Japan, Singapore agree to forge free trade accord

Japan, Singapore agree to forge free trade accord

TOKYO (AFP): Japan agreed to its first free trade accord Sunday, when it decided to forge a bilateral pact with Singapore by the end of next year.

The agreement was reached between Japanese Prime Minister Yoshiro Mori and his Singapore counterpart Goh Chok Tong, who arrived here Saturday from Seoul after taking part in the Asia- Europe Summit between 25 Asian and European leaders.

In a joint statement they said "formal negotiations should begin in January 2001" and are expected to be concluded "within a reasonably short period of time, but not later than Dec. 31, 2001, so as not to lose momentum."

The free trade agreement (FTA) would be a first for Japan, which is one of the few industrial countries which does not already have any accords of this nature.

Tokyo has long favored a multilateral system of commercial privileges within the framework of the General Agreement on Tarriffs and Trade, which has since been succeeded by the World Trade Organization (WTO).

Following the setbacks in Seattle last December over launching a new round of multilateral trade negotiations, Japan reviewed its traditional stand regarding FTAs, and is now following the rest of the world in reinforcing free trade arrangements.

"In Europe, they are expanding the Europe Union. In America, they are looking into South America. They are talking about a free trade area in the Americas," Goh told a news conference.

"Whereas, in Asia, we have not begun to integrate our economies," he noted. "So, strategically, this is a very important step that Northeast Asia is being linked with Southeast Asia -- first through Singapore-Japan free trade arrangements."

A joint study on free trade pacts between the two countries was completed earlier this month, calling for a "new age partnership" in such areas as trade in goods and services, investment, harmonization of regulatory procedures, and competition policy.

Goh said that information and communication technology (IT) will be a major area to be covered by the accord.

"In terms of IT literacy, we are within the world's top three. Japan can cut short its learning time by coming to Singapore," he said.

The joint statement said the bilateral FTA must be consistent with WTO rules and secondary to the multilateral trading system.

According to a Japanese government official who played a key role in changing Tokyo's attitude towards FTAs, the accord would lead the way to total elimination of customs tariffs and a complete liberalization of exchanges of services between Japan and Singapore.

Earlier this month Japanese Minister of International Trade and Industry Takeo Hiranuma said FTAs were important as the WTO lagged behind rapid changes in the trading environment as businesses worldwide sought quick resolutions to issues they faced.

"Regional efforts to complement such multilateral negotiations are becoming a critical sub-system in terms of enhancing the stability of the global system," he said.

The Japanese government chose Singapore as its first FTA partner because the island state does not produce goods or services which are a concern to the Japanese agriculture lobby.

The main difficulty in the negotiation will be finding a formula which excludes agriculture without contravening WTO principles.

Mori and South Korean President Kim Dae-jung agreed last month to establish a panel comprising business leaders from both countries to research the feasibility of forging an FTA.

These negotiations are likely to prove more troublesome because both countries have very protected agricultural sectors.

Japan is also consulting with Mexico and Malaysia, who have expressed interest in a similar deal.

Goh said Singapore was considering concluding similar accords with Mexico, South Korea and Canada.