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Thai-Japan FTA talks hit snags

Business Day, Thailand

Thai-Japan FTA talks hit snags

Dow Jones/TNA

TOKYO - Prospects for Japan signing free trade agreements with Thailand and South Korea are being stymied because the countries remain seriously divided on key industrial and farm sectors, the Nihon Keizai Shimbun reported yesterday quoting diplomatic sources.

Talks between Economy, Trade and Industry Minister of Japan Shoichi Nakagawa and Thai Deputy Prime Minister Somkid Jatusripitak held here Thursday produced no tangible results regarding tariff cuts.

The Japanese negotiating team called on Thailand to abolish tariffs on steel and car imports by 2010, a request that Thai officials countered with an offer exempting over 90 percent of those products from reductions.

On Saturday, Nakagawa said, “I intend to continue the negotiations in the belief that my good relationship with Mr Somkid will help produce an agreement in July.”

Thailand, however, hinted at wanting to renegotiate trade issues affecting primary goods, on which the two countries reached an accord in March, unless Japan moderates its demands on car and steel trading.

A senior METI official said the vice ministerial meeting scheduled for later this month will likely make little progress.

FTA talks with South Korea were suspended last November, but the two countries are expected to agree to restart them when Japanese Prime Minister Junichiro Koizumi and South Korean President Roh Moo-hyun meet today.

Seoul earlier criticised Tokyo for offering too modest a tariff cut on imports of primary goods and it is not clear whether South Korea will tone down its demands. The two sides will likely continue to differ greatly on many issues, particularly those regarding marine products, clouding prospects for striking a deal this year.

According to TNA, Somkid yesterday expressed confidence that a conclusion on FTA would be reached next month and stressed that the two countries would sign deals on the uncontentious parts of the agreement first.

Somkid, who held talks with Japanese Foreign Minister Nobutaka Machimura, Nakagawa and ruling LDP Party politician Yoshio Yatsu responsible for overseeing FTA negotiations, denied that the phased discussions indicated Thailand wanted to postpone the deal.

But he stressed that Japan was becoming increasingly accommodating to Thai demands on industry and a conclusion was reached on the agricultural sector, following Thailand’s decision to remove rice from the FTA.

Industries which remain points of contention include the steel and automobile industries.

“These negotiations represent an economic relationship between the two countries to help look after the investments of Japanese and Thai businesspeople and to ensure that the investment meets the needs of both parties,” Somkid said.

But he warned that the Thai private sector needs to make urgent adjustments in anticipation of the deal, saying trade liberalisation is ‘unavoidable’.

Somkid, who is paying an official visit to Japan, dined with Japanese businesspeople interested in the Thai automobile sector. He told reporters that an increasing number of Japanese automobile companies were shifting their production bases to Thailand, helping modernise the automobile sector with research and development.