The Age, Melbourne
FTA deal shaky over agriculture
By Deborah Cameron, Tokyo
18 April 2005
Australia’s prospects of a trade breakthrough with Japan this week have been undermined by new regional tensions and growing domestic opposition.
Japan’s agriculture ministry is set to scuttle a feasibility study for a free trade agreement that was to be announced by Prime Minister John Howard on Wednesday on a visit to Tokyo.
Instead, Japan would sideline the trade deal and promote other investment and deregulation ideas, a leading Japanese business newspaper said at the weekend.
The decision was "clearly the result of agriculture issues", a senior official in Japan’s foreign ministry reportedly said.
At the same time, Japan is using the trade talks to pressure Australia into a more forthright regional role as a friend and to act as a counterweight to the rising power of China.
The president of the Japan Foundation, Kazuo Ogoura, said: "Australia and Japan should and could form a closer partnership because the incidents that have been taking place in Korea and China have highlighted the political and sociopolitical immaturity of China and Korea and the absence of freedom, particularly in China."
Foreign ministry officials in Japan had linked talks about trade with the view that Australia should "shoulder a very important role along with India to keep the balance of power in Asia", Mr Ogoura said.
"This is the first time I’ve ever seen such a statement, officially quoted by an official of the Foreign Ministry, that in the view of Japan, Australia should be seen as a partner with whom Japan could form an alliance with a whole Asia Pacific or global perspective in view."
But the main obstacle to a trade deal is Japan’s agriculture ministry, which is legendary in its opposition to any measures affecting Japanese farmers. It even objects to the term "feasibility study" because it sounds more positive than its preferred terminology, "a study into the merits and demerits".
Japan is using the trade talks to pressure Australia into a more forthright regional role.
In contrast to the poor reception accorded Australia, Switzerland’s preliminary moves towards a free trade agreement with Japan have been smooth because agricultural exports were not involved.
Australia is in a delicate balancing act. Mr Howard is arriving in a Japan that feels alienated from its near neighbours because of disputes over territory and history, and is seeking friends elsewhere.
Australia, unlike China and South Korea, strongly supports Japan’s bid for a permanent seat on the United Nations Security Council. Australia yesterday sent troops to Iraq to protect Japanese engineers engaged in a humanitarian effort there.
As well, Mr Howard and Japanese Prime Minister Junichiro Koizumi are passionate advocates of the US alliance and Australia, which wants an invitation to the East Asia Summit later this year, has found support from Japan.
While these connections might provide leverage on the trade front, they could also be viewed negatively in China, with which Australia is in talks over another free trade deal.
A senior Australian embassy official, at a briefing on free trade in anticipation of Mr Howard’s visit, was non-committal about Australia’s priorities on Japan and China.
Australia was negotiating with both countries and wanted to deliver advantages to its business community and economy, he said.
Japan is Australia’s biggest trading partner, with two-way trade valued last year at $44.3 billion. Of Australia’s exports to Japan, agricultural, forestry and seafood products are a significant component.
Australia wants a feasibility study to see how much this would grow after a free trade deal and claims that Japan’s economic modelling shows the Japanese GDP would grow by 700 billion yen ($A8.4 billion) a year after a trade agreement with Australia.