Japan races China to woo ASEAN

Japan’s concern about its role in fast-growing South East Asia has grown since 2002 when Beijing signed a pact setting a framework for talks on free trade agreements (FTAs) with the 10-member Association of Southeast Asian Nations (ASEAN).

Playing catch-up, Prime Minister Junichiro Koizumi agreed to the FTA talks with leaders of the three key ASEAN members, who were attending a two-day ASEAN leaders summit in Tokyo.

Japan’s only free trade deal to date is with ASEAN member Singapore, which offers little in the way of competition for Japan’s heavily protected farming sector.

Statements issued after the meetings said the talks should begin in early 2004. No deadlines were set, but the leaders agreed talks should conclude “within a reasonable period of time”.

“We have agreed that we will begin the formal talks on the economic partnership agreement this coming January,” Philippine president Gloria Macapagal Arroyo told reporters.

“I think it’s a very positive development.”

Rice wars

Agriculture proved to be a major stumbling block in Japan’s FTA talks with Mexico, which collapsed in October.

“There may be some difficult issues,” Thai Prime Minister Thaksin Shinawatra was quoted by a Foreign Ministry official as telling Koizumi. “But getting started is important.”

Thailand is the world’s biggest exporter of rice – a commodity that has strong cultural and social significance in Japan – and it is a major exporter of sugar and chicken meat.

Another Japanese official said Tokyo wanted to clinch several bilateral pacts with ASEAN nations by the start of 2005, when it hopes to start talks on a pact with ASEAN as a whole.

Singapore PM Goh Chok Tong represents Japan’s only Asian free trade partner

“Having these bilateral agreements completed is essential for an ASEAN FTA,” the official told reporters.

Preparatory talks have also begun with Indonesia.

“If these nations are added to our FTA with Singapore, and then Indonesia, Japan will have most of the ASEAN economy covered,” said Akira Kawaguchi, a trade analyst at Nippon Keidanren, Japan’s largest business lobby.

“This has huge merit for business,” he said.

China and ASEAN are aiming to finalise the world’s most populous free trade zone – 1.7 billion people – by 2010. Japan’s target date for a pact is two years later, in 2012.

While Beijing has promised an “early harvest” of concessions on agricultural goods for six core ASEAN nations, aiming for zero tariffs by 2006, Japan has no such timetable.

‘Built on trade’

“Japan, as a nation without resources, is a country built on trade and in that sense we are falling behind,” Trade Minister Shoichi Nakagawa told Reuters this week. “Not having free trade agreements could become a handicap.”

Japan is hoping that its record on aid and investment in Southeast Asia give it an edge.

Japan’s trade with ASEAN is still three times that of China’s and its direct investment in the region in recent years has been 10 times that of its giant neighbour.