Subject: [cwj 29] Japanese, Korean Institutes Announce Proposal for Bilateral FTA to Advance Talks
From: "Olivier Hoedeman" <>
Date: Mon, 5 Jun 2000 11:03:59 +0200
Seq: 29

International Trade Reporter

Volume 17 Number 22 Thursday, June 1, 2000 Page 865 ISSN 
1523-2816 Asia/Pacific Rim

International Agreements 

Japanese, Korean Institutes Announce Proposal for Bilateral FTA 
to Advance Talks

TOKYO--Japanese and South Korean governmental economic 
research institutes May 23 released a proposal for establishing a 
bilateral free trade agreement, paving the way for formal government 
negotiations on the project.

During his visit to Seoul that began May 29, Japanese Prime 
Minister Yoshiro Mori is expected to propose to South Korean 
President Kim Dae Jung a sort of framework for starting formal 
negotiations, Mori's aide said May 25.

The proposal was made by the Institute of Developing Economies, 
a governmental body reporting to the Japanese Ministry of 
International Trade and Industry, and the Korea Institute for 
International Economic Policy.

The two countries informally agreed in October 1998 to 
commission joint research into an FTA as part of the bilateral 
partnership regime. In March 1999, the late Japanese Prime 
Minister Keizo Obuchi agreed to strengthen the regime, which was 
initially put forward by Kim, according to a joint announcement 
released May 23 by the two institutes.

The announcement urged the two countries to reduce tariffs and trade barri=
ers over a period of 10 years. By product line, Korean exports to Japan wo=
uld increase for apparel, leather goods, and agricultural products, while
 Japanese exports to Korea would increase for sophisticated machinery, met=
als, and chemical products. But because Korea's average tariff rate on Jap=
anese products is 7.9 percent, while the Japanese average rate on Korean 
products is 2.9 percent, Japan would have an expanded trade surplus at lea=
st initially, it said.

The announcement said that in order to promote the bilateral FTA, the two =
countries need to conclude a tax treaty, investment agreements, mutual rec=
ognition of standards and certification, intellectual property rights pro
tection, wide-ranging standardization of customs clearance procedures, and=
 government procurement accords.

On the effects of a Japan-Korea FTA, the announcement said that two-way tr=
ade would grow, prices of imported goods would decrease, and imports from =
third countries would be reduced.

FTAs With Other Nations

MITI's trade promotion arm, the Japan External Trade Organization (JETRO),=
 which is the parent of IDE, separately formed on May 25 a study group to =
explore an FTA with Chile, and plans to complete a report that would be s
imilar to the IDE-KIIEP study. Chile initiated the proposal for an FTA wit=
h Japan in February, a JETRO official said.

The Japanese government, under MITI's initiative, also is vigorously movin=
g forward on FTAs with other countries, including Singapore, New Zealand, =
and Mexico.

While MITI officials are silent on the reasons they are actively pursuing =
regional FTAs, economists said what is driving the ministry is its histori=
c ambition to spearhead an economic region. MITI also wants to rally the 
support of Asian-Pacific Economic Cooperation (APEC) forum member economie=
s behind it to engineer the resumption of stalled World Trade Organization=
 talks, a former senior MITI official told BNA.

Business circles also back the policy. Takashi Imai, chairman of Keidanren=
 (the Federation of Economic Organizations of Japan), addressing a general=
 membership meeting May 25, said that after the Seattle ministerial meeti
ng's failure to launch the next round of negotiations, "I believe it is ne=
cessary for Japan to consider making efforts to sign bilateral [free] trad=
e agreements as a means to complement multilateral trade rules."

Imai also emphasized that Japan should reinforce relationships with Asia.

The IDE-KIIEP joint statement emphasized: "As an exception to the nondiscr=
iminatory and most-favored-nation treatment principles, the GATT-WTO recog=
nizes FTAs as the first step toward realizing global-scale liberalization

It also said that Japan and Korea will not unilaterally relax barriers unl=
ess other WTO members do the same.

While MITI campaigns for FTAs, Japan's Ministry of Finance promotes the ye=
n's internationalization and advocates an Asian Monetary Fund as a semi-in=
dependent regional lending institution. At a recent Asian Development Ban
k annual meeting in Chenmai, Thailand, participants discussed these topics=
 as well as a regional currency swap arrangement.

(The institute's joint statement is available in English at http://www.jet=

By Toshio Aritake

Copyright =A9 2000 by The Bureau of National Affairs, Inc., 
Washington D.C.

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