Trade Policy Bureau

Signing ceremony for the Japan-Mexico Economic Partnership Agreement
(Photo: Office of Cabinet Public Relations, Cabinet Secretariat)

As the economy globalizes, many countries and areas in Asia, most notably China, are fully participating in the market economy, and a great change is occurring in the competitive environment surrounding the Japanese economy and in its corporate behavior. At the same time, the pace of regional integration, epitomized by the North American Free Trade Agreement (NAFTA) and the European Union (EU), is also picking up worldwide. Adapting to these changing circumstances, the Trade Policy Bureau is actively executing an integrated domestic and external economic policies, aiming to maintain the established world free trade system and to create a business environment in which Japan's economic growth is sustainable and constantly creating high added value.

>	The dramatically changing international business environment and Japan's policy agenda: Integrated domestic and external economic policy

White Paper on International
Economy and Trade 2004

Advance of globalization
In today's world various resources such as people, capital, money and information move freely across borders through the increasing use of IT. Japanese firms are increasingly moving all over the world to find the best production areas to gain greater competitiveness in the global market.

International competition in systemic and rule creation
In the face of this intense world-scale competition, supporting the activities of Japanese companies, boosting industrial competitiveness, and maintaining and improving the living standard of each Japanese citizen will be achieved by: (1) developing a more attractive domestic business environment, and (2) shaping international trade and investment rules in such a way as to increase Japan's industrial competitiveness by even a fraction. Because other countries are pursuing the same goal, international systemic competition and competition in the creation of international rules have become vital in today's world.

Japan's external trade policy agenda
In this age of international competition among systems and in rule creation, it will be vital to advance an economic policy that integrates domestic and external aspects. In other words, in addition to directing liberalization negotiations to bolster the competitive advantage of Japanese industry, an international environment needs to be developed which will contribute to progress with domestic structural reform. With these objectives firmly in mind, the Trade Policy Bureau is moving strategically to take the initiative in trade negotiations and the evolution of other international frameworks.

>	External economic policy utilizing multiple fora levels

In the past, Japan has based its external economic policy on rule-making in the WTO and other multinational frameworks. However, given the numerous regional trade agreements being concluded around the world today, we have positioned generally more flexible free trade agreements (FTA) as mutually complementary to WTO initiatives and have actively worked toward their conclusion. We have utilized regional and bilateral fora to supplement these multilateral efforts.

METI Minister Shoichi Nakagawa at a meeting with Indonesia's commerce minister, Mari E. Pangetsu

Strengthening regional partnerships and integration
In addition to efforts within the WTO framework, the use of economic partnership agreements on further trade and investment liberalization and facilitation, harmonization of economic systems and a wide range of other measures will open the way not only for the reduction of border barriers but also for timely efforts toward the harmonization of domestic systems.
In September last year, following the 2002 agreement entered into with Singapore, Japan signed an economic partnership agreement with Mexico that includes comprehensive tariff abolition or reduction in order to eliminate the various disadvantages experienced by Japanese companies due to the nonexistence of an FTA between the two countries. Spurred by a broad agreement reached with the Philippines at the end of November last year, METI will energetically continue promoting such economic partnerships, principally with East Asian countries that have close economic interdependence with Japan. We are currently conducting talks with Thailand, Malaysia and South Korea, and in the coming April, we will extend these talks to the whole of ASEAN.

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Development of a global business environment through the establishment of new multilateral trade-related rules

METI Minister Nakagawa meets German Chancellor Gerhard Schroder

-- Launching a new WTO round --
As a trading nation that significantly benefits from a multilateral trade system, we will aggressively promote the negotiations pushed forward by the 148 large and small member countries of the WTO to maintain and strengthen a multilateral trade system, as one of the two driving forces that keep our external economic policies moving forward, along with economic partnerships. In the general council meeting held in Geneva in July last year, conflicts of interest among member countries at different stages of economic development were overcome, and the members reached the July Package as a breakthrough for the negotiations which had been derailed at the Cancun Ministerial Meeting. We intend to continue negotiations to promote global economic development and contribute to the integration of developing countries into the world economy through improvement of trade disciplines such as prevention of abuse of Anti-Dumping measures and market access through tariff reduction.

Strengthening East Asia Economic Partnership
-- Toward economic cooperation in East Asia --
In recent years, an increasing quantity of goods, money and people have been moving across borders, particularly in the East Asian region. This situation is causing businesses to intensify or upgrade their international division of labor and networks for that purpose, making the region an area of dynamic growth and development. In keeping with such deepening relationships between the region and Japanese businesses in the real economy, it has become important for Japan to create an open and free intraregional economic and trade system to induce a virtuous growth cycle in the whole region and to vitalize the Japanese economy. Aspiring to the realization of an East Asian community that "acts together and advances together" as put forth by Prime Minister Junichiro Koizumi, we will continue to contribute to the stability and development of the East Asian region including addressing the East Asian Economic Partnership now being studied by ASEAN+3 and other organizations.