation shifts the tariff rate determined by the TPP negotiations from the ideal point of the government, the political approval rating of the government would decrease.
Third, a reduction in protectionist political pressure and an increase in direct payments would decrease the political approval rating of the government, because the ideal point of the bureaucracy (agricultural bureau) is proximate to that of the government representative (prime minister). However, if the ideal points of both leave it enough, the result of the TPP negotiations gets closer to the ideal point of the government and therefore, the political approval rating of the government would rise. In addition, if the ideal points of both deviate moderately, the political approval rating of the government and the result of the TPP negotiations do not change simultaneously.
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