FTA Time for Japan and Australia?
Image Credit: Office of the Prime Minister: Japan

FTA Time for Japan and Australia?


Japan is set to beat rival China to the punch in signing a free trade agreement (FTA) with Australia, cementing economic ties between the two U.S. allies. While Australian Prime Minister Julia Gillard’s recent China visit sparked talk of finalizing a trade deal with Beijing, a pact with Tokyo could be signed as early as this month, sources say.

Confirmation that an agreement is imminent came on April 8th, when Japan’s Kyodo newswire cited Japanese government sources in claiming a breakthrough on agriculture.

According to the report, Japan would be allowed to retain high tariffs on imports of some of its most “sensitive” farm goods in return for accepting a set amount of such products from Australia at lower rates, excluding rice.

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The two nations aim to conclude the FTA talks “this summer” if disagreements on automotive tariffs can be overcome, the report said, with Japanese business media reporting a deal is likely by the end of April.

While agriculture was cited as being a major barrier since talks commenced in 2007, “Australia decided to compromise after Japan formally announced last month that it intended to join the talks on the Trans-Pacific Partnership [TPP] agreement,” it said.

According to the report, Japan had resisted slashing tariffs on beef, wheat, dairy products and sugar as well as rice, but Australia was keen for a deal to boost exports ahead of the TPP’s launch. The so-called “two-stage tariff system” would allow low tariffs for Australian exports of beef and dairy products until their quotas were filled.

Japan imports 60 percent of its food and policies aimed at boosting domestic “food security” have seen high farm tariffs imposed, including 778 percent on rice, 252 percent on wheat and 38.5 percent on beef. Japan’s previous FTA deals have excluded such agricultural products, with the 10-million strong farmers’ organization, JA Group, flexing its political muscles.

Australia runs a healthy trade surplus with Japan, for which Australia accounts for its third-largest source of imports. Under the deal, Tokyo could expect continued secure supplies of Australian coal and liquefied natural gas, along with a potential lift in auto-related exports.

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