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Japan: FTA deals deadlocked

The Asahi Shimbun | Tokyo | 9 October 2004

EDITORIAL: FTA deals deadlocked
Japan has to give a little to gain in trade pacts.

Japan’s separate negotiations with Thailand, the Philippines, Malaysia and South Korea for bilateral free trade agreements (FTAs) have run into a brick wall. The outlook is particularly gloomy for talks with the three members of the Association of Southeast Asian Nations (ASEAN), with the impasse threatening to doom Japan’s effort to strike a deal with the trio by the end of the year.

Thailand is strongly pressing Japan to scrap its tariffs on rice, chicken, starch and sugar. But Tokyo has so far rejected the demand, saying it cannot eliminate tariffs on farm imports.

In a meeting on the FTA held before the bilateral talks, government officials and industry leaders from both countries agreed to consider exempting ``sensitive’’ agricultural products from tariff elimination. Bangkok, however, is adamant, saying an FTA that won’t increase its farm exports is meaningless.

In its talks with Japan, the Philippines are putting the priority on its request for Tokyo’s acceptance of nurses and nursing care workers from that country. Remittances from Filipinos working abroad to their relatives at home are important foreign exchange earners for the Philippines. Japan, though, has turned down this request, saying that accepting many foreign nurses and care workers would lower the levels of medical services and nursing care.

Japan’s reluctance to open its doors to farm imports and foreign workers is not the only block to progress toward FTAs. The negotiation partners are also hamstrung by their own domestic concerns.

In the FTA talks, Tokyo has called on these countries to improve their economic cooperation environments. Main items on Japan’s wish list include clear rules to secure efficiency in investments such as factory construction and the liberalization of trade in financial, telecommunications and other services. While beneficial for Japan, such reforms could hurt these countries’ domestic industries through tougher foreign competition. Their governments have no choice but to resist such steps. This is a common dilemma in trade talks between an industrial and a developing country.

With its economic power far outstripping these trade partners’, however, Japan should now make concessions to push the negotiations forward. Japan can contribute greatly to long-term development in East Asia by sharing profits in the region through FTAs. That would also advance Japan’s own interests.

Successful conclusions of Tokyo’s FTA negotiations with the three ASEAN members would lay a solid foundation for market integration in East Asia involving South Korea and China, too. Japan should act quickly to avoid falling behind in the region’s FTA race.

For decades, ASEAN and Japan have been linked by an extensive web of economic, cultural and other ties that bind them through human interactions and bilateral flows of goods and money. As the aging of its population will inevitably cause a serious shortage of workers such as nurses, Japan must make more efforts to encourage acceptance of immigrant workers.

After he inked an FTA with Mexico last month, Prime Minister Junichiro Koizumi spoke enthusiastically about the FTA talks with Japan’s trade partners in Asia, acknowledging the need to make concessions on farm trade. Yet despite Koizumi’s explicit words, his ministers are lukewarm about pushing through such pacts. Yoshinobu Shimamura, the minister of agriculture, forestry and fisheries, has voiced skepticism about opening wide the domestic farm market to imports. Other related ministers, including Economy, Trade and Industry Minister Shoichi Nakagawa and Foreign Minister Nobutaka Machimura, have joined the ranks of doubters, expressing pessimism about closing deals with the trio by the end of the year.

Foot-dragging by Japan’s top policymakers ruled out any breakthrough in the FTA talks during last week’s Asia-Europe Meeting, which brought together Asian and European leaders in Hanoi. However, there will be further diplomatic opportunities to accelerate the negotiations, including the scheduled ASEAN Plus Three (Japan, China and South Korea) summit in Laos in November. The onus is now on Koizumi to make a bold decision that is in Japan’s long-term national interests.