JAPAN: Premier Goes to South-east Asia with Trade on His Mind

By Suvendrini Kakuchi Reprint | | Print |

Suvendrini Kakuchi

TOKYO, Jan 7 2002 (IPS) - Building closer trade links between Japan and South-east Asia is expected to figure prominently when Prime Minister Junichiro Koizumi visits five countries in that region starting Jan. 9.

“Close on the heels of the new euro (currency) and recent free- trade agreements signed between other countries, Koizumi hopes to use his visit to mark a new chapter in regional trade between Japan and South- east Asia,” says Koichi Ishiyama, an independent business writer.

So far, Koizumi has been perceived as prioritising Japan’s ties with long-time security ally United States and industralised nations — and letting relations with Asia lag behind. Some say he did not really pay attention to the region until recent spats with South Korea and China over Japan’s wartime acts.

During this trip, Koizumi will propose enhancing relations in financial services and information technology between Japan and the five countries he will visit, all of which belong to the Association of South-east Asian Nations (ASEAN), reports the Japanese media, quoting government sources.

In addition, he will push for strong trade and investment ties and underscore the need to enhance links in science and technology, they add.

The countries in Koizumi’s itinerary for his Jan. 9-15 trip are Indonesia, Malaysia, Thailand, Philippines and Singapore.

The prime minister is also expected to reveal details of a new international development body for East Asia during his high- profile tour. He is expected to unveil the East Asia Development Initiative Forum in a policy speech he plans to deliver during the Singapore leg of his tour.

Japan is paving the way to set up the international cooperation arrangement together with member countries of ASEAN, the United States, China, South Korea, Australia, New Zealand, and the World Bank.

According to the foreign ministry, Japan wants to include in this plan energy security, focusing on cooperation in the field of oil reserves.

In recent years, officials in the region have been increasingly discussing a vision for an East Asian “economic community”. Thus, there are ongoing talks on free trade areas between Japan and South Korea, despite their bilateral mistrust, as well as by ASEAN and China.

Government sources also report that Tokyo is monitoring moves by ASEAN to conclude free trade agreements with China, Japan’s regional rival, in 10 years’ time.

“Tokyo has always been reluctant to conclude free trade agreements to protect its own market. But the changing situation has made it painfully aware of not being the odd man out,” says business writer Ishiyama.

Japan sees talks about a China-ASEAN trade bloc in November as a move by Beijing to expand its clout in the region and Tokyo is wary of being eclipsed as China sends overtures to countries in South-east Asia.

Japan is also keen to respond to the ASEAN Free Trade Agreement (AFTA) that officially went into effect on Jan. 1.

Experts point out that any Japan-ASEAN economic accord would create a massive free trade area encompassing more than 600 million people, consequently providing a huge market for Japanese exports. Last year, Japanese direct investment into ASEAN was 200 million U.S. dollars, or 0.7 percent of Japanese total investment.

The 10-member ASEAN, South-east Asia’s key diplomatic club, comprises Brunei, Burma, Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

Japan and ASEAN agreed in a meeting of economic ministers in September to accelerate economic cooperation and integrate their economies, including the possibility of a free trade agreement. A group of experts has been assigned to explore this and meantime, and a Japan-Singapore free trade area is expected to take effect in the spring.

Japan in fact took the unusual step of establishing sweeping tariff reforms to display its commitment towards such an initiative.

Starting in the new Japanese fiscal year in April, most imports including computers and electronic goods will have no tariffs, and only some farm goods will, such as rice.

What worries the Japanese government, though, are the two tiers of countries inside ASEAN — one of industrialised nations like Singapore and others comprising less developed nations like Burma and Laos seeking to catch up.

“Japan finds it hard to conclude a blanket free trade agreement with ASEAN due to the gap in industrialisation between the two camps,” Kyodo news service quotes government officials as saying.

The officials added that Japan wants to “strengthen relations in a realistic manner” when seeking to conclude comprehensive cooperative economic ties with each ASEAN nation.

It is relatively easy for Japan to sign a free trade agreement with Singapore because that city state does not produce major agricultural goods, says Ishiyama.

Japanese moves to liberalise its trade are also a potential political factor at home, which is why Tokyo has to juggle its domestic economic interests with the desire for a higher international profile by reaching out to countries in the region.

“Japan would have no credibility in any FTA (free trade area) initiative if it does not pursue a policy of liberalising its agricultural sector,” Hitoshi Tanaka, director general of the Asian and Oceanian Affairs Bureau at the Foreign Ministry, was quoted as saying by local media.

For instance, Japanese farmers are an important electorate for the ruling Liberal Democratic Party, which makes it difficult for Koizumi to push ahead with a free trade agreement with ASEAN.

The government also hopes the South-east Asian trip by Japan’s most popular prime minister in recent times will help establish an image of a fresher and vigorous Japan, given its long recession and traditional reluctance toward change.