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Japan proposes 16-nation free trade area

Toshihiro Nikai, Japan’s economy, trade and industry minister, made the proposal to trade ministers from the Association of Southeast Asian Nations (ASEAN) for the setting up of a study on the viability of the ambitious partnership.

“If we are able to create an amicable grouping ... it will be to the benefit of all countries in the region,” Nikai told reporters in Malaysia’s capital Kuala Lumpur after the meeting with his ASEAN counterparts.

The proposed zone has a combined population of 3.1 billion people and gross domestic product of more than 9 trillion dollars, he said.

The ministers supported Japan’s proposal to set up the study group, but urged Tokyo to place emphasis on completing its free trade negotiations with ASEAN, said Malaysian Trade Minister Rafidah Aziz.

“Once all the trade policies are in order, then we can look to see how we can put in place the bigger ones,” Rafidah told reporters in a joint media conference with Nikai.

Nikai reiterated Japan’s commitment to its discussions with ASEAN, adding that the government intended to “give maximum effort to achieve” the conclusion of free trade agreements.

“The main challenge is how to make compatible, the regional agreements with the bilateral agreements,” he said, referring to existing trade agreements between Japan and individual ASEAN member countries.

Total trade between Japan and ASEAN was 54.6 billion dollars last year, an increase of 7.9 per cent from 2004.

Foreign direct investments from Japan into the region also increased from 3.12 billion dollars in 2004, to 3.16 billion dollars last year. Japan is ASEAN’s third largest source of foreign investments.