Friday September 22, 2006

Japanese Cabinet approves free-trade agreement with Chile

TOKYO (AP) - Japan's Cabinet approved a bilateral free trade pact with Chile on Friday, an official said.

The two sides have been discussing a possible economic partnership since February, culminating in the most recent round of talks last week in Tokyo.

Under the agreement, Chile will reduce tariffs on Japanese exports, including vehicles and auto parts, eventually eliminating them on all items.

Japan will also gradually reduce tariffs on salmon, wine and other agricultural products, except for politically sensitive rice and wheat.

"It is extremely delightful to reach this basic agreement on the free-trade pact between Japan and Chile after approximately seven months of negotiations,'' Prime Minister Junichiro Koizumi said in a statement after his Cabinet approved the accord.

Both sides are still working out the final wording of the documents, but Foreign Ministry official Yoshihiro Higuchi said Thursday night that the governments hope to sign the trade pact early next year.

Japan has been stepping up efforts to sign trade pacts in a bid to spur growth. Japan has signed several such bilateral pacts -including a deal with the Philippines earlier this month - but still lags behind other countries in the region.

Japan is a major exporter of automobiles, auto parts and electronics appliances to Chile, while its main imports from Chile include copper ore, salmon, pork and wine.

"This economic partnership agreement is to further strengthen and stabilize mid- and long-term trade and economic relations between Chile and Japan, including the need for stable supply of resources necessary to Japan,'' Koizumi's statement said Tariffs on 92 percent of a two-day trade amount will be abolished within 10 years.

Chile will immediately abolish a 6-percent tariff on automobiles, general machinery, and electric and electronics products from Japan.

Japan will gradually abolish a 3.5 percent tariff on salmon and trout from Chile over a ten-year period, while tariffs on bottled wine, currently at 17.6 percent, will be phased out over a 12-year period.

Japan will set tariff quotas for beef, pork and chicken, but eliminate tariffs on forestry products, excluding plywood, either immediately or gradually, said the Foreign Ministry's Higuchi.

Japan exported 103.95 billion yen (US$888.48 million; euro700.92 million) worth of products, 63 percent of them automobiles, to Chile in 2005, up 33.2 percent from the previous year, according to Finance Ministry figures.

Meanwhile, Chile exported 565.36 billion yen (US$4.83 billion; euro3.81 billion) worth of products, 55 percent of them copper ore and molybdenum, to Japan last year, up 25.1 percent from 2004.

Molybdenum, a very hard, lustrous, silver-white metallic element, is used in alloys, and added to steel to give it strength and resistance to corrosion.

Japan has free trade agreements with Singapore, Mexico, Malaysia and the Philippines, while Chile has FTAs with more than 40 countries, including the United States and the European Union.

Japan on Thursday kicked off the first round of talks on FTAs with six Middle Eastern countries, including Saudi Arabia.

For Another perspective from The Daily Yomiuri, a partner of Asia News Network, click here

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