Japan, Australia end FTA talks with little progress on farm trade+

TOKYO, Feb. 10 Kyodo -
Japan and Australia ended their latest round of bilateral free trade
negotiations Thursday in Tokyo apparently without seeing a substantial
breakthrough over the major sticking point of farm trade issues.
Japanese negotiation sources said that Australia is likely to accept Japan's
demand to exempt rice from items subject to tariff elimination under their free
trade agreement, while the move may mean that it is set to continue pressing
Japan on the liberalization of four other sensitive items -- beef, dairy
products, wheat and sugar.
The latest round of talks, the first since April 2010, is drawing attention as
a process to test Tokyo's seriousness about its recent commitment to promoting
free trade and to give clues on whether Tokyo is qualified to join a high-level
regional free trade initiative involving Australia and the United States,
called the Trans-Pacific Partnership.
A Japanese Foreign Ministry official, who briefed reporters about the four-day
negotiations, said, ''If we are asked in which way the talks are heading, it is
not in a stalled state and we are deepening mutual understanding and making
progress.''
But he also said that he feels ''there is still a long way to go'' and
acknowledged that reaching an FTA with Australia by June, as mentioned by some
Cabinet ministers, is a ''lofty goal.''
Jan Adams, Australia's first assistant secretary of the Foreign Affairs and
Trade Department, told reporters that she cannot comment on the matter, while
Australian Ambassador to Japan Murray Mclean said, ''We'll be working
hard...over the coming weeks and months.''
Japan and Australia agreed to hold the next round of FTA negotiations around
April in Canberra, the Japanese Foreign Ministry said in a press release.
The major sticking point in the negotiations, launched in 2007, has been
Japan's reluctance to make concessions on Australia's demand that it eliminate
tariffs on sensitive products.
Japan, for its part, is calling for the abolition of Australia's 5 percent
tariffs on cars.
Negotiations resumed after Japan's recent avowed commitment to pursue trade
liberalization and institute reform of its agricultural sector, which would
likely be adversely affected in the event it reaches FTAs with major trading
partners.
The Japanese government has also said it will decide by around June whether to
join negotiations for the so-called TPP, which is intended to require members
in principle to scrap all tariffs.
But strong opposition lingers among farmers, who fear they could be hit hard by
an influx of cheap agricultural imports.
In both the TPP debate and the Japan-Australia FTA negotiations, Japan is
facing the question of whether it can drastically open up its agricultural
market.
Japan has so far excluded sensitive agricultural items such as rice and wheat
from tariff elimination in FTAs signed with other economies.
Japan imposes tariffs of 38.5 percent on beef imports, 252 percent on wheat
imports and 778 percent on milled rice imports.
If rice is exempted from tariff elimination in the bilateral FTA with
Australia, Japan believes the exemption may also be respected in the envisioned
TPP agreement that is likely to be built on recent bilateral FTAs reached
between member economies.
In the past, Australia has urged Japan to open up its rice market. But with the
decline in rice production following droughts in recent years, the level of
rice exports to Japan has dropped sharply -- to zero in each of the three years
from fiscal 2007. In fiscal 2010, Japan-bound exports of Australian rice will
be limited to 12,000 tons.
One of the Japanese negotiation sources said, ''Australia has no interest in
rice.''
But even if rice is exempted, the outlook for the bilateral negotiations
remains uncertain as Japan is hoping exemptions will also be applied to beef,
dairy products, wheat and sugar.
To discuss progress in the bilateral FTA talks and issues related to the TPP,
Japanese Minister of Economy, Trade and Industry Banri Kaieda left for
Australia on Thursday for a two-day visit.
During his trip to Sydney, Kaieda is expected to hold talks with his Australian
counterpart Craig Emerson, as well as with Prime Minister Julia Gillard.
The TPP negotiations are built on a regional free trade agreement that took
effect in 2006 among Brunei, Chile, New Zealand and Singapore. Talks are under
way to expand the framework to include five other Asia-Pacific countries --
Australia, Malaysia, Peru, Vietnam and the United States.
==Kyodo