April 2024
AIIB ASEAN ASEAN (R) ASEAN-ISIS Asia Big Tech CH: Hong Kong Country (R): Indonesia Country (R): Malaysia Country (R): Myanmar Country (R): Singapore Country: ASEAN Country: Australia Country: Cambodia Country: China Country: Germany Country: India Country: Indonesia Country: Japan Country: Laos Country: Malaysia Country: Myanmar Country: North Korea Country: Philippines Country: Qatar Country: Russia Country: Singapore Country: South Korea Country: Taiwan Country: Thailand Country: UK Country: United States Country: US Country: USA Country: Vietnam covid-19 DE: 5G DE: Data privacy DE: Data security DE: Facebook Digitalisation Elections: Indonesia 2019 Elections: Thailand 2019 ESG: Climate Change ESG: Diversity ESG: Energy ESG: Green Finance ESG: Green Growth ESG: Haze ESG: Human Rights ESG: Modern Slavery ESG: Peatland ESG: Riau ESG: Smallholders ESG: Sustainability ESG: Sustainable/Green Infrastructure European Union Event: SDSWR Events: AAF Fukushima Global Citizens Singapore Indonesia: Jokowi Institute: ERIA Institute: SIIA JP: Abenomics Leaders: Kim Jong Un Leaders: Lee Hsien Loong Megatrends: Populism MM: Aung San Suu Kyi MM: NLD MM: Rakhine State MY: Anwar Ibrahim MY: GE14 MY: Mahathir Mohamad MY: Najib Razak New Horizons New Zealand Nicholas Fang Oh Ei Sun Recovery Region: European Union Region: Latin America Region: Middle East Reports Security: South China Sea Security: Terrorism SG: Lee Kuan Yew SG: SG Secure SG: Smart Nation SG: Society Simon Tay Sustainable infrastructure Topic (R): Belt and Road Topic (R): Business Topic (R): Digitisation Topic (R): Economy Topic (R): Green Finance Topic (R): Haze Topic (R): Infrastructure Topic (R): Palm Oil Topic (R): Peatland Topic (R): Smallholders Topic (R): Sustainability Topic: Anti-Globalisation Topic: Belt and Road Topic: Business Topic: Coronavirus Topic: COVID-19 Topic: Deforestation Topic: Development Topic: Digital Economy Topic: Digitisation Topic: E-Commerce Topic: Economics Topic: Economy Topic: Elections Topic: Environment Topic: ESG Topic: Finance Topic: Global Citizens Topic: Globalisation Topic: Human Trafficking Topic: Indo-Pacific Topic: Infrastructure Topic: Investment Topic: Labour Topic: Nuclear Topic: Palm Oil Topic: Race Topic: Regional Integration Topic: Religion Topic: Security Topic: Singapore-Malaysia Relations Topic: Small States Topic: Trade Trade: AEC Trade: CPTPP Trade: FTA Trade: Multilateralism Trade: RCEP Trade: TPP Trade: War Trends (Digital): Cybersecurity UK: Brexit United States US: Obama US: Trump US: Trump WEF youth

Japan-Australia FTA: A good precedent for compromise

09 Apr Japan-Australia FTA: A good precedent for compromise

Japan and Australia have agreed on a bilateral Free Trade Agreement (FTA). This is the first time a major agricultural exporting nation has concluded a trade deal with Japan, and it sets a positive precedent for the successful conclusion of the regional-level Trans-Pacific Partnership (TPP) talks.

The deal was announced by Japanese Prime Minister Shinzo Abe and his Australian counterpart Tony Abbott, during Mr Abbott’s visit to Japan. The deal may be signed as early as this summer, entering into force by 2015.

Cheaper beef, cars

Japan’s agricultural lobby is extremely influential, and has generally opposed the signing of FTAs, as they could lead to the lowering of Japanese tariffs on imported food. The agricultural lobby believes that such tariffs are necessary for the survival of Japanese farms, which would otherwise face tough competition from the much larger agribusinesses in countries like Australia and the United States.

But Japanese car manufacturers like Toyota and Mitsubishi are strongly in favour of FTAs, as they would benefit from greater overseas market access. The agreement between Japan and Australia illustrates the competing interests of the agricultural and automobile industries.

Under the new FTA, Japan will reduce its tariffs on Australian beef by up to half. In exchange, Australia will effectively abolish its tariffs on the import of Japanese vehicles. This is not much of a concession for Australia, as it is no longer competing with Japan in automobile manufacturing. Australia’s car making industry has effectively collapsed, with Ford, General Motors’ Holden and Toyota all shutting down their factories by 2017.

What this means for the TPP

The Japan-Australia agreement shows that Japan is willing to compromise on agricultural tariffs. This is a good sign for negotiations on the regional TPP trade agreement, a grouping of 12 countries that includes Japan, the US and Singapore.

The TPP talks have suffered repeated delays; Japanese opposition to agricultural tariff reduction has been a sticking point. But a breakthrough could now be possible. American and Japanese negotiators are currently holding discussions ahead of US President Barack Obama’s trip to Japan. It would be a coup for both Mr Obama and Mr Abe if there was clear progress on the TPP by the time Air Force One touches down in Tokyo on 24 April.

A positive sign for Abenomics

Mr Abe appears to be in favour of signing more trade agreements for his country. Even if some domestic sectors like the food industry suffer losses, the overall benefit to the Japanese economy is expected to outweigh the costs. The successful conclusion of the Japan-Australia bilateral agreement may also demonstrate that Mr Abe is making headway in convincing conservative elements of his own party about the urgent need to open up Japan’s economy.


Japan, Australia agree in principle on EPA [Asahi Shimbun, 7 Apr 2014]

Trade deal: Japan wins, and why that’s good for Australia [Sydney Morning Herald, 8 Apr 2014]

Photo Credit: Australian Prime Minister’s office