Staff writer Japan should keep its commitment to trade liberalization under the World Trade Organization, but this must not prevent it from seeking free-trade agreements with its trading partners, according to Noboru Hatakeyama, chairman of the Japan External Trade Organization. Earlier this month, Japan agreed with Singapore to launch a joint study on a bilateral free-trade pact, the first such a move by Japan, which has long advocated a multilateral approach. The decision, coming shortly after the failed WTO ministerial talks in Seattle, however, should not be deemed "exclusionary," said Hatakeyama, formerly the nation's top trade negotiator. Instead, he said, it is more reflective of global trends, pointing to the growth of regional trade blocs. "With or without the failure of the WTO Seattle summit, I have repeatedly said that Japan must seek a bilateral free-trade pact to avoid lapsing into isolation," Hatakeyama said in a recent interview. "This doesn't mean denial of the multilateral framework under the WTO. All I'm saying is that we should consider both bilateral and multilateral frameworks as parallel concepts (that can complement each other)." Some trade officials are voicing concern that the recent decision to seek a bilateral deal with Singapore may invoke the unintended impression among other trading partners that Japan is now leaning toward a narrower framework of free trade. Indeed, Japan has long held the view that bilateral arrangements run counter to the fundamental spirit of the General Agreement on Tariffs and Trade, the WTO's predecessor, which stipulates in its Article 1 that world trade should be liberalized in an open and nondiscriminatory manner. "We used to say we'd stick to that principle even if Japan was invited into some free-trade arrangements," Hatakeyama acknowledged. As vice minister for international affairs at the Ministry of International Trade and Industry between 1991 and 1993, he played a key role in the final stages of the Uruguay round of global trade liberalization talks under GATT. Asked why that rigid stance has been eased, he said Japan alone cannot afford to wait for the slow progress of the multilateral liberalization efforts. As it is, many of Japan's trading partners have been forming regional blocs. The temporary breakdown in the Uruguay Round, following the failed ministerial talks in Brussels in December 1990, spurred momentum for a more manageable free-trade agreement, Hatakeyama said. "All too soon, there emerged free-trade zones, such as the North American Free Trade Agreement and the ASEAN Free Trade Area," he said. "Along with China, South Korea and Taiwan, Japan is the only major economy left behind today."GATT's Article 24 allows for free-trade agreements, provided that such arrangements do not become barriers against outsiders and that a substantially broad range of sectors are subject to the elimination of customs or other liberalization measures. Thus, he said Japan, whose tariffs on industrial products are among the lowest in the world, can team up with just about any trade partner. Having said that, however, he added, it may be wise for Japan to start with nonagricultural countries, given the "cautious domestic stance" on cheap agricultural imports. Apart from Singapore, Japan is now holding working-level talks with South Korea and Mexico toward creating bilateral investment pacts. The nation's business community and other nongovernmental institutions are also studying the possibility of free-trade arrangements with those two nations. But how will these efforts complement global trade liberalization? "Ideally, world trade should be liberalized through multinational agreements. But it takes too much time for the 135 WTO members to reach an agreement in reality," Hatakeyama said. "If two or three of those countries boost free trade among themselves by concluding an agreement, it will help increase the degree of liberalization in the world as a whole." When those free-trade areas link up to facilitate cross-regional free trade, he said, it would further complement liberalization efforts under the WTO. As prime examples of such movement, Hatakeyama cites an agreement in October between the 10 member states of the Association of Southeast Asian Nations and Australia and New Zealand to explore the possibility of integrating AFTA and the Closer Economic Relationship Treaty formed by the two Oceanic countries. Referring to the WTO Seattle meeting, which failed to launch the new round, he said, antitrade liberalization feelings are building up in both developing and developed countries. "Such a sense of backlash will undermine the world economy and run counter to Japan's interests," Hatakeyama said. With Japan's tariffs on industrial goods averaging 1.5 percent, the nation's industrial sector has been exposed to fierce competition, thereby generating a number of globally competitive players. Today, he said, Japan cannot afford to relax globalization efforts to rebuild its financial sector, to which exposure to greater competition is crucial. As for future development on the WTO talks, Hatakeyama voiced strong concerns over possible interference by antiliberalization activists, such as those belonging to the AFL-CIO. "They first succeeded in skewing negotiations (of the Organization of Economic Cooperation and Development) on MAI (multilateral agreement on investment) and then the launch of the new WTO round in Seattle," Hatakeyama said. With the administration of President Bill Clinton deprived of the fast-track initiative in endorsing trade pacts with other governments, he said, "They must now want to prevent (Congress) from endorsing the agreement between Washington and Beijing on China's accession to the WTO." Under such circumstances, Hatakeyama said Japan must step up joint efforts with the European Union to pursue a broad-based agenda, including the problem of antidumping proceedings, in launching the new WTO round.
