Japan-Asean trade deal takes effect

Japan-Asean trade deal takes effect

A revised free trade pact between Japan and the Association of Southeast Asian Nations facilitating the cross-border flow of services and investment entered into force on Saturday.
A revised free trade pact between Japan and the Association of Southeast Asian Nations facilitating the cross-border flow of services and investment entered into force on Saturday.

A revised free trade pact between Japan and Asean facilitating the cross-border flow of services and investment entered into force on Saturday.

The deal took effect for Japan and five Asean members — Laos, Myanmar, Singapore, Thailand and Vietnam. The five remaining members — Brunei, Cambodia, Indonesia, Malaysia and the Philippines — are set to join once they conclude domestic procedures.

Asean as a whole is Japan's second-largest trade partner after China, with exports to the bloc totaling 12.6 trillion yen ($120 billion) in 2018 and imports at 12.4 trillion yen, according to Finance Ministry data.

It is a major market for Japanese firms as well as a key link in supply chains, with many companies setting up factories in the region to take advantage of cheaper labor.

The original economic partnership agreement with Asean took effect in 2008, becoming Japan's first multilateral free trade pact. It was focused on eliminating tariffs on goods but provided for further negotiations on services and investment.

Those negotiations began in 2010, with a consensus reached at the ministerial level in 2017.

Under the revised pact, the countries are required to maintain transparency in regulating services and not discriminate against foreign investors.

It also establishes a dispute settlement mechanism for companies to sue a government for unfair treatment, as well as rules for foreign travelers to enter and stay in the other countries.

The rules are especially important for Cambodia, Laos and Myanmar, none of which have bilateral trade deals with Japan.

Since signing the deal with Asean in 2008, Japan has pushed forward with other multilateral free trade pacts such as the revised 11-member Trans-Pacific Partnership and an economic partnership agreement with the European Union.

Japan is also involved in negotiations for the Regional Comprehensive Economic Partnership, a free trade pact that would encompass Asean along with other countries including China, South Korea, Australia and New Zealand.

Negotiations on the deal, known as RCEP, are due to wrap up within the year, though the withdrawal of India has caused some uncertainty.


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