Sun, Mar 14, 2004 - Page 11 News List

Japan, Mexico make FTA breakthrough

HISTORICAL AGREEMENTThe free-trade agreement would provide Mexican farmers with a valuable market and generate Japanese investments worth billions in Mexico ·


Japan and Mexico all but clinched a free-trade agreement on Friday, a move that could give Mexican farmers access to a valuable new market and boost Tokyo's chances of similar deals with Asian partners.

Mexico's government said its economy and agriculture ministers signed a final declaration with their Japanese counterparts, although Japan's Trade Minister Shoichi Nakagawa was more cautious, saying there were still some technical details to be ironed out.In a joint statement, the two countries said they had "reached agreements in substance on major elements ... Based on the achievement made so far, both sides are determined to finalize the agreement as soon as possible."The deal, reached after 16 months of negotiations, will allow Mexico to export 80,000 tonnes of pork and 6,500 tonnes annually of orange juice to Japan under preferential tariffs. Pork accounts for around 11 percent of Mexican exports to Japan.Reduced tariffs will also be applied to more than 300 agricultural products.A statement from Mexico's economy ministry said the agreement was expected to generate Japanese investment in Mexico to the tune of US$1.3 billion annually in its first 10 years.Mexico exported US$606 million of goods to Japan in 2003 while Japanese exports to Mexico totaled US$7.623 billion.Japan has concluded only one free-trade deal to date, with Singapore, and an agreement with Mexico would be the first to include the agriculture sector -- a contentious topic in Japan, where farmers wield considerable clout."The fact that we were able to agree to an FTA with a big country like Mexico would be beneficial to the global economy," Nakagawa said.Japan hopes a trade pact with Mexico will help its firms regain competitiveness. Its major exports to Mexico include electronic equipment and parts, autos and auto parts and steel products.An agreement with Mexico could help Japan's push for free trade pacts with its Asian neighbors by demonstrating its willingness to reach deals involving agriculture, analysts say.But some wondered whether Prime Minister Junichiro Koizumi was really prepared to take on the farm sector in the interests of free trade."I think Japan is pursuing FTAs due more to worries about falling behind Asian countries than based on a strong resolve to clinch deals regardless of opposition from farming-lobby lawmakers," said Mamoru Yamazaki, chief economist for Japan at Barclays Capital.Japan began talks with Malaysia, Thailand and the Philippines this year and with South Korea late last year.It hopes to conclude agreements with some of those countries before starting talks on a broad pact with the Association of South East Asian Nations, or ASEAN, by the beginning of 2005, with the aim of forging a pact by 2012.China aims to conclude a free-trade pact with six ASEAN countries by 2010 and with the other four by 2015.

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