Japan and India sign free trade pact
Japan and India signed a free trade agreement on Wednesday amid a push by Japan to revive its weak economy by lowering barriers to trade and deepening its economic ties with the fast-growing nations of emerging Asia.
The economic partnership agreement, signed by Japanese Foreign Minister Seiji Maehara and Indian Commerce Minister Anand Sharma on Wednesday, will slash tariffs on goods from DVD players to shrimp and lumber, and introduces measures to promote investment and deal with intellectual property rights.
Forging this kind of pact is increasingly a priority for Japan, which sees itself falling behind regional rival South Korea in the area of free trade agreements. With Japan's population shrinking and its economic stuck in a two-decade slump, Prime Minister Naoto Kan has declared that Japan needs to ``open up'' to revive its prospects.
Sharma called the agreement ``historic and significant,'' highlighting how emerging economies such as India and China ``are helping reshape the new global architecture.''
The pact still needs ratification by Japan's parliament to come into force, but India does not require approval of its legislative body.
Despite the size of their economies, Japan and India have limited trade, totaling 1.267 trillion yen, or about $15 billion, in 2010, just 1 per cent of Japan's global trade. By comparison, Japan's annual trade with China exceeds 26.4 trillion yen, or $317 billion.
Under the agreement, within 10 years, Japan will remove tariffs on 97 per cent of Indian imports, with India eliminating tariffs on 90 per cent of goods imported from Japan.
Japan will allow greater market access on most products in the industrial sector, as well as agricultural products such as curry, tea leaves, lumber and shrimp.
India in turn will cut tariffs on Japanese imports ranging from car mufflers and steel sheets to DVD players and video cameras, as well as peaches, strawberries and Japanese yams.