Japan approves FTA talks with Australia
December 5, 2006
Cabinet ministers for international trade matters have approved a joint report submitted by Japanese and Australian experts recommending initiating talks on a bilateral free trade agreement, government officials said.
The approval will pave the way for the opening of negotiations early next year on bilateral trade deregulation centring on tariff elimination.
The final decision on the matter is expected to be made when Prime Minister Shinzo Abe meets with his Australian counterpart John Howard in mid-December on the sidelines of the East Asia Summit meeting in the Philippines.
The expected FTA talks with Australia will be Japan’s first such parley with a major exporter of farm products, so there could be serious roadblocks ahead in view of Japan’s heavy protectionism in agriculture, especially the rice sector, political watchers say.
According to the joint report, some trade items might be exempted from the terms of the FTA, although it proposes covering all products in the trade liberalisation talks.
The report indicated that all options would be open, including provision of exemptions for important farm products such as beef, and that matters concerning such products might be renegotiated in the future.
Hiroko Ota, state minister in charge of economic and fiscal policy, said of the proposed accord: "It is important to study whether it would be an overall plus for Japan."
An FTA with Australia, with its vast quantities of important natural resources, should benefit Japan’s industrial sector, she said.
"We intend to work on the issue while devising measures to address the needs of industries that would stand to lose."
In 2005, bilateral trade was worth an estimated Y4 trillion ($A44.04 billion), according to the Finance Ministry.
The ministry said Japan was the largest trade partner for Australia.
A free trade deal would ensure a more secure supply of resources such as coal and iron ore for Japan, while making it possible for Japanese manufacturers to sell more of their products, such as cars and machinery, in Australia, analysts said.
Farming interests and many politicians of the ruling Liberal Democratic Party representing them, however, have been demanding that the joint report explicitly state that rice, wheat, sugar and other Australian farm products be excluded from the scope of the proposed FTA talks.