April 24, 2007

 

Japan's farm sector key to Australia economic pact talks

 

 

Japan and Australia on Monday launched negotiations toward an economic partnership agreement, with the opening of the Japanese agricultural market and the scrapping of Australian tariffs on industrial products seen as central issues, The Nikkei reported in its Tuesday (Apr 24) morning edition.

 

In the first round of negotiations ending Tuesday, the two nations will map out the direction of future talks. Specifics will not be discussed, but they are expected to agree on strengthening their economic relationship for trade as well as investments and services. The discussions, being held in the Australian capital of Canberra, represent Japan's first negotiations with an agricultural powerhouse.

 

Agriculture Minister Toshikatsu Matsuoka in March warned against liberalising agricultural imports from Australia. The removal of tariffs on wheat, sugar, dairy and beef would have a JPY790 billion impact on domestic production, according to the Agriculture Ministry, which is calling for such items to be treated as exceptions.

 

The World Trade Organization has ruled that economic partnerships must effectively liberalise all trade. Increasing the number of exceptions too much would draw criticism from other nations.

 

A pact with Australia holds many potential benefits for Japanese industry. Most exports to Australia are industrial products. A complete repeal of such tariffs-- including the 5 percent-10 percent levies on autoparts, video cameras and other products--is estimated to boost Japan's real gross domestic product by around 0.1 percent via higher exports.

 

Stable procurement of natural resources will also be a central topic. With Japan importing around 60 percent of its iron ore and coal from Australia, negotiators are expected to seek supply guarantees.

 

South Korea and the US have already agreed to enter a free trade agreement, while China plans to reach such a pact with Australia.

 

"Japan's strategy for economic partnership agreements lags on a global scale," laments one government official.

 

And should negotiations with Australia fail, Japan will almost certainly be unable to reach similar pacts with China and the US--both of which are agricultural forces.