The free-trade agreement between Japan and Mexico due to be signed this week in Mexico City will be a landmark treaty benefiting both sides, according to the Mexican ambassador.
“This treaty is a very important and a historic agreement for the bilateral relationship between Mexico and Japan, because with this treaty we will institutionalize our economic relations for the coming decades,” Miguel Ruiz-Cabanas said in a recent interview.
“Japan and Mexico have always enjoyed a very special bilateral relationship,” Ruiz-Cabanas said. Mexico, in 1888, became the first country that allowed Japan to sign a treaty of amity and trade, Japan’s first reciprocal and equal pact with any other country.
Prime Minister Junichiro Koizumi will visit the Mexican capital Friday and sign the FTA with President Vicente Fox. The arrangement will take effect sometime next year.
It will be the second FTA for Japan, following one sealed with Singapore in January 2002. But it will be the first comprehensive free-trade pact covering the agricultural sector, a politically sensitive area for Japan.
Mexico has a number of FTAs, encompassing 32 countries. Japan is the first country in Asia with which Mexico opted to sign an FTA.
It seems Mexico has no plan to seek another partner in Asia for an FTA in the near future.
“The characteristics of the Japanese economy and our historical relationship with Japan made it the only candidate, at least for the time being,” Ruiz-Cabanas said.
Under the FTA, Japan will give Mexico pork and orange juice import quotas to which tariff rates at the current level will be applied. It will also give Mexico no-tariff quotas for oranges, chicken and beef.
As for Mexico, it will give Japanese automakers and steelmakers more access by completely abolishing tariffs in seven years for automobiles and within 10 years for steel products.
Mexico will also give Japanese companies equal treatment with EU companies in government procurement and investment liberalization.
Ruiz-Cabanas said both Japan and Mexico will enjoy the fruits of the FTA.
Japanese companies will take advantage of the treaty because they will be given the same treatment that other foreign companies enjoy in the Mexican market, Ruiz-Cabanas said.
“Because Japan did not have a treaty with Mexico, Japanese companies have been left out,” he said. “A lot of opportunities for exports to Mexico were missed.”
Mexico will also be able to boost exports to Japan by establishing joint ventures with Japanese companies and promoting Mexican products on the Japanese market, the ambassador said.
“There are many people enthusiastic about selling products from the agricultural sector to Japan. One of the significant aspects of this treaty is that for the first time, Japan has decided to open its agricultural sector,” he said.
“For Japan, I believe it is an important step in terms of long-term restructuring of the economy.”
With gross domestic product of $637.2 billion in 2003 — which is bigger than the combined GDP of the Association of Southeast Asian Nations — the Mexican economy is the 10th largest in the world.
“It is a big economy and a big market,” Ruiz-Cabanas said.
He said Mexico is “satisfied” with the contents of the FTA, describing it as “balanced.”
Regarding the bumpy negotiations between the two countries, which took nearly two years since the start of October 2002, Ruiz-Cabanas said it is natural for trade negotiations to take considerable time.
“It was not surprising that it took two years to negotiate this treaty with Japan,” he said.
The important thing is to produce a treaty that is “acceptable and politically and economically beneficial for both sides,” he said. “In this sense, we are very happy that the treaty will be signed soon.”
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