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Japan, ASEAN to miss end-March target for free trade deal

Saturday February 17, 2007

Japan, ASEAN to miss end-March target for free trade deal

(Kyodo) — Japan and the 10-member Association of Southeast Asian Nations will not be able to wrap up their negotiations for an economic partnership agreement by the end of next month as earlier planned and now hope to strike a deal by this summer, according to ASEAN and Japanese trade officials.

The main reason for the delay is the sluggish pace of negotiations for the liberalization of trade in goods, which forms the nexus of the EPA, they said.

"March is not doable. ASEAN is looking at June or July," ASEAN Secretary General Ong Keng Yong told Kyodo News.

China is already way ahead of Japan in the race to forge freer trade with the economically dynamic and resource-rich grouping. China and ASEAN began reducing tariffs on goods in July 2005.

The delay may lead to a setback for Japan in the competition with China to grab the initiative in creating economic integration in East Asia.

The EPA that Japan plans to ink with ASEAN is more comprehensive than free trade agreements, or FTAs, which focus largely on liberalization of trade in goods. The EPA will cover not only that but also the opening up of the service and investment sectors and even freer movement of human resources, such as lawyers and nurses.

The proposed EPA with ASEAN would be Japan’s maiden one with a regional grouping.

ASEAN and Japan began negotiations for an EPA in April 2005 with both sides agreeing to conclude all the negotiations by the end of March this year.

They had planned to first conclude the negotiations for trade in goods at the end of August last year in conjunction with an annual gathering of ASEAN economic ministers and Japan’s minister of economy, trade and industry, but that did not prove possible.

So far, the two sides have basically agreed that 92 percent of goods from each side should be liberalized in the future from a common list of about 5,200 goods.

The two sides are now scrambling to speed up the negotiations when they meet in the Philippines toward the end of this month.

"So far there has been a long standstill in the negotiations," said a Philippine trade official. "They have to resolve the issue of regional package for trade in goods and rules of origin."

"Both sides have not reached any agreement on the regional package. They still don’t know yet when the agreement can be signed," she said.

However, officials said they can only conclude negotiations on goods trade in late April or early May at the earliest.

As a face-saving measure, the two sides now "plan to make a big announcement on the positive outcome of their talks on goods trade immediately after they finish the negotiations, copying the earlier example of China and ASEAN," a Japanese trade negotiator said.

After that, they will have to rush through the rest of the EPA in a bid to finalize it this summer. The investment and services sectors will have to be negotiated.

Japan and ASEAN are expected to conclude negotiations for the broader EPA only during this summer. There are fears that further delays will force the postponement of the signing of the agreement by the leaders at the end of this year.

It is feared these delays will cause Japan to lose out to China in the competition between them to take the lead in steering East Asia’s economic integration.

A study initiated by China for an ASEAN-plus-three FTA, comprising the 10 ASEAN member countries plus China, Japan and South Korea, is already on the verge of completion.

In contrast, a study on Japan’s idea for a broader EPA covering 16 countries in the region, which would also involve Australia, New Zealand and India, will only be launched in April.

ASEAN groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

 source: Kyodo