October 20, 2003

Mexican Pork Dispute Failed Japan, Mexico FTA Consensus

Mexico's president, Vicente Fox, leaves Japan on October 18 for the Asia-Pacific Economic Co-operation summit in Bangkok after failing to secure a free trade agreement (FTA), due to disagreements between the two countries over the issue of agricultural tariffs.

Japanese officials, including Yoriko Kawaguchi, foreign minister, had desperately tried to salvage an agreement during Mr Fox's three-day visit.

The failure to reach a deal is a bitter blow for Japan, which was hoping to build on an FTA with Mexico to conclude similar agreements with neighbouring countries. Failure of the Mexican negotiations could complicate Tokyo's overture to South Korea to begin talks towards an FTA almost immediately.

So far, Japan has signed only one FTA, with Singapore, a country with negligible agricultural exports. Concluding an agreement with Mexico would have sent a signal that the Japanese government was able to face down its powerful agricultural lobbies. Tokyo also wants to sign similar trade deals with Thailand and the Philippines.

The two main stumbling blocks were import quotas and tariffs for Mexican pork and orange juice. Japan agreed to halve pork tariffs and increase imports, but it is still not fulfilling Mexico's demands. Japanese officials also said they made last-minute concessions on orange juice import quotas.

Junichiro Koizumi, prime minister, said: "It had seemed as if we were almost there. It's disappointing but the negotiations have left hope."

The failure of the talks is a blow to Japanese manufacturers. Hiroshi Okuda, chairman of Japan's Business Federation, or Keidanren, described the talks as "a litmus test to gauge how Japan's forthcoming talks on FTAs with South Korea and the Association of South East Asian Nations, ASEAN, will fare."

Last year Japan imported goods worth $1.8bn (€1.6bn, 1.1bn sterling pound) from Mexico and exported $3.8bn.