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3 A dry run for a Japan-US
FTA By Hisane Masaki
TOKYO - Japan has kicked off negotiations
with Australia on concluding a free-trade
agreement (FTA), in a desperate bid to play
catch-up in the ever-intensifying regional and
global FTA race. The negotiations with Australia,
launched this week, are particularly significant
because they are Japan's first with a major
agricultural exporter and are widely seen as a dry
run for possible future talks with the United
States.
Despite being the world's
second-biggest economy and racking up huge trade
surpluses for many years through robust exports of
automobiles and other
high-tech products, Japan is notorious for its
heavily protected agricultural market.
It
would be fair to note, though, that Japan is the
largest net food-importing country in the world,
buying from abroad 60% of its food consumed
domestically on a calorie basis. Japan has
defended its farm protectionism, citing the need
for food security.
Pressure has been
growing from other domestic industries for Prime
Minister Shinzo Abe's government to move toward
FTA negotiations with the US as soon as possible.
The pressure has increased since the US and South
Korea reached an agreement early this month.
Abe is expected to raise the possibility
of concluding an FTA with the US in his talks with
President George W Bush in Washington on Friday
during a two-day US visit, his first since taking
office last September.
Japan's recently
revved-up FTA drive has been largely fueled by an
intensifying rivalry with China, a rapidly
ascending economic as well as military power, over
leadership in regional economic integration - and
political clout - and also by increasingly tough
global competition for oil, gas and other
resources.
China became Japan's largest
trading partner in fiscal 2006, which ended on
March 31, replacing the US, according to
preliminary figures released on Wednesday by
Japan's Finance Ministry. Japan's trade with
China, excluding Hong Kong, rose 16.5% in fiscal
2006 from a year earlier, totaling 25.42 trillion
yen (about US$213.6 billion), while that with the
US increased 10.3% to 25.16 trillion yen ($211.4
billion)
Until the turn of the century,
Japan was the only major industrialized country
that had not concluded an FTA with any of its
trading partners in accordance with its
traditional policy of only pursuing multilateral
free trade under the General Agreement on Tariffs
and Trade (GATT) and its successor, the World
Trade Organization (WTO).
Japan was even
slower than its East Asian neighbors, especially
China, in jumping on the global FTA bandwagon.
This drew criticism at home that the Japanese
government tested the waters for too long and
allowed the nation's influence in the region,
especially over economic integration, to be eroded
significantly by China. In a desperate attempt to
turn the tables, Japan is now going all out to
conclude deals with as many countries as possible.
Alarmed by stubbornly high prices for oil
and the intensifying global rush for oil, gas and
other resources, led by China and India,
resource-poor Japan has also recently begun to
place priority on concluding FTAs with
resource-rich countries outside of the region as a
foreign-policy tool to beef up relations with them
and thereby ensure its energy security through
stable, long-term supplies.
In the past
month or so alone, Japan has reaped two harvests
of its accelerated FTA drive. Japan signed an
agreement with Thailand early this month, only a
week after doing so with Chile. Japan has also
signed FTAs with Singapore, Mexico, Malaysia and
the Philippines, the first three of which have
already taken effect. Japan has also reached basic
agreement in negotiations with Indonesia and
Brunei.
Japan and South Korea launched
negotiations in December 2004, but they were
suspended because of sharp differences over farm
trade. South Korea has strongly criticized Japan
for its refusal to open its fishery market. Japan
has also been negotiating FTAs with the 10-member
Association of Southeast Asian Nations (ASEAN) as
a whole, the oil-rich Gulf Cooperation Council,
Vietnam, and India. Japan and ASEAN are expected
to reach an agreement next month.
For its
part, Australia has FTAs with the US, Singapore,
Thailand and New Zealand and is in negotiations
with ASEAN, Chile, China and Malaysia.
Japan's strategic partner Japan
has been Australia's largest trading partner for
nearly 40 years, and it has long been, by far,
Australia's largest export market. Japan is also
the third-largest source of foreign investment and
tourists to Australia. Meanwhile, Australia is
Japan's seventh-largest trading partner and
12th-largest export
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