logo logo

Rio lobbies for Japan free trade

AAP | October 16, 2006

Rio lobbies for Japan free trade

A FREE-TRADE agreement between Japan and Australia could strengthen the relationship between the two countries and ensure the prosperity of their businesses in the decades ahead.

Rio Tinto Australia managing director Charlie Lenegan told an Australia-Japan business conference in Sydney today the foundation for such a treaty had been laid over the past 50 years, since the signing of a Commerce Agreement between the pair in 1957.

"A bilateral free trade agreement (FTA), focused on security of supply and increased trade in the agricultural and services sectors, would appear to make sense - especially when seen as a stepping stone on the long road to multilateral free trade," Mr Lenegan said.

"It (an FTA) has the potential to strengthen an already strong relationship and ensure that Japanese and Australian businesses, and their customers, suppliers, employees and shareholders, prosper in the decades ahead."

He said Australia and Japan - Australia’s biggest export market - had to work on opening their economies and improving their competitiveness and a broader trading base was needed between them.

"Our trading relationship is suffering from an imbalance, and it would be healthier, economically speaking, if it had a broader base," he said.

"That commodities comprise around 90 per cent of our exports to Japan, while gratifying to Australia’s mineral suppliers, should send a warning to anyone concerned about the long-term health of the trade and investment relationship between our two countries."

Mr Lenegan said trade in services had made a greater contribution to both economies, with Australia increasing its export of manufactured goods to the United States and European Union.

But this had not occurred between Australia and Japan, and two-way investment between them had underperformed in the last 10 years.

He said four considerations should be taken into account in investigating the feasibility of an FTA: that government policies making trade and investment more difficult will prompt international businesses to pursue opportunities elsewhere; that cultivating international investment stimulated the domestic economy; that business would respond to the changing demographics of both countries, and that greater business opportunities may exist in financial and professional services and agricultural trade and services subject to appropriate policies.

Mr Lenegan also said the migration of labour-intensive industries to China, India and other Asian markets with more competitive labour conditions was changing the economic profile of Japan and Australia.

But Japan would remain the dominant economic force in the region, underpinned by ongoing reform.

 source: AAP