'FTA a building block for ASEAN'

Agence France-Presse, Singapore

A free-trade agreement (FTA) basically agreed to between Japan and Singapore can be a building block for a wider accord covering Tokyo and the Association of Southeast Asian Nations (ASEAN), an official said over the weekend.

Singapore Trade Minister George Yeo met with his Japanese counterpart Takeo Hiranuma on the sidelines of an informal World Trade Organisation (WTO) meeting here to "celebrate" the agreement "in principle and in substance" reached by negotiators in Tokyo.

"We are here to celebrate the final agreement that we have reached in principle and in substance on the economic partnership agreement between Japan and Singapore," Yeo told reporters after the meeting.

"Negotiations were difficult but amicably settled," he said.

A few remaining issues are expected to be resolved before a meeting between Singapore Prime Minister Goh Chok Tong and Prime Minister Junichiro Koizumi of Japan on the sidelines of the annual Asia-Pacific leaders' summit in Shanghai, China next week.

The pact, formally called the Japan-Singapore Economic Agreement for a New Age Partnership, is expected to be signed by the end of the year.

Yeo said he hoped the agreement "will eventually lead to greater economic integration between Japan and Southeast Asia."

He allayed concerns by some of Singapore's Southeast Asian neighbors that other countries would use FTAs to gain backdoor entry into the ASEAN market.

"The rules of origin will not allow that... In fact, what we have achieved today provides a building block for something bigger and more interesting for all of Southeast Asia in its relationship with Japan."

Hiranuma said the agreement is the first FTA by Japan, the world's second largest economy which had previously favored multilateral pacts in bodies such as the WTO.