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Australia: Push to free up Japan on trade

The Australian

Push to free up Japan on trade

Peter Alford, Tokyo correspondent

March 23, 2005

JOHN Howard will ask Japan to support an official feasibility study as the first substantial step towards a bilateral free trade agreement when he visits Tokyo next month.

Alexander Downer yesterday told Prime Minister Junichiro Koizumi on a visit to Japan of Canberra’s renewed push for an FTA. Japan has been the most resistant of Australia’s major trade partners to the concept.

The Foreign Minister said later he was "pleasantly surprised and pleased" by the Japanese leader’s response and Mr Howard would follow the matter up with Mr Koizumi in April.

"We recognise that Japan has, to say the least, a number of sensitivities regarding an FTA, including with respect to agriculture, but this problem is smaller than many imagine, with some 80 per cent of Australian exports already entering duty-free and a further nine per cent entering with tariffs of less than 10 per cent."

However beef, Australia’s most valuable farm export to Japan earning a record

$2.25billion in 2004, attracts a 38.5 per cent tariff and later this year is likely to be hit with a 50 per cent "snap-back" tariff because of fast-rising import volumes.

Though Japan is Australia’s biggest foreign market and one of its two largest trading partners — two-way trade was worth $44.2billion last year — its powerful agricultural lobby has so far frustrated all attempts launch free trade negotiations.

Farm groups, influential elements of Mr Koizumi’s Liberal Democratic Party and senior Ministry of Agriculture Forests and Fisheries bureaucrats combined to derail the previous FTA push in 2003 and will fight the new Australian proposal for a joint feasibility study to identify "merits and demerits" of a comprehensive FTA.

Agriculture vice-minister Mamoru Ishihara, the country’s top farm bureaucrat, said last week there was "no merit for Japan" in any free trade deal with Australia.

Before meeting Mr Koizumi, Mr Downer acknowledged Australia’s efforts might not get FTA negotiations off the ground and, even if they did, the process could take four years to resolve.

However, he also warned the Japanese that unless they were prepared to start the process, economic relations between two of the region’s closest political and strategic allies risked stagnation.

Pointing to Australian FTAs with New Zealand, Singapore, Thailand and the US and discussions with China, Malaysia and the ASEAN group, the Foreign Minister said the Australia-Japan economic relationship needed "the same kind of spirit of dynamism".

"More broadly, an FTA between Australia and Japan would reinforce our strategic partnership in the Asia-Pacific region," he said.

Australia hopes a joint taskforce report on Japan-Australia trade and investment liberalisation will be complete in time for Mr Howard’s visit next month.

 source: The Australian