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Japan, Chile reach basic agreement on free trade

International Herald Tribune

Japan, Chile reach basic agreement on free trade

The Associated Press

21 September 2006

Tokyo. Japan and Chile have agreed on a bilateral free trade pact, a Foreign Ministry official said Thursday.

The two sides have been discussing a possible economic partnership since February, including the most recent round of talks last week in Tokyo.

Tokyo plans to announce the agreement Friday after Cabinet approval, ministry official Yoshihiro Higuchi said. The two countries will then sign the agreement early next year.

"We have reached a basic agreement," Higuchi said. "The outcome reflects negotiations based on our mutual understanding that an early agreement would benefit both countries."

Japan has been stepping up efforts to sign trade pacts in a bid to keep its economy afloat. Japan has signed several such bilateral pacts, but still lags behind other countries. Earlier this month, it signed a pact with the Philippines.

Japan is a major exporter of automobiles, auto parts and electronics appliances to Chile, while its main imports from Chile include copper ore, salmon, pork and wine.

Under the agreement, Chile will reduce tariff on Japanese exports, including vehicles and auto parts, eventually eliminating them on all items. Japan will also gradually reduce tariffs on salmon, wine and other agricultural products, except for politically sensitive rice and wheat, Higuchi said.

He refused to disclose other details of the agreement prior to Friday’s official announcement.

Japan exported 103.95 billion yen (US$888.48 million; €700.92 million) worth of products, 63 percent of them automobiles, to Chile in 2005, up 33.2 percent from the previous year, according to Finance Ministry figures.

Meanwhile, Chile exported 565.36 billion yen (US$4.83 billion; €3.81 billion) worth of products, 55 percent of them copper ore and molybdenum, to Japan last year, up 25.1 percent from 2004.

Molybdenum, a very hard, lustrous, silver-white metallic element, is used in alloys, and added to steel to give it strength and resistance to corrosion.

Japan has free trade agreements with Singapore, Mexico, Malaysia and the Philippines, while Chile has FTAs with more than 40 countries, including the United States and the European Union.

Japan on Thursday kicked off the first round of talks on FTAs with six Middle Eastern countries, including Saudi Arabia.