Business

Japan, Chile agree on FTA framework

Japan and Chile have produced a framework free-trade accord that will abolish tariffs on 92 percent of both countries’ exports over 10 years, settling negotiations in principle just seven months after they were launched, the government announced Friday.

The two countries struck the basic agreement during two days of high-level talks that began Sept. 13, following four rounds of formal negotiations started in February.

Tokyo and Santiago will now translate the accord into legal documents and they expect it to take effect early next year, Japanese officials said.

The FTA with Chile will “provide a comprehensive framework not only for closer and more stable bilateral trade and economic relations in the mid- to long terms, which will serve to ensure the stable supply of natural resources indispensable for Japan, and also to further strengthen the partnership,” Prime Minister Junichiro Koizumi said in a statement.

He said Tokyo is fully committed to concluding the pact at an early date.

Chile is the sixth country Japan has reached a basic FTA with, following Singapore, Mexico, Malaysia, the Philippines and Thailand. Tokyo has FTAs with the first three and recently signed one with Manila.

The Latin American nation has concluded FTAs with more than 40 economies including the United States, the European Union and South Korea. It has also signed an FTA with China.

Japan reached the basic accord with Chile much quicker than it did with the other FTA partners, because both parties were familiar with the negotiation process, the officials said.

Under the FTA, 99.8 percent of Japan’s export value will be tariff-free, while 90.5 percent of Chilean shipments to Japan will be exempt from duties within 10 years of the pact’s entry into force.

Santiago will immediately do away with its 6 percent tariffs on Japanese vehicles, machinery and electric appliances as well as farm items, including green tea, soy sauce, sake, persimmons and yams.

Tokyo will remove a 3 percent tariff on Chilean purified copper and 3.5 percent duties on salmon in stages over 10 years. It will also get rid of an average 17.6 percent tariff on bottled Chilean wine over 12 years, they said. The Latin American nation is the largest copper provider to Japan.

Chilean salmon accounts for half of Japan’s total import of the fish, or about 25 percent of its overall consumption in the country, while wine from the Latin American economy is sixth in market share in Japan among foreign brands, the officials said.

Japan will also establish low-tariff import quotas for five years for Chilean beef, pork and chicken to facilitate the South American nation’s farm exports.