Japan eyes East Asia free trade pact

By Masayuki Kitano

TOKYO (Reuters) – Japan’s trade ministry wants to create an
“East Asia” free trade zone including southeast Asia, China,
India and Australia, an official said on Tuesday, in a renewed
push for regional economic integration.

Japan, keen not to fall behind China, has stepped up its
pursuit of free trade agreements in recent years but progress
has been slow, with negotiations often complicated by Tokyo’s
desire to protect the nation’s agriculture industry.

The Ministry of Economy, Trade and Industry (METI) is
likely to soon unveil a proposal calling for the pursuit of a
massive 16-nation trade zone including Japan, the 10 members of
the Association of Southeast Asian Nations (ASEAN), China,
South Korea, India, Australia and New Zealand, the official
said. “We want to conclude negotiations by 2010,” said Takeshi
Fujimoto, deputy director for METI’s economic partnership
division.

“Both trying to launch such negotiations as well as trying
to conclude them might be considered ambitious,” he said.

“But with discussions for east Asian (economic integration)
on the rise, we don’t think it’s something you should spend a
lot of time studying,” Fujimoto said, adding that the trade
ministry would aim for consensus within the Japanese
government.

According to a METI estimate, such a regional free trade
pact would boost Japan’s gross domestic product (GDP) by around
5.0 trillion yen ($42.5 billion) and the total GDP of countries
taking part by around 25.0 trillion yen, he said.

Trade Minister Toshihiro Nikai may unveil the proposal at a
meeting of the government’s Council on Economic and Fiscal
Policy on Friday, Fujimoto said.

DIFFICULT GOAL?

The feasibility of such a regional agreement, however, is
open to question, especially given Japan’s limited track record
of clinching free trade pacts as well as chilly ties with
China.

Asked about the feasibility of Japan pursuing an FTA that
involves China at this juncture, Fujimoto said that while there
were various political issues, interest in such a deal was high
within Japan’s business community.

“There are strong calls from the industrial sector for…an
FTA with China,” Fujimoto said.

Despite burgeoning two-way trade, Japan-China ties are at
their worst in decades due to a dispute over Prime Minister
Junichiro Koizumi’s visits to Tokyo’s Yasukuni shrine, which
honors some war criminals along with Japan’s war dead.

Ken-ichi Takayasu, a senior economist for private think
tank Japan Research Institute, said the sheer number of
countries involved would pose a challenge.

“I think it would be a bit difficult. The more countries
are involved the harder it will be to clinch a deal,” he said.

There is also a lack of consensus among countries about the
idea of forging a regional FTA, said Takayasu, adding that the
idea of including Australia, India and New Zealand may be meant
as a check against China.

Japan has signed free trade agreements with Singapore,
Mexico, and Malaysia and has also agreed in principle to FTAs
with Thailand and the Philippines.

Japan is also in free trade negotiations with South Korea
and has begun talks with ASEAN aimed at clinching a pact to
create a giant regional free trade zone.