Japan, India broadly agree to form free trade accord

TOKYO, Sept. 9 Kyodo -
Japan and India broadly agreed Thursday to form a bilateral free trade deal
that would eliminate tariffs on 94 percent of trade between the two Asian
powerhouses in 10 years, Foreign Minister Katsuya Okada said.
Following negotiations that started in 2007, the two countries hope to ink the
agreement during the planned visit to Japan by Indian Prime Minister Manmohan
Singh in late October. If concluded, the accord will be the 12th such trade
deal for Japan.
With the arrangement, Japan wants to spur its economic growth through increased
exports of cars and auto parts to India, a market that has a population of 1.2
billion people -- the second largest after China -- but accounts for less than
1 percent of Japan's total trade in value terms.
Japan also hopes to gain momentum in making headway in FTA negotiations with
other countries, although Japan's heavily protected farm sector is often
considered to be a major stumbling block in such talks.
Okada welcomed the outcome of the sub-Cabinet-level talks in Tokyo, telling
reporters he hopes the free trade agreement will contribute to enhancing the
two countries' economic ties ''dramatically.''
''I won't be surprised if the amount of trade increases tenfold. This isn't an
exaggeration, considering the economic scales of India and Japan, and compared
with (the trade between) Japan and China,'' he said.
Under the broad agreement, the two countries will scrap tariffs on goods that
account for 94 percent of two-way trade flows in 10 years after the deal goes
into effect.
About 90 percent of exports to India, including Japan's key export items such
as vehicle parts, and 97 percent of imports from India will become tax-free in
the 10-year period, an official at the Japanese Economy, Trade and Industry
said.
As for India's call on Japan to simplify the approval procedures for the sale
of generic drugs, the official said that he cannot talk about the specifics
because there are still points of adjustments but indicated that the two
countries saw some consensus on the matter.
The Japanese Agriculture, Forestry and Fisheries Ministry announced that
sensitive agricultural import items such as rice and beef were excluded from
tariff elimination.
Japan has apparently been rushing to complete the negotiations with India as it
is lagging behind South Korea, which has already sealed an FTA with India.
South Korea has also signed an FTA with the United States, although it has yet
to take effect, and initialed another with the European Union. But Japan is not
even able to commence FTA negotiations with such major trade partners.
Okada said the Democratic Party of Japan-led government has especially focused
on promoting free trade, and that it wants to make headway in negotiations with
other countries as well.
The FTA with India would be the first such deal since the DPJ-centered
coalition wrested power from the long-ruling Liberal Democratic Party in
September last year.
Japan is now holding FTA negotiations with such countries as Australia and
Peru, while it is not yet able to resume the suspended negotiations with South
Korea.
An FTA aims chiefly to remove tariffs on goods and trade barriers for services,
but also covers areas such as intellectual property rights and facilitation of
human exchange.
The participants of the sub-Cabinet-level meeting in Tokyo included Yoichi
Otabe, Japanese deputy foreign minister in charge of economic affairs, and
Indian Commerce Secretary Rahul Khullar.
==Kyodo