Japan, U.S. business leaders call for early free trade agreements

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TOKYO, Oct. 8 Kyodo -
Business leaders from Japan and the United States called Friday on their
governments to take the lead in creating a region-wide free trade zone in the
Asia-Pacific and urged Japan to join an existing trans-Pacific free trade
agreement involving four nations.
The leaders also urged the governments to reduce their relatively high
corporate tax rates to help encourage more investment and increase the
competitiveness of both economies, while noting that the yen's appreciation
carries the risks of depressing growth and adding to deflationary pressures in
Japan.
As interim steps to create a so-called Free Trade Area of the Asia-Pacific, or
FTAAP, Japan and the United States should join the Trans-Pacific partnership
agreement, known as TPP, involving Brunei, Chile, New Zealand and Singapore as
well as concluding a bilateral FTA no later than 2015, the leaders said in a
joint statement following a two-day meeting in Tokyo.
The leaders ''urge the Japanese and U.S. governments to build support for an
FTAAP by focusing on achieving interim steps, or pathways,'' the statement
said, citing their participation in the TPP and a bilateral FTA as among the
''most meaningful pathways.''
They ''recommend that Japan join the TPP negotiations on the same terms as
other countries as soon as possible and that a building block approach be put
in place for the negotiation of a high-standard Japan-U.S. EPA,'' it said. FTAs
that cover more than just trade are often named economic partnership
agreements.
The United States has already offered to join the Trans-Pacific Strategic
Economic Partnership Agreement that took effect in 2006 among the four nations
as negotiations are under way to expand it by four countries, also including
Australia.
Japanese Prime Minister Naoto Kan has said Japan will consider joining the TPP,
but the agreement, which basically requires members to eliminate all tariffs to
zero, is seen as quite a high bar for Japan, which has been reluctant to open
up its agricultural market.
U.S. President Barack Obama ''has strong interest in the Asia-Pacific, and is
especially positive about joining in the TPP,'' said Hiromasa Yonekura,
chairman of the Japan Business Federation, the largest Japanese business lobby
known as Nippon Keidanren, who co-chaired the conference.
''In that sense, Japan should play a bridging role between the United States
and Asia by participating in the TPP,'' he said.
The statement also urged the governments to reduce the 40 percent corporate tax
rate in both countries, saying that the rate is ''much higher than the 2009
average of 25 percent in Asia and 26 percent in OECD (Organization for Economic
Cooperation and Development) countries.''
It also touched on the Japanese currency, which still remains around a 15-year
high in the 82 yen level versus the U.S. dollar even after the Bank of Japan
further eased its monetary grip on Tuesday.
''The growth of the (Japanese) economy largely depends on exports, thus raising
the risks that an appreciating yen will depress growth and add to deflationary
pressure,'' the statement said.
Though Yonekura said the BOJ's steps were ''drastic'' and expressed hope that
they would prove effective, a survey by Nippon Keidanren has shown that many
companies would relocate from Japan if the yen's current strength continues.
During the conference, also co-chaired by Jean-Luc Butel, executive vice
president of Medtronic Inc. of the United States, participants in addition
discussed such issues as energy and the environment.
The next conference will be held in the United States in December 2011.
==Kyodo
2010-10-09 00:22:53