Japan eyes FTAs with US, EU
Ohmynews | 13 July 2007
Japan Eyes FTAs with U.S., EU
The white paper on trade urges the nation to prepare for FTA talks
Japan’s Ministry of Economy, Trade and Industry (METI) has released an annual report on international trade specifying the nation’s policy of revving up preparations for future talks with the United States and the European Union on concluding free-trade agreements (FTAs).
The annual report also stresses the need for the government to "aggressively pursue" investment accords with other countries, as the total number worldwide has risen sharply in recent years. At present, Japan has only bilateral investment pacts with 11 countries, while Britain, China, France and Germany each have such pacts with about 100 countries.
The annual report also says Japan needs more foreign and information-technology investment to boost its service sector and make it more competitive with the U.S. and Europe. Compared with its manufacturing, Japan’s service sector is not competitive.
The 2007 White Paper on International Economy and Trade, which was also approved by Prime Minister Shinzo Abe’s cabinet earlier this week, stipulates the need to consider FTAs with the United States and European Union as "a future subject." It is the first time that METI has referred to the possibility of concluding FTAs with the U.S. and the EU in its annual reports on international trade.
The report reflects a strong desire to prevent the world’s second-biggest economy from failing to jump on the global FTA bandwagon. METI is already considering launching joint bilateral private-sector studies with the U.S. and the 27-nation EU on the FTA issue as early as September. These private-sector studies would pave the way for official government-to-government negotiations.
Japan has so far signed FTAs with seven countries — Singapore, Mexico, Malaysia, the Philippines, Chile, Thailand and Brunei. The FTAs with Singapore, Mexico and Malaysia have already taken effect. In August, Japan is expected to ink an FTA with Indonesia during Prime Minister Abe’s planned visit to the Southeast Asian country.
After South Korea reached an FTA with the U.S. in early April and then opened FTA negotiations with the EU in early May, pressure has further grown from Japanese businesses for the Abe government to move toward FTA negotiations with the U.S. and the EU.
Japanese exporters, especially of electronics goods, such as flat-panel televisions, fear losing sales in the U.S. and European markets to their South Korean rivals, who will enjoy significantly lower or zero import tariffs in the two huge markets.
The annual report also says that Japan aims to conclude FTA negotiations with the Association of Southeast Asian Nations (ASEAN) as a whole in November. The report also expresses a Japanese resolve to push for its proposal for an FTA involving 16 Asian economies. The 16 nations are the 10 ASEAN nations, Japan, China, South Korea, Australia, New Zealand and India.
China has proposed an FTA encompassing the 10 ASEAN nations plus Japan, China and South Korea alone, while the U.S. has proposed the creation of a broader FTA encompassing the 21 member economies of the Asia-Pacific Economic Cooperation (APEC) forum, which includes the U.S., Canada and Mexico.
"Our country needs to strongly promote East Asian economic integration to spur development in East Asia, focusing on liberalizing trade in goods and services, establishing economic rules and redressing (economic) gaps in the area," the annual report says. It urges the government to advance a plan to set up an economic research institute for ASEAN and East Asia, an Asian version of the Paris-based Organization for Economic Cooperation and Development (OECD). The organization would be located in an ASEAN country, it says.
Hisane Masaki is a Tokyo-based journalist, commentator and scholar on international politics and economy.
