Japan trade deal ’bigger than China’
By Sandra O’Malley
August 01, 2006
A FREE trade deal between Australia and Japan could be a multi-billion dollar bonanza for both countries, Foreign Minister Alexander Downer has suggested.
Australia and Japan are currently investigating whether to move towards formal negotiations for a free trade agreement (FTA).
Speaking to the Japan Press Club today, Mr Downer said an agreement could be a major money spinner for both nations.
Japan is Australia’s biggest trading partner, with two-way trade worth around $44 billion.
"I think the early indications from the FTA feasibility study show strong advantages for both countries," Mr Downer said.
"I am told that econometric modelling undertaken by our two governments shows that Australia and Japan stand to gain more from an FTA with each other than any of the other FTAs either of us is negotiating."
By Mr Downer’s assessment, a deal with Japan could better the benefits offered by a trade deal with China, which is the biggest FTA Australia is negotiating at present.
Analysis commissioned by the Australian and Chinese Governments estimated an FTA would boost the Australian economy by up to $23 billion, and China’s economy by up to $83 billion.
Mr Downer admits striking a deal could be hard - Japan’s farmers are extremely reluctant to open their markets to Australian producers.
But he believes it could have potential flow on benefits for the region.
"With regional integration in East Asia firmly on the agenda, an agreement between our two countries would be a positive step towards the broader vision of an East Asia community," Mr Downer said.
"It would consolidate the increasing economic linkages between our two countries and, importantly, help Japan to secure reliable supplies of key minerals and energy in the future and realise its food security objectives.
"Of course, we know there are sensitivities and that finalising an FTA will be difficult, that it will require considerable flexibility and that it needs to make economic and political sense.
"And given Japan’s importance to Australia, we would not want to do anything that would harm this important relationship."
Still, he maintains it would be worth the effort.
"Negotiating an FTA may prove difficult and complex, but in the end it will yield enormous benefits to both our countries," Mr Downer said.