21 April 2005

Step closer toward Japan-Australia FTA

The Yomiuri Shimbun

Heading down what Japan’s agricultural sector fear could be a bumpy road, Prime Minster Junichiro Koizumi and Australian Prime Minister John Howard on Wednesday announced a joint feasibility study into a free trade agreement between the two countries.

The announcement followed a summit meeting between the two leaders at the Prime Minister’s Office in Tokyo.

Koizumi announced Japan was willing to work toward an FTA with Australia during a visit to Canberra in May 2002. But objections from the Japanese agriculture sector have been a key sticking point in moving closer to an agreement and ensured the two leaders adopted a cautious tone.

Koizumi said agriculture presented "tough challenges" for both countries and the feasibility study may not be directly related to an FTA immediately.

He said the study would take two years, after which the countries would decide whether to begin negotiations for an FTA.

"I welcome the fact that both countries have agreed to elevate and enhance the economic relationship including studying the feasibility of a free trade agreement," Howard said.

Earlier in the day Howard also had taken a cautious line on the study at a press conference. "We’re not talking here about inaugurating a free trade negotiation, we’re talking about a scoping study, a feasibility study," he said.

Japan has been Australia’s largest export market for almost 40 years, with Japan buying 2.1 trillion yen in goods in 2004.

A joint study into the costs and benefits of trade and investment liberalization between Australia and Japan was released the same day by the two countries’ foreign ministries.

The study found that trade would increase in both countries as a result of liberalization and would result in growth to gross domestic product of between 0.03 percent and 0.13 percent for Japan and between 0.66 percent and 1.79 percent for Australia in 2020.

In a speech earlier in the day at a luncheon for Japanese business leaders, Howard said Australia had "no closer partner in the region than Japan."

"I would extend that to say Australia has no more loyal and valuable customer in the world than Japan," he said.

Howard announced the commencement of FTA negotiations with China during a visit there Tuesday. Australia has finalized FTAs with the United States and Thailand. Japan has inked FTAs with Singapore and Mexico.

The two leaders were expected to discuss informally the strained relationship between Japan and China over dinner at the Prime Minister’s Office.

Howard will travel to 2005 World Exposition Aichi on Wednedsay to take part in Australia’s National Day event and tour the expo site.