Association of Southeast Asian Nations, Japan reach preliminary agreement on free trade deal

MANILA, Philippines (AP)

Economic ministers from Southeast Asia and Japan have agreed in principle on major elements of a free trade pact they hope to sign in November, officials said Saturday.

Under the deal with the 10-member Association of Southeast Asian Nations, Japan would eliminate tariffs on 90 percent of ASEAN products once it is signed, then raise coverage to 93 percent of all products by the 10th year, said Philippine Trade Secretary Peter Favila.

“The deal is more or less settled,” said ASEAN Secretary-General Ong Keng Yong, referring to the proposed agreement, called the ASEAN-Japan Comprehensive Economic Partnership. “We just have to tie a few loose ends.”

Ong said the pact would let more ASEAN products enter Japan, and would “stimulate more business confidence, exchange of businesses and definitely more investments coming from Japan into ASEAN.”

He said some politically sensitive agricultural products, such as rice, were excluded from a list of products from which import tariffs will be removed.

Japan is a major ASEAN trading partner, accounting for 12 percent of the Southeast Asian bloc’s global trade in 2006. Japan-ASEAN trade last year rose to US$161.8 billion (�118.84 billion), from US$154.6 billion (�113.55 billion) in 2005.

Japan is also ASEAN’s largest source of foreign direct investment, with flows last year rising to US$10.8 billion (�7.93 billion), from US$7.2 billion (�5.29 billion) in 2005.

Six ASEAN members _ Malaysia, Indonesia, the Philippines, Brunei, Singapore and Thailand _ have committed to cut tariffs on at least 90 percent of products from Japan. The other four members _ Cambodia, Laos, Myanmar and Vietnam _ are in talks with Japan on their schedule, said Philippine Assistant Trade Secretary Ramon Vicente Kabigting.

Ong said officials would work out “a few more details” of the accord before its expected signing at the ASEAN-Japan summit in Singapore in November.

One issue still to be resolved is ASEAN’s “rules of origin,” under which a product is deemed to originate from the regional bloc if at least 40 percent of its content comes from its member countries.

Ong said Japan feels this is “too straightforward.”

He acknowledged that it would not be easy to determine the content of some goods, “so we have to sign a common understanding on some of these products.”

“This is good for us because later on we don’t want to have a debate on where a product comes from,” he said.

The preliminary agreement was reached Saturday in Manila during an annual meeting between Japanese and ASEAN economic ministers.

ASEAN, with a market of more than 550 million people, already has free-trade deals with China and South Korea. It is in talks with India, Australia, New Zealand and the European Union on similar agreements.