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Mexico FTA paves way for Asian trade agreements

Mainichi Shimbun, Japan

18 September 2004

Mexico FTA paves way for Asian trade agreements

MEXICO CITY — Japan signed a free trade agreement (FTA) with Mexico on Friday, the first such pact to cover the politically sensitive agricultural sector, officials said.

President Vicente Fox welcomed Japanese Prime Minister Junichiro Koizumi at the National Palace in Mexico’s capital before they signed the pact, which is designed to gradually liberalize trade and investment between the two countries.

Under the FTA, Japan intends to open its market to some 1,200 kinds of agricultural and marine products from Mexico.

For example, Tokyo will set numerical levels with low tariff rates for imports of pork and orange juice from Mexico, and special import quotas for Mexican beef, chicken and orange, Japanese officials said.

Mexico is set to scrap tariff on steel from Japan in 10 years. Seven years after the FTA takes effect, apparently from April 2005, Mexico will totally liberalize imports of Japanese cars, the officials said.

The trade pact will be welcomed by Japanese industry as the Ministry of Economy, Trade and Industry has estimated that Japanese export businesses would lose 400 billion yen annually in trade with Mexico without the FTA.

"This FTA is an important step for Japan-Mexico relationships," Koizumi said.

After signing the pact, Koizumi referred to the delay in concluding the FTA with Mexico because of opposition from the Japanese agricultural sector.

"I want to proceed with talks with Asian countries, using the pact with Mexico as a successful example," he said.

Both countries began FTA negotiations in November 2002, but talks broke down in October 2003 over a request for a non-tariff quota on Mexican orange juice.

Observers say Japan’s FTA negotiations with Asian countries will be tougher, noting that the conclusion of the pact with Mexico was relatively easy because trade volumes of agricultural products from the country was not huge.

Japan already signed an FTA with Singapore in 2002, but it doesn’t cover farm products.

Japan is negotiating with Asian nations such as Thailand and Malaysia for FTAs. Thailand is asking Tokyo to open its market to Thai agricultural products.