Page 3 of 3 Slow starter Japan revs up
FTA drive By Hisane Masaki
hopes of strengthening relations with them
and thereby ensuring stable supplies in the medium
and long terms.
Alarmed by stubbornly high
prices for oil and the intensifying global rush
for oil, gas and other resources, led by China and
India, Japan adopted a "New National Energy
Strategy" this year that called for, among other
things, strengthening ties with resource-rich
countries through such means as increased official
development assistance and
conclusion of FTAs.
Beneath the recently
accelerated Japanese FTA strategy lies an
intensifying rivalry with China over energy
resources, as well as over political and economic
influence in Asia. Japan has increasingly been
competing over scarce energy resources with China.
The two energy-hungry Asian powers have been
locked in the simmering dispute over gas reserves
in the East China Sea. Furthermore, they have each
lobbied hard for alternative routes for a pipeline
from eastern Siberia's oilfields to Pacific Rim
nations.
The Japan-Indonesia FTA, on which
the two countries reached a basic agreement in
late November, will contain a clause to ensure
stable energy supplies. It was the first time that
Japan had reached an agreement in FTA negotiations
with a trading partner to include such an energy
clause.
Indonesia is the biggest supplier
of liquefied natural gas (LNG) to Japan,
accounting for 25% of 58 million tons Japan
purchased from abroad in 2005. Under the deal,
Indonesia will hold prior consultations with Japan
about restricting oil and gas exports in the event
of a surge in domestic demand. Indonesia will also
fully implement existing energy-supply contracts
between the two countries even when export
restrictions are invoked. In return, Japan will
increase technical assistance to Indonesia in
areas such as coal-to-liquid technology,
energy-saving measures and the compilation of
long-term supply-demand balance for crude oil,
coal and natural gas.
The agreement to
include an energy clause in the FTA came as
Indonesia has threatened to cut in half LNG
shipments to Japan from 2010 - when long-term
contracts expire - to boost the availability of
natural gas for domestic industries amid
decreasing oil and natural-gas production at home.
This month Japan and Brunei, another oil
and gas producer, also reached a basic agreement
in free-trade negotiations. In addition to
eliminating tariffs on most products traded
between the two countries, including Japanese
autos and Brunei's petroleum products, the two
countries agreed to include in the pact an energy
clause similar to one in the Japan-Indonesia FTA
to ensure stable oil and gas supplies.
Japan and the six-member GCC launched FTA
negotiations in September. The two sides hope to
conclude the pact by the end of 2007. The GCC
groups Saudi Arabia, the United Arab Emirates,
Bahrain, Oman, Qatar and Kuwait and accounts for
more than 70% of Japanese crude-oil imports. In
the FTA negotiations with the GCC, Japan is
seeking a written pledge by the grouping to supply
crude oil preferentially to Japan, even in
emergencies such as war.
In addition to
Indonesia, Brunei and the GCC, Japan has
negotiated or plans to negotiate FTAs with some
other resource-rich countries, such as Australia,
Chile and South Africa. Australia is a major
supplier of coal, iron ore and LNG, which together
account for more than half of its Japan-bound
exports. Australia is also an important country
for Japan's civilian nuclear policy.
Japan's New National Energy Strategy,
adopted this year, calls for nuclear-energy
production to rise from the current 30% to between
30% and 40% or more in 2030. Japan is already the
world's third-largest nuclear-power nation in
terms of the number of civilian nuclear plants in
operation. Australia has the world's largest
uranium deposits. Chile is also rich in such
mineral resources as copper, as well as a gateway
to the South American regional trade grouping
Mercosur. Japan is also eyeing FTA negotiations
with South Africa, which is rich in such mineral
resources as gold, platinum and diamonds.
Hisane Masaki is a Tokyo-based
journalist, commentator and scholar on
international politics and economy. Masaki's
e-mail address is yiu45535@nifty.com.
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