Free trade pact eyed to aid firms in Chile
Asahi Shimbun, Japan
Free trade pact eyed to aid firms in Chile
10 November 2004
Japan is considering a free trade agreement with Chile out of concern the Latin American country’s FTA agreements with other nations may put Japanese companies in the area at a disadvantage.
If preparations are successful, the two countries will agree to start feasibility studies on the sidelines of the Asia-Pacific Economic Cooperation forum meetings that open in Chile on Nov. 17, government sources said.
Specifically, government bureaucrats, corporate executives and academics from the two countries would set up a study group, the first of several steps required before full-fledged FTA talks can get under way.
Free trade arrangements form the pillar of Santiago’s trade policy. FTAs are already in place with industrialized nations such as the United States, Canada and the European Union, as well as with Central American neighbors such as Mexico and Costa Rica.
Across the Pacific, Chile also signed an agreement with South Korea in February 2003 and is considering negotiations with China and India.
Japanese companies operating in Chile say they are at a competitive disadvantage because imports from Japan, including automobiles and electronics products, face higher tariffs than those on imports from the United States, the EU and other FTA signatories.
The absence of an FTA will cost Japanese firms in Chile about $2.1 billion in lost profits by 2007, according to industry estimates compiled in 2003.
Automobiles account for about 60 percent of Japan’s exports to Chile and were worth about $575 million in 2003. Two other leading exports are electric machinery and general machinery.
The value of exports is the second largest among Japan’s trading partners in Latin America after Brazil.
With an FTA, imports from Chile could grow in importance.
Chile is the world’s top copper producer, and the metal represents 35 percent of the country’s exports to Japan, worth $2.6 billion (273 billion yen) in 2003.
Some analysts say Japan will find it difficult to secure copper in the future if Chile becomes a close partner with China, which is sucking in a wide range of resources, from crude oil and coal to various rare metals.(IHT/Asahi: November 10,2004)
