General | Feb 05 2006
The Japanese government has revealed plans to push for a regional free trade agreement that would cover the Asia and Oceania regions, in a move that if successful would boost not only its economy but provide benefits for Australia as well.
According to minister of economy, trade and industry Toshihiro Nikai, if the plan is approved the government intends to commence talks with other countries in 2008, with a view to establishing a framework by 2010.
The proposed agreement would cover 16 nations, including Japan, China, Australia, New Zealand, India, South Korea and the 10 current members of ASEAN. The region includes about three billion people, equal to half the world’s population, while it accounts for about 25% of global GDP. This number is expected to rise as the Chinese and Indian economies continue to expand.
If established the FTA would be roughly equal in size to both NAFTA, the North American Free Trade Agreement that includes the US, Canada and Mexico, and the European Union.
Estimates of the benefits vary, but the Japanese government suggests the FTA could add as much as JPY 5 trillion to Japan’s GDP, while boosting regional GDP by as much as US$25bn.
With Australia enjoying stronger trade relations with both China and Japan in recent years and India a likely market for some of our reserves of natural resources in particular, the Australian economy appears well placed to be a major beneficiary of any such deal, as it would strengthen our position in what is fast becoming out most important trading region.
As evidence of the region’s importance, in 2004/05 the value of Australia-China trade exceeded the value of trade with our traditional major trading partner, the US, while our trade with Japan in the same period was worth more than $40bn.
