In a major shift of trade strategy, Japan is moving toward concluding bilateral and regional free-trade agreements. In January of this year the nation signed its first FTA with Singapore. Now it is negotiating a similar arrangement with Mexico. And looming over the horizon are FTAs with South Korea and the Association of Southeast Asian Nations.
Since the end of World War II, Japan has achieved economic prosperity under the multilateral free trade system represented formerly by the General Agreement on Tariffs and Trade, or GATT, and now by the World Trade Organization. Other nations, however, have been pushing liberalization in trade, investment and other areas under regional FTAs. The North American Free Trade Agreement (the U.S., Canada and Mexico) and the 15-member European Union are notable examples.
Japan's emphasis on FTAs stems from the realization that promoting trade strictly within the WTO's multilateral framework -- without recourse to bilateral or regional agreements -- will not serve national interests in the long run. In this sense, FTAs represent a major shift in Japan's traditional economic diplomacy and trade strategy.