Japan, Mexico prepare to sign Free Trade Agreement

Cattle Market & Farm Reports, Editorials
Sep 20, 2004
by WLJ
Japan and Mexico are signing a Free Trade Agreement (FTA) this week, which will mark the first time Tokyo has made a comprehensive pact involving agriculture products. This landmark treaty is beneficial to both sides, giving Mexican farmers more export opportunities, and Japanese auto and steelmakers more access to the Mexican market with a reduction in tariffs.
Over 300 agriculture products in total are covered in the agreement. Of particular interest is the new preferential tariffs for pork, especially since the Japanese border is still closed to U.S. beef. Mexican farmers will be able to export 80,000 tons of pork a year to Japan, a quota agreement that was said to be a sticking point in the negotiations along with orange juice quotas. At the present time, almost all of Mexico's pork goes to Japan.
According to the agreement, Japan will also give Mexico no-tariff quotas for oranges, chicken and beef.
Mexican Agriculture Minister Javier Usabiaga said in a press statement that he estimates Mexico's agriculture exports to Japan could grow by as much as 10.6 percent annually over the next 10 years as a result of the no-tariff quotas.
Japan and Mexico have been working on this FTA for nearly two years. The inclusion of such a plethora of agriculture products is still somewhat of a surprise to the Japanese public, according to news reports, because Tokyo has zealously protected those products in the past, bowing to the political clout of farmers. Nonetheless, Japanese consumers are looking forward to enjoying cheaper agriculture products once the agreement takes affect.
Mexico Ambassador to Japan, Miguel Ruiz-Cabanas said, "There are many people enthusiastic about selling products from the agriculture sector to Japan. One of the significant aspects of this treaty is that for the first time Japan has decided to open its agriculture sector."
Ruiz-Cabanas added that he believes opening the agriculture sector was an important step in terms of long-term restructuring of Japan's economy. Japanese economists have estimated that the country is losing nearly $4 billion annually without the FTA with Mexico.
The Japanese/Mexico FTA is set to go into effect sometime after January 2005. Mexico is the second country Japan has signed a FTA with—the first being Singapore. Japan has also recently initiated free trade negotiations with South Korea, Malaysia, Thailand and the Philippines, and is said to be considering launching negotiations with Indonesia and Taiwan. — Sarah L. Swenson, WLJ Associate Editor