Tariffs on pork, chicken and orange juice imports from Mexico were slashed, and those on mangoes and avocados were abolished altogether as Japan's first comprehensive free-trade agreement took effect Friday.
Japanese car, steel and electronics makers are eyeing Mexico's market of 105 million people, with some, including electronics producer Kyocera Corp., already shifting production there.
The FTA erases Mexican tariffs on steel plates, and 5 percent of Japanese car sales in Mexico will be tariff-free, while a 50 percent tariff on imported vehicles will be phased out and scrapped in 2011.
Mexican Economy Minister Fernando Canales said Friday in Tokyo that the FTA would boost exports to Japan by 20 percent to $2.5 billion in the first year and create 43,000 Mexican jobs per year for 10 years.
"Mexican pork is not fully understood by Japanese consumers," Victor Garcia, director general of Carnes Genpro, S.A., said during an earlier visit to Japan to promote Mexican meat. "The FTA gives us a chance to prove ourselves."
Analysts say the FTA could boost Japan's exports by 400 billion yen per year. By shifting production to Mexico, Japanese firms would be able to ship products to the United States and Canada tariff-free through the North American Free Trade Agreement, they say.
The FTA phases out tariffs on 90 percent of goods within 10 years, when 98 percent of Japanese exports and 87 percent of Mexican imports will become duty-free.
"It's true we wanted more concessions on farm goods, but we also understood the economic and social sensitivity of the issues involved," Canales said. "The FTA is not merely about abolishing tariffs; it develops markets and further cooperation between the two countries."