Japan, India broadly agree to form free trade accord.

Japan and India broadly agreed Thursday to form a bilateral free trade deal that would eliminate tariffs on 94 percent of trade between the two Asian powerhouses in 10 years, Foreign Minister Katsuya Okada said.

Following negotiations that started in 2007, the two countries hope to ink the agreement during the planned visit to Japan by Indian Prime Minister Manmohan Singh in late October. If concluded, the accord will be the 12th such trade deal for Japan.

With the arrangement, Japan wants to spur its economic growth through increased exports of cars and auto parts to India, a market that has a population of 1.2 billion people -- the second largest after China -- but accounts for less than 1 percent of Japan's total trade in value terms.

Japan also hopes to gain momentum in making headway in FTA negotiations with other countries, although Japan's heavily protected farm sector is often considered to be a major stumbling block in such talks.

Okada welcomed the outcome of the sub-Cabinet-level talks in Tokyo, telling reporters he hopes the free trade agreement will contribute to enhancing the two countries' economic ties "dramatically."

"I won't be surprised if the amount of trade increases tenfold. This isn't an exaggeration, considering the economic scales of India and Japan, and compared with (the trade between) Japan and China," he said.

Under the broad agreement, the two countries will scrap tariffs on goods that account for 94 percent of two-way trade flows in 10 years after the deal goes into effect.

About 90 percent of exports to India, including Japan's key export items such as vehicle parts, and 97 percent of imports from India will become tax-free in the 10-year period, an official at the Japanese Economy, Trade and Industry said.

As for India's call on Japan to simplify the approval procedures for the sale of generic drugs, the official said that he cannot talk about the specifics because there are still points of adjustments but indicated that the two countries saw some consensus on the matter.

The Japanese Agriculture, Forestry and Fisheries Ministry announced that sensitive agricultural import items such as rice and beef were excluded from tariff elimination.

Japan has apparently been rushing to complete the negotiations with India as it is lagging behind South Korea, which has already sealed an FTA with India.

South Korea has also signed an FTA with the United States, although it has yet to take effect, and initialed another with the European Union. But Japan is not even able to commence FTA negotiations with such major trade partners.

Okada said the Democratic Party of Japan-led government has especially focused on promoting free trade, and that it wants to make headway in negotiations with other countries as well.

The FTA with India would be the first such deal since the DPJ-centered coalition wrested power from the long-ruling Liberal Democratic Party in September last year.

Japan is now holding FTA negotiations with such countries as Australia and Peru, while it is not yet able to resume the suspended negotiations with South Korea.

An FTA aims chiefly to remove tariffs on goods and trade barriers for services, but also covers areas such as intellectual property rights and facilitation of human exchange.

The participants of the sub-Cabinet-level meeting in Tokyo included Yoichi Otabe, Japanese deputy foreign minister in charge of economic affairs, and Indian Commerce Secretary Rahul Khullar.

Source : mdn.mainichi.jp