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US-Japan FTA in the works?

April 29, 2007
By Ken Worsley


With discussions on setting up a free trade agreement between Japan and Australia getting off to what Australian Department of Foreign Affairs and Trade deputy secretary Peter Grey described as a “very good start” last week, one has to wonder what will happen when they finally get to talking about agriculture. The first meeting did not broach the subject; the agenda for the second meeting, to be held in July in Tokyo, has not yet been set.

We’ve also seen the recent conclusion of a US-South Korea free trade agreement. Despite the fact that many are not one hundred percent satisfied with its terms (especially with regards to agriculture), Claude Barfield of the American Enterprise Institute suggests that the “US/Korea FTA may well be the tipping point that produces” a “domino effect” of FTA signings in the region, as East Asian economies gradually back off from over-protection of their markets.

On Friday, in an article published by the Asia Times, Hisane Masaki of the Japan Forum on International Relations suggested that business interests in Japan have been pressuring the government to engage the US in free trade talks, and that this pressure has been stepped up since the announcement of the US/South Korea deal.

Despite hope in some circles that free trade would come up during the recent talks between US President George W Bush and Prime Minister Shinzo Abe, the statement released by the White House entitled U.S.-Japan Cooperation to Tackle Global Trade, Energy, and Environmental Challenges stops short of mentioning free trade.

Did some sort of stress in the relationship between the US and Japan prevented discussion of an FTA between Bush and Abe? With the current ‘tension’ or ’strain’ that some observers describe in the US/Japan alliance being of a political and historical nature, it seems unlikely that it will have any long-term effects on the relationship between the two nations. Japan is frantically trying to increase the number of FTAs it is party to in order to hold China in some form of balance; though, of course, we also know that as of last week, China is now Japan’s largest trading partner. Historical issues obviously exist in that relationship as well.

What would a US/Japan FTA look like? One thing’s for sure: no one is going to think it’s perfect, and it will only be the first step in a gradual process of possibly, maybe, eventually getting something that resembles free trade.

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Comments

2 Responses to “US-Japan FTA in the works?”

  1. Adamu on April 30th, 2007 3:10 pm

    There’s a pretty simple reasoning behind the lack of FTA support — there’s no room on the US FTA agenda for Japan in the near future, partly because it would be a much harder deal to make as opposed to the smaller countries. The USTR was quoted a few months ago telling the US-Japan Business Council/ ACCJ to cool their jets.

  2. Ken Worsley on April 30th, 2007 9:00 pm

    There’s certainly the “Democratic Congress” factor there - Japan may be pressed to accept absurd conditions that violate the spirit of free trade in order to get approval. I don’t see it happening any time soon either…especially since any agreement would an “FTA” along the lines of the “FTA” that the US signed with South Korea, which isn’t an “FTA” at all.

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