Australia and Japan are reportedly set to finalise a free trade agreement (FTA) by July this year, in accordance with the Abbott government’s policy of promoting free trade which has recently seen the agreement of the Australia-Korea FTA and a push to conclude the regional Trans Pacific Partnership. It is understood that Prime Minister Tony Abbott will look to conclude discussions on the Australia-Japan FTA when he travels to Japan in April.
The Australia-Japan FTA has been under negotiation since April 2007, and is intended to liberalise trade in goods, food and services between the two nations to increase economic growth, trade, investment and employment in both countries. Both countries stand to benefit significantly from a concluded FTA, given that Japan is Australia’s second-largest export market and third-largest source of foreign investment, and Australia is Japan’s tenth-largest export market, and third-largest source of imports. A feasibility study undertaken in 2006 prior to the commencement of negotiations estimated that:
- Australia would likely gain at least A$39 billion in GDP and Australian consumers would be A$19 billion better off; and
- Japan would gain at least A$27 billion in GDP and Japanese consumers would be A$68 billion better off,
over 20 years, as a result of a concluded FTA. Further details of the anticipated benefits of the FTA are available1.
It is expected that the Australia-Japan agreement will be at least as comprehensive as the recently agreed FTA between Australia and Korea and thus is likely to result in the reduction or elimination of tariffs across agriculture, services, energy and minerals and manufacturing sectors and to include investor-state dispute settlement provisions.
Please also refer to our earlier article on Australia’s FTA negotiations2.