TOKYO (Kyodo) - A task force set up under a key governmental economic panel on Tuesday
urged Japan to study the possibility of signing a free trade agreement (FTA) with the United States and the European Union, so as not to be put at a disadvantageous position in global competition.
The task force on reforms needed for globalization said in its first report that Japan and the U.S. should launch a joint FTA study group at an early date, and that Tokyo should immediately prepare for work on an FTA with the EU, in view of recent developments between South Korea and the two major economies.
The eight-member group headed by Takatoshi Ito, a professor in the University of Tokyo Graduate School of Economics, was set up last December under the Council on Economic and Fiscal Policy, which is chaired by Prime Minister Shinzo Abe.
The report warned that Japanese manufacturers of items such as vehicles and flat-panel televisions could suffer if the country is ''left out in global trends of FTA networking.'' South Korea, which is Japan's main rival exporter of autos and electronic appliances, struck an FTA deal with the U.S. in early April. Seoul also started FTA talks with the European Union on Monday.
An FTA between two countries eliminates tariffs, quotas and other trade barriers on most, if not all, goods between them.
Washington otherwise imposes 2.5 percent tariffs on certain types of vehicles and 5 percent duties on flat-panel televisions, while the EU levies 10 percent tariffs on automobiles and 14 percent duties on flat-panel TVs.
The report also underlined the need to study ways to strengthen Japan's farm sector, as the U.S. is a major exporter of items such as rice, wheat and pork, which are heavily protected in Japan due to their political sensitivity.
As for the envisioned Japan-U.S. FTA, the document pointed out that the combined gross domestic product of Japan and the United States amounts to about 40 percent of the world's GDP and that a free trade pact between the two could affect the multilateral trade system under the World Trade Organization.
However, the paper also introduced task force members' opinion that an FTA between the world's two big economies could have positive influence on the stalled WTO global trade liberalization talks.
The report said efforts to reach a deal at the WTO will culminate around early summer this year and urged Japan to contribute to the completion of multilateral trade negotiations at an early date.
The paper also stressed the need to reform Japan's farm sector to seal FTAs with major farm exporters including Australia and the United States.
Referring to aging of Japanese farmers and an increase in abandoned farmland in the country, the task force called on the government to facilitate the entry of new players in the agricultural sector, such as private-sector companies, to rationalize farming and enhance productivity.
The group also sought preferential tax treatment for farmland transfers from small-scale farmers to stock companies in a bid to foster competitive farming enterprises that operate larger fields. As an example, the task force said the government should allow farmers to acquire shares from companies which purchase their farmland.
