Japan’s FTAs/EPAs with APEC Economies Nobuhiko Sasaki Deputy Director-General APEC Senior Official METI Japan March 2006

1 All APEC economies (East Asian APEC economies) European Union (EU) Japan’s trade and investment with APEC economies (particularly with East Asian APEC economies) are increasing. Japan 72% → 75% 68% ← 70% 49% ← 43% 13% ← 14% 39% → 50% 18% → 16% All APEC economies (East Asian APEC economies) European Union (EU) Japan 39% → 46% 13% → 31% 50% → 36% Share of export from Japan (‘99) → (‘04) Share of import into Japan (‘99) → (‘04) Share of Japan’s foreign direct investment (‘99) → (‘03) TradeInvestment Deepening Mutual Economic Dependence between Japan and APEC Economies (Sources) Trade Statistics, Ministry of Finance Japan (Sources) Foreign Direct investment, Ministry of Finance Japan

2 China 23% Korea 9% Chinese Taipei 8% Hong kong China 5% Thailand 5% Australia 4% Indonesia 4% Malaysia 4% Singapore 3% Philippine 2%Vietnam 1%NZ 1% Brune i USA 26% Canada 2% Russia 1% Mexico 1% Chile1% Peru PNG ＡＰ E Ｃ economies 72% ＥＵ 14% Others 14 % Total amount of Japan’s trade (exports and imports) US$ 1,021 billion (2004) Total amount of Japan’s trade with APEC economies US$ 734 billion (2004) East Asian economies 69% Japan’s Trade with APEC Economies The share of trade value with APEC economies is 72% in total Japan’s trade. (East Asian economies 50%) (Sources) World Trade Atlas

3 Japan’s Contribution to Bogor Goals through FTAs/EPAs Policy (1) [Approach ～ 3 STEP APPROACH] 1. Institutionalization of the de facto based regional economic linkage in the APEC region, particularly in East Asia The regional economic linkage in APEC region, particularly in East Asia, is being strengthened through the networked business operation of the private sector. Japan is institutionalizing the de facto based regional economic linkage in the area. 2. Further trade and investment liberalization, and improvement of investment climate from various aspects Japan is trying further trade and investment liberalization and facilitation in the APEC region. Japan includes many kinds of chapters, contributing to this purpose, in its FTAs/EPAs. 3. Effort toward convergence and coherence of FTAs/EPAs in the APEC region Japan is making efforts to bring convergence and coherence to FTAs/EPAs in the APEC region in collaboration with other APEC economies. [Approach ～ 3 STEP APPROACH] 1. Institutionalization of the de facto based regional economic linkage in the APEC region, particularly in East Asia The regional economic linkage in APEC region, particularly in East Asia, is being strengthened through the networked business operation of the private sector. Japan is institutionalizing the de facto based regional economic linkage in the area. 2. Further trade and investment liberalization, and improvement of investment climate from various aspects Japan is trying further trade and investment liberalization and facilitation in the APEC region. Japan includes many kinds of chapters, contributing to this purpose, in its FTAs/EPAs. 3. Effort toward convergence and coherence of FTAs/EPAs in the APEC region Japan is making efforts to bring convergence and coherence to FTAs/EPAs in the APEC region in collaboration with other APEC economies.

4 [CONCRETE ACTIONS] 1. Individual actions under the FTAs/EPAs negotitation Intensive negotiation for tariff-elimination, particularly on parts and components tariffs Challenges toward an improvement of investment-climate of East Asian economies through establishment of i) investment-rule (including that for service investment), and ii) framework for consultation among both governments and investors Inclusion of chapters on intellectual property protection, competition, and government procurement 2. Collective actions under APEC with other APEC economies Positively participating in the discussions on creating APEC FTAs/RTAs Best Practice(2004), APEC Model Measures on Trade Facilitation(2005), and other Model Measures(2006-) under the framework of APEC Tackling new issues such as e-commerce, structural reform that are not easy for WTO to address, considering the nature of APEC (non-binding, voluntary) [CONCRETE ACTIONS] 1. Individual actions under the FTAs/EPAs negotitation Intensive negotiation for tariff-elimination, particularly on parts and components tariffs Challenges toward an improvement of investment-climate of East Asian economies through establishment of i) investment-rule (including that for service investment), and ii) framework for consultation among both governments and investors Inclusion of chapters on intellectual property protection, competition, and government procurement 2. Collective actions under APEC with other APEC economies Positively participating in the discussions on creating APEC FTAs/RTAs Best Practice(2004), APEC Model Measures on Trade Facilitation(2005), and other Model Measures(2006-) under the framework of APEC Tackling new issues such as e-commerce, structural reform that are not easy for WTO to address, considering the nature of APEC (non-binding, voluntary) Japan’s Contribution to Bogor Goals through FTAs/EPAs Policy (2)

5 (1) Eliminating/reducing tariffs Further opening of the Japan’s market; elimination of tariffs between parties to the agreement; integration of markets of the APEC region (1) Setting up shared rules for investment Eliminating regulations on investment, simplifying and clarifying procedures, setting up dispute settlement procedures (1) Setting up shared rules for investment Eliminating regulations on investment, simplifying and clarifying procedures, setting up dispute settlement procedures (2) Harmonizing systems and making them transparent Harmonizing intellectual property rights systems, standards and qualifications, IT-related systems, laws on competition, commercial law, etc., making them transparent (4) Expanding person-to-person exchanges Simplifying visa and entry procedures, increasing the number of foreign students in Japan, consideration of granting permanent residence to people with advanced skills, etc. (2) Smooth movement of goods Simplifying customs clearance, promoting electronic procedures, etc. (2) Smooth movement of goods Simplifying customs clearance, promoting electronic procedures, etc. (3) Deregulating trade in services Eliminating regulations on services, improving market access, etc. (3) Deregulating trade in services Eliminating regulations on services, improving market access, etc. Assuring energy security, sharing experiences of development through cooperation measures including economic ODA. 1. Assuring free movement of goods, services, and natural persons 2. Facilitating economic activity in the region 3. Assuring stability and ongoing development Contents of EPA

6 Chapters and elements of “WTO Plus” in EPAs (Examples) 1. Chapters 2. Elements Investment Improvement of business environment Competition Bilateral cooperation Tariff elimination, in particular, nearly all (100% on trade volume) tariff elimination of industrial goods within 10years Various elements to improve investment climate -> Securing given conditions on each investment activity by manufacturing sector as what were allowed -> Establishing investor-state dispute settlement system -> Establishing one-stop service window and dialogue mechanism for solving various investment-related problems

7 ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ :APEC economies Brunei Started study group in Feb Korea Started negotiations in Dec Singapore Entered into force in Nov The Philippines Agreed in Principle in Nov Malaysia Signed in Dec Thailand Agreed in Principle in Sep Indonesia Started negotiations in Jul Vietnam Started study group in Feb Mexico Entered into force in Apr Chile Started negotiations in Feb Australia Started study group in Nov Bilateral EPA ASEAN Started negotiations in Apr Japan’s EPAs with APEC Economies

8 Japan’s Schedule on EPAs Negotiations ２００３２００４ ２００５２００６ Negotiations Korea Dec. Oct. PM agreement India Negotiations Thailand The Philippines Malaysia ASEAN Make utmost efforts to conclude the negotiations as soon as possible within two years Consultations Negotiations Feb. Jan. Joint Study Group Chile Nov. Agreed in principle Indonesia ２００７ Joint Study Group Vietnam, Brunei Apr. policy dialogue July Joint Study Group Apr. Feb. Jan. Feb. Negotiations Agreed in principle July ※ Singapore （ Nov in effect ）, Mexico （ Apr in effect ） Joint Study Group Agreed in principle Negotiations May Dec. PM agreement Joint Study Group Dec. Jan. sign September Negotiations Australia, Switzerland