Japan-NAFTA Relations

NAFTA United States, Canada, Mexico “North American Free Trade Agreement” Signed in 1992, entry into force in 1994 Topics covered : Market access for Goods - Tariffs - Customs procedures - Agriculture - Investment - Cross-Border Trade in Services - Competition Policy - Intellectual Property

Japan’s point of view Mainly economic expansion traditionnally Now political goal : lead an Asian trade bloc and prevent the formation of a US-China G2 Protect the rice, wheat, beef, pork, auto and auto parts, insurance markets Japan to Mexico : delocate its automobile companies there as a high technology export door to the US and Canada → maquiladoras for duty-free imports of input and materials Japan to Canada : Canada as a base for the manufacturing of finished goods and machineries

Means Power of bargain : - US needs to reduce its trade deficit with Japan; - Japans auto firms are structurally and institutionally advantaged in comparison with the US - Japan is the 2nd largest economy at the time BUT weak domestic natural resources and geographic position AND high strategic dependance solely on the US → Use of GATT–WTO rulemaking and rule enforcement to directly confront and challenge the United States

Policy contents Towards U.S. After World War II → the core of Japan’s foreign and security policies follow the US be independent of the US Now → doesn’t want to be a downright follower of the United States appear independent

Policy contents Towards U.S “ strengthen the bilateral trade and investment and promote cooperative relationships in various areas.”

Policy contents Towards Canada Cooperating on a wide range of fields including politics, economy, security and culture Both trade and investment are developing steadily. Canada-Japan EPA

Policy contents Towards Mexico key partner of Japan in terms of economy building a better international community based on the rule of law Japan’s strategy strengthening economic relations. strengthening people-to-people exchange. contributing to stable development of Mexico.

Policy contents Towards Mexico Mexico-Japan EPA

What’s the Evaluation for implementig regional trade ? "There aren't any areas in Japan where Keiretsu doesn't exist, Keiretsu will not be dismantled by outsiders.” keirestsu : The relationship between Japnan’s companies based on “trust” = Japan will not be made over in the image of the United States. 1. Highly efficient Japanese designed production processes, 2. Low-cost Mexican labor 3. The importation of parts from Japan = Japanese companies that ultimately prosper from NAFTA.

What’s the Evaluation for implementig regional trade ? ★ Japan's potential to benefit from NAFTA > direct investment in North America. = The recent economic and political integration in the EC, and the prospect of NAFTA, has reawakened Japanese interest in an Asian-Pacific region which might exclude the NAFTA nations. ★Japan is the leading investor, trading partner, and foreign aid donor in the region. = Japan is positioned to lead an Asian trade bloc with restricted trading access to North America.

What’s next step for JAPAN toward “NAFTA” ? ★ Japan and its economy are the long-term beneficiaries of regional trade zones. Only Japan is economically strong enough to counter trading block barriers with direct investment in EC and NAFTA member nations. As the economies of Southeast Asian nations become more advanced and regional trade becomes more active → an Asian intergovernmental trading structure or free trade zone becomes more viable with Japan playing a predominant role.

Bibliography LUNEY, Percy R. JR, The Japanese view toward NAFTA and regional trade zones, Duke Journal of Comparative & International law, 1992 MEYERSON, Christopher C., Domestic Politics and International Relations in US-Japan Trade Policymaking, International Political Economies Series, 2003