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Japanese poll delays FTA

Australian Financial Review

Japanese poll delays FTA

16 November 2012

Australia’s hopes of quickly clinching a free-trade agreement with Japan, its second biggest trading partner, have been dashed by a decision by Japanese Prime Minister Yoshihiko Noda to call a general election for December 16.

Japanese government sources confirmed it could be months before Australia-Japan trade talks made progress. The federal government was keen to give the talks a final push to forge an agreement.

Negotiations have been bogged down after 16 rounds of negotiations over Australia getting better access to Japan’s agricultural markets.

A coalition led by Mr Noda’s Democratic Party of Japan is expected to lose the election. The Liberal Democratic Party’s Shinzo Abe is viewed as the most likely victor.

Mr Noda promised in August to call elections but was vague about the timetable, apparently hoping his party could regain some of the popularity it has lost over the past three years. Polls show the party’s approval is in the low teens.

Negotiations with Japan over a trade deal began in 2007 and were delayed by almost a year after the 2011 earthquake and tsunami.

Two-way trade with Japan is worth about $68 billion a year. A joint free-trade feasibility study estimated a treaty would add $39 billion to Australia’s economy and $27 billion to Japan’s over 20 years.

South Korean government sources suggest Australia-South Korea free-trade talks are likely to make little headway given long-serving President Lee Myung-bak is completing his final term. An election is due on December 19.

Australia’s beef industry has been pushing hard for a deal with South Korea. The US got in first in 2010 with a free-trade deal that came into effect in March and gave its beef industry better access.

Trade analyst Alan Oxley said while he understood the Japan talks were “still plodding along’’, there was “some urgency on the Korea deal’’.

“Certainly given the US has clinched a deal with Korea, there is no time to be wasted in terms of our beef producers,’’ he said.
free trade meeting in Phnom Penh

Prime Minister Julia Gillard is due to meet Mr Noda on the sidelines of the Association of South-East Asian Nations’ East Asia Summit which begins in Cambodia’s capital, Phnom Penh, on Monday. The focus is on an ambitious freer-trade push.

Two competing regional trade groupings will be discussed at the summit, which brings together the 10 ASEAN countries plus China, India, the US, Australia, New Zealand, Russia, Japan and South Korea.

The Regional Economic Comprehensive Partnership includes the 10 ASEAN countries plus Australia, New Zealand, China, Japan, Korea and India. It would create the world’s largest economic bloc by 2015 with a market of 3 billion people and combined gross domestic product of $US17.23 trillion.

US President Barack Obama has been strongly pushing the Trans Pacific Partnership, which involves 11 nations and would form a trade bloc worth $US20 trillion and cover 700 million people.

The TPP membership includes the US, Australia, Canada, Mexico, Malaysia, Peru, Vietnam, Brunei, Chile, New Zealand and Singapore.

Though Ms Gillard will see Mr Obama at the TPP meeting on Tuesday, it is not clear whether they will have a private discussion.

Ms Gillard is expected to meet Chinese Premier Wen Jiabao, in the wake of the completion of China’s leadership transition.

The divisive issue of China’s maritime territorial disputes is also expected to be discussed.