Japan could back off FTA with Australia

Associated Press

Japan could back off FTA with Australia

17 April 2005

Japan has decided not to pursue free trade talks with Australia because of concerns that its agricultural industry could be harmed, a news report said yesterday.

The two countries were expected to agree to launch free trade negotiations when Australian Prime Minister John Howard visits Japan next week.

But Tokyo has decided to put those discussions on hold and instead suggested exploring other ways to strengthen bilateral economic ties through mutual investment and deregulation, the Nihon Keizai business daily reported without naming its sources.

Canberra has long coveted a free trade deal with Japan, which is Australia’s largest export market and third-biggest source of investment.

Japan is famously protectionist when it comes to its agricultural industry, imposing high tariffs on everything from rice, Japan’s staple food, to apples. That tendency has been its biggest obstacle to free trade deals with other nations.

The report said Tokyo was concerned about the effect of Australian beef and wheat flooding the domestic market. But it added that many officials still favored a deal with Australia because it would offer a stable supply of goods, like iron ore and coal, for resource-poor Japan.

In 2003, 49 percent of Japan’s beef imports and 22 percent of wheat imports came from Australia, it said.

Japan has free trade agreements with Singapore, Mexico and has reached a basic agreement with the Philippines. Tokyo is currently in talks with Indonesia, Malaysia, Thailand and also with the 10-member Association of Southeast Asian Nations.

On Friday, Japan and ASEAN wrapped up their first round of talks, and a second is expected to take place this summer.

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