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Japanese Auto, Steel Industries Hail Basic Japan-Thailand FTA

Posted on: Monday, 1 August 2005, 12:01 CDT

Aug. 1--TOKYO -- Japanese auto and steel industries welcomed a basic free trade agreement reached Monday between Japan and Thailand, which will remove or lower the Southeast Asian country's tariffs on Japanese auto parts, large vehicles and steel.

Japan Automobile Manufacturers Association Chairman Itaru Koeda hailed the bilateral agreements on the liberalization of auto parts and finished cars, saying an FTA with Thailand will have "great significance as in the cases of accords with the Philippines and Malaysia."

"Although the two countries are to renegotiate some of the items, we hope future negotiations aimed at further liberalization will bear fruit so as to strengthen cooperation between the auto industries" of Japan and Thailand, said Koeda, co-chairman of Nissan Motor Co.

He described the Thai auto industry as "the most important partner" for Japanese automakers.

Akio Mimura, chairman of the Japan Iron and Steel Federation, also said in a statement that the accord "would bring significant gains" to Japanese steelmakers as well as Thai industries which need steel products.

Mimura, president of Nippon Steel Corp., noted that Japanese manufacturers will enjoy immediate tariff cuts on most of the hot-rolled steel products and on about half of such Japanese export items as seamless steel pipes and electromagnetic steel sheets under the FTA accord.

Hiroshi Okuda, the head of Japan's biggest business lobby, the Japan Business Federation, was also delighted and hoped that bilateral economic ties will become even closer.

Okuda, chairman of Japan's largest carmaker Toyota Motor Corp., called the framework deal "comprehensive and of a high level," and urged the Japanese government to accelerate FTA negotiations with Indonesia and South Korea.

Kakutaro Kitashiro, chairman of the Japan Association of Corporate Executives, also expressed hope that the basic deal with Thailand will help inject momentum to FTA negotiations with Japan's trading partners in Asia, including the Association of Southeast Asian Nations.

Nobuo Yamaguchi, chairman of the Japan Chamber of Commerce and Industry, aired concerns that some of Japan's small- and medium-sized enterprises would face intensified competition through the influx of cheap Thai imports, and sought support for them.

The FTA deal with Thailand is the fifth for Japan, which has FTAs with Singapore and Mexico and reached basic deals with the Philippines last November and Malaysia in May this year.

The latest accord will remove tariffs in Thailand on most auto parts by 2011, gradually lower tariffs on large vehicles and eliminate duties on steel in stages over 10 years.

About 90 percent of 920,000 vehicles produced in Thailand in 2004 were locally manufactured by Japanese carmakers.

Toyota, which assembled 250,000 vehicles in the country last year including pickup trucks, has designated Thailand as the production base for its "IMV" strategic vehicles for newly emerging markets. IMV stands for Innovative International Multipurpose Vehicle.

The company will open a new plant in the suburbs of Bangkok in 2007, expanding its annual production capacity in Thailand to 550,000 units.

JAPAN, THAILAND FREE TRADE AGREEMENT

The following is the gist of a basic free trade agreement Japan and Thailand struck Monday in Bangkok.

Industrial goods:

--Thailand will open up its auto parts market for Japan in 2011, except for five sensitive items -- mainly engines -- that will remain protected until 2013.

--Thailand will reduce tariffs for Japanese automobiles with the engine capacity of more than 3,000 cc in stages from the current 80 percent until 2010, and renegotiate with Japan the possibility of future tariff elimination in 2009.

--For completely built-up automobiles with engines less than 3,000 cc, there will be no tariff cuts in the next five years and the two countries will renegotiate the matter after that period.

--Japan will offer personnel training in the Thai auto industry to enhance its competitiveness.

--Thailand will immediately scrap tariffs on some types of hot-rolled steel, for which it does not have production facilities, and give Japan a tariff-free quota on other types of hot-rolled steel. The overall Thai steel industry will remain protected for up to 10 years, depending on the product.

Agricultural products:

--Japan will immediately abolish tariffs on okra, nuts, processed shrimp, frozen fruits such as papaya, mango, guava, durian, jackfruit and rambutan, as well as expand the tariff quota for bananas.

--Japan will also slash tariffs on Thai chicken imports in stages and to renegotiate eliminating tariffs on sugar in a few years.

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Source: Kyodo News International, Tokyo

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