After seven years of tough negotiations, Japan and Australia have finally inked a basic free trade agreement, the first that Japan has signed with a major agricultural exporter. This agreement will allow for cheaper Japanese cars and Australian beef to be sold in their respective markets.
The agreement was reached during Australian Prime Minister Tony Abbott’s visit with Japanese Prime Minister Shinzo Abe on Monday. They are both hoping that this free trade deal will help fast track the negotiations between Japan and the US in the Trans-Pacific Partnership trade talks. In the basic deal, some tariffs for certain key items remain, with Australian beef’s tariff almost halved from 38.5% to under 20% over 18 years. This is in exchange for the phaseout of the 5% tariffs on Japanese cars three years after the trade deal is signed. However, rice was not included in any of the tariff talks with butter and wheat up for discussion in the future.
Japan’s farm minister Yoshimasa Hayashi said that the reason for the long period in the reduction of the tariffs in farm products is due to their “consideration for the efforts taken by Japanese cattle farmers to undertake structural reform.” One of the strongest opponents of the free trade deals, Japan’s Agricultural Cooperatives, said that they appreciate what the government has done to protect the domestic agriculture industry’s interests, but if this agreement will have a negative impact on the industry, they will be asking for fiscal and policy responses. Meanwhile, the chairman of the Japan Chamber of Commerce and Industry, Akio Mimura, said that they are hoping this will have a great impact on the still ongoing negotiations with the US for the TPP agreement.
[ via Wall Street Journal ]