Mexico, Japan sign free trade agreement

MEXICO CITY (AP) - Mexico's President Vicente Fox and Japanese Prime Minister Junichiro Koizumi signed a free-trade agreement Friday that both countries see as a bridge to greater commerce around the world.

The deal signed in Mexico's ornate National Palace is only Japan's second free-trade pact - the first was with Singapore - while Mexico has now signed 12 agreements with 43 countries.

It is supposed to take effect in April following legislative approval.

Fox said the agreement will be a "mutual bridge for expansion,'' allowing Japanese companies to export from factories here to Mexico's many other trade partners while helping Mexico expand its exports to all of Asia, as well as drawing more investment.

Koizumi said the accord "will be for our mutual benefit, and the benefits will be shared with the countries of North America, Central America and even South America.''

Mexican officials have said they hope the deal will ease their reliance on the United States, which now accounts for 90 percent of the country's exports.

The new agreement "will mark the beginning of a new era ... to increase trade and investments,'' Fox said.

He noted that trade between the two countries had already jumped by 28 percent in the first half of the year.

Mexico also hopes the deal with Japan will help revive an assembly-for-export industry that was dented by Chinese competition and by a U.S. economic downturn.

Mexican officials said they expect exports to Japan to increase by more than 10 percent a year and they seek Japan as a new market for farm products.

Japanese import tariffs on most Mexican produce will be lowered over three to seven years. In the case of bananas, the tariffs will be lowered over 10 years.

Excluded from the agreement for at least three years are pineapples and pineapple juice, candy, wheat and pastas.

Japan will be granted tariff-free auto imports for up to 5 percent of the Mexican market, compared with the current 3 percent, and tariffs will be gradually eliminated over six years.

Tariffs also will be lifted immediately on specialized steel products not made in Mexico, used in areas such as the auto parts, electronics and machinery industries.

Tariffs will remain for five years on other steel products that compete with Mexican production, and then be phased out over the following five years.

Of Mexico's US$165.4 billion (135 billion) in exports in 2003, a mere US$605.8 million ($494.5 million) went to Japan, with US$149.6 billion (122.1 billion) going to the United States, according to the Economy Department.

At the same time, Mexico imported US$171 billion (139.6 billion) worth of goods, of which US$7.6 billion (6.20 billion) came from Japan and US$109.8 billion (89.6 billion) from the United States.

Koizumi also gave Fox a general boost in his efforts to push economic reforms through a reluctant opposition-led Congress.

"In any country there are two groups, two currents,'' Koizumi said, "one current that says you can't grow without change and the other current that says you have to stay the same or you cannot grow. I am in the first current.''

He said that idea of change for growth "is not only for my country, but I am sure it applies to all countries.'' - AP

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