Japan, India to agree on free trade accord by year-end: sources+

TOKYO, Aug. 17 Kyodo -
Japan and India are expected to reach a bilateral free trade agreement by the
end of this year, which will provide Japanese goods and services greater access
to the world's second-most populous market, sources close to the matter said
Tuesday.
It will mark the 12th such trade deal for Japan and the first since the
Democratic Party of Japan-led coalition wrested power from the long-ruling
Liberal Democratic Party in September 2009.
Through the arrangement, Tokyo aims to stimulate Japan's economic growth by
boosting exports of vehicle parts and other products to India, a market that
has a population of 1.2 billion, the second largest after China, but accounts
for less than 1 percent of Japan's total trade in value.
Prime Minister Naoto Kan's government has been promoting the establishment of
closer economic relations with emerging Asian countries through FTAs under the
nation's growth strategy, as Japan aims to benefit from fast-growing Asian
economies.
The government is seeking to expand Japan's network of FTAs by accelerating
similar free trade talks with South Korea and Peru, in addition to India.
For the Japan-India trade deal, both countries' governments appear to have made
concessions to reach an agreement, with the Japanese side moving toward
simplifying approval procedures for the sale of pharmaceutical products in its
domestic market, while the Indian side looks set to cut tariffs on vehicle
parts, the sources said.
After holding a working-level meeting in September, the two countries are
expected to strike a basic agreement on the FTA in the fall when Indian Prime
Minister Manmohan Singh visits Japan and meets with Kan.
By reaching an FTA with India, where Japanese manufacturers of cars and
electronics appliances are expanding their output, Japan is aiming to benefit
from tariff cuts on parts and materials imported from Japan for production in
India.
India, meanwhile, is seeking to boost exports of generic drugs to Japan.
According to the Japanese Foreign Ministry, trading with India accounted for
only 0.9 percent of Japan's total trade value in fiscal 2008.
When then-Prime Minister Yukio Hatoyama visited India in late 2009, he agreed
with Singh to accelerate the countries' FTA talks to strike an agreement at an
early date.
So far, Japan has agreed FTAs mainly with members of the Association of
Southeast Asian Nations such as the Philippines and Indonesia.
Japan is hoping to reach FTAs with other countries at an early date as it is
lagging behind South Korea in FTA negotiations with big markets such as the
European Union and the United States. South Korea has already agreed an FTA
with India.
Some Japanese vehicle and electronics manufacturers that are facing tough
competition from South Korean rivals in the global market have expressed
concern regarding the Japanese government's slow FTA negotiations with other
countries.
Since agricultural trade often serves as a stumbling block to Japan's pursuit
of FTAs, the agriculture and trade ministers as well as Cabinet ministers under
the DPJ-led government have continued discussing the issue on a regular basis.
The government has continued trying to facilitate negotiations with India and
South Korea in particular.
As part of efforts to move talks with South Korea forward and involve China in
its FTA network, Japan launched joint studies with the two countries in May in
a bid to conclude FTAs in the future.
Uichiro Niwa, Japan's ambassador to China and a former businessman, who assumed
his post at the end of July, has expressed his readiness to work toward a
bilateral FTA.
==Kyodo
2010-08-17 23:55:19


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