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3 Slow starter Japan revs up FTA
drive By Hisane Masaki
TOKYO - Japan is revving up its drive
toward free-trade agreements (FTAs), a move
largely fueled by an intensifying rivalry with
China over leadership in regional economic
integration and increasingly tough global
competition for oil, gas and other resources.
Several years ago, Japan was not alone in
East Asia in choosing to opt out of any FTAs.
Other major Asian economies, such as
China, South Korea and
Taiwan, had declined to conclude FTAs with any of
their trading partners. But Japan was even slower
than its East Asian neighbors, especially China,
in jumping on the global bandwagon.
This
drew criticism at home that the government was
allowing Japan's influence in the region,
especially over economic integration, to be eroded
significantly by that of China, a rapidly
ascendant economic as well as military power.
In a belated attempt to turn the tables,
Japan is now going all out to conclude FTAs with
as many countries as possible. Japan concluded its
first deal with Singapore, in 2002. It signed its
second FTA, with Mexico, in 2004, and a third,
with Malaysia, last December.
Japan signed
an FTA with the Philippines this September, and
Parliament approved it this month. Japan reached a
basic agreement with Chile and Indonesia in
November, and then with Brunei this month. The
Japanese FTAs with the Philippines, Chile,
Indonesia and Brunei are all expected to go into
force by the end of next year.
Under the
Japan-Indonesia agreement, Indonesia will reduce
tariffs on Japanese cars and auto parts. Japan
will accept Indonesian nurses and care workers,
following a similar arrangement between Japan and
the Philippines.
Japan completed FTA
negotiations with Thailand in August 2005, but
signing of the agreement, originally set for
April, has been delayed because of Thailand's
prolonged political instability, which culminated
in a military coup in September.
Negotiations with South Korea were under
way, but the two countries missed the original,
end-2005 target date because of sharp differences
over farm trade and also chilly political
relations. The political obstacle to the proposed
Japan-South Korea FTA seems to have been lifted
after Prime Minister Shinzo Abe's fence-mending
trip to Seoul in early October, immediately after
taking office.
A free-trade agreement with
the 10-member Association of Southeast Asian
Nations (ASEAN) as a whole is also in the works.
This month Japan and ASEAN reached a basic
agreement on a plan to scrap bilateral tariffs
within 10 years, a centerpiece of the
negotiations. The two sides aim to bring the talks
to a conclusion next spring.
In addition
to fellow East Asian countries, Japan has recently
begun to place priority on resource-rich countries
outside of the region as a foreign-policy tool to
beef up relations with them and thereby ensure
stable supplies of oil, natural gas and other
resources. Among those it has approached to open
FTA negotiations is the oil-rich Gulf Cooperation
Council. Japan opened FTA negotiations with the
GCC in September.
Japan is also expected
to kick off FTA negotiations early in the new year
with Vietnam, India, Australia and Switzerland.
Negotiations with Switzerland would mark Japan's
first attempt to conclude an FTA with a European
country.
Meanwhile, the Japan Business
Federation (Nippon Keidanren), Japan's most
powerful business lobby, has recently proposed an
FTA with the United States, although the
governments of both countries remain negative
about the idea.
The sensitive issue of
farmers Despite its accelerated FTA moves,
however, Japan still has a lot to do if it is to
march in step in the ever-intensifying global and
regional FTA competition. The biggest obstacle is
Japan's heavily protected and internationally
uncompetitive agricultural industry.
Japan
has refused to put many of its agricultural
products on the negotiation table. Under the
recent basic agreement with Indonesia, for
example, Japan will cut tariffs on nearly all
industrial and forestry products while removing
gradually those on tropical fruits. So-called
sensitive products such as rice, wheat and meat
aren't included in the pact.
Tokyo has
also dug in its heels on agricultural trade in the
stalled Doha talks. Japan's plan to enter FTA
negotiations with Switzerland, a close ally in the
fight against farm-market liberalization in the
Doha Round, is widely seen as part of its efforts
to strengthen its negotiating position there.
Concluding free-trade deals is considered
by some to be the best avenue to cashing in on
rapid growth in other Asian economies. But many
experts point out that Japan needs to reform its
heavily protected agricultural market - which has
been left largely
