The ambitious Trans-Pacific Partnership (TPP) free trade pact that seemed dead in the water after the United States' withdrawal could get a second wind, with Japan prepared to take the lead in an 11-country agreement sans the US.
Tokyo also wants to focus on drawing up a common set of trade rules that can be adopted across the Asia-Pacific when Finance Minister Taro Aso meets US Vice-President Mike Pence for the first round of bilateral economic talks on Tuesday.
In doing so, Japan wants to push back against the rising protectionist tide sweeping the world, and forge an open and free economic order in the Asia-Pacific.
Mr Aso, who is also Deputy Prime Minister, told the Diet last week: "I want Japan and US to take the lead in creating rules that other nations in the region can adopt."
US President Donald Trump, who favours bilateral trade pacts over multilateral deals, nixed what he called the "job-killing" TPP in one of his first acts since taking office.
But Tokyo sees the TPP, which had covered 40 per cent of the global economy, as a "gold standard" of trade deals, given its inclusion of provisions not usually found in most trade deals, such as labour standards and governance and transparency standards.
Japan has long maintained that the TPP would be "meaningless" without the US. The other signatories are Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
In a shift in its calculations, Japan is now working to resurrect the pact with just 11 members, local media reported yesterday. Top government spokesman Yoshihide Suga told Kyodo News: "We have a feeling that the 11-nation framework should be given weight."
Japan decided to move forward with the pact after it became clear that the US would not oppose such an arrangement, Nikkei Asian Review reported.
Minister of Economy, Trade and Industry Hiroshige Seko raised the alternative plan to his Asean counterparts at an economic meeting in Osaka earlier this month.
Singapore has said it will sign the TPP deal if there is consensus among the 11 countries. A spokesman for the Ministry of Trade and Industry said that during a meeting with TPP parties last month in Chile, "Singapore said that we hope to harvest the benefits of the agreement in a timely way. We look forward to working with the others to find a way forward."
But it is understood that Vietnam and Malaysia see little appeal in having to make concessions without gaining access to the vast US market.
The chief TPP negotiators will begin talks early next month in Canada, before their trade ministers meet in Vietnam weeks later.
A Japanese Foreign Ministry official told the Nikkei: "The US-Japan economic dialogue and the 11-member TPP plan are two sides of the same coin."
Tuesday's bilateral talks with Mr Pence, who will be making a 10-day visit to the Asia-Pacific, come with a huge elephant in the room: Japan's enormous trade deficit with the US last year amounted to US$69 billion (S$96.3 billion).
The US wants to focus on bilateral trade but Japan is said to be reluctant due to concern that it will be pressured to open up its farming and car sectors. On the agenda instead are measures to strengthen protection of intellectual property rights, set at 70 years from the death of the copyright holder under the TPP, the Yomiuri Shimbun said yesterday.
It also includes measures to ease regulations for entry of foreign firms into financial and retail sectors.