Trade zone finds test in Japan
Open markets would represent shift
YOKOHAMA, Japan – Although Asia-Pacific leaders have committed themselves to achieving a Pacific-wide free trade zone following an annual summit, host Japan may prove a key test case for how realistic that vision is.
Acknowledging that Japan’s economic power is declining, Prime Minister Naoto Kan declared his country must open up its markets and embrace free trade – or risk getting left further behind other regional rivals.
“Japan is determined to reopen itself,” Kan said at a press conference Sunday that wound up the Asia-Pacific Economic Cooperation forum, alluding to the historic role that Yokohama, which hosted the summit, played more than 150 years ago as one of the first Japanese ports to open up to the West.
That bold declaration represents a change for Japan, which for decades had been ruled by conservative administrations that were reluctant to engage in trade liberalization and were closely tied with farmers who fiercely oppose lowering protective tariffs. Imported rice, for example, is subject to a 778 percent tariff.
Japan and the other 20 members of APEC will face many such tough choices as they strive to execute their shared commitment to free trade and greater regional integration as outlined in the leaders’ communique issued at the end of the weekend meeting.
Their overarching goal: to work toward establishing a Free Trade Area of the Asia-Pacific that would envelop all members, from behemoths China and the U.S. to tiny Brunei and New Zealand. Slashing tariffs and other barriers to imports and investments, the so-called FTAAP would cover half the world’s global commerce and two-fifths of its trade. Kan said the rough target date was 2020.
The Asia-Pacific region has led the world’s still-weak recovery from the financial crisis, and the region’s leaders are convinced that open markets are a sure way to ensure future growth. Still, creating such a huge free trade zone is a highly complicated endeavor given the region’s diversity and vested interests opposed to opening markets.