By: Isabel Reynolds and Maiko Takahashi, Bloomberg
Japan and Australia reached broad agreement on bilateral trade after seven years of wrangling, in a pact that will lower or eliminate tariffs on everything from cars to canned tomatoes.
The terms of the agreement will see tariffs on frozen Australian beef eventually cut to 19.5 percent from 38.5 percent and those on Japanese cars, household appliances and electronics abolished, according to a statement from Prime Minister Tony Abbott’s office issued after he met with counterpart Shinzo Abe in Tokyo. Two-way trade between the nations in the 12 months to June 30 reached $64.1 billion.
"We have a deep, shared commitment to the universal aspirations of democracy, freedom and the rule of law," Abbott said after meeting with Abe. "The relationship between Australia and Japan is about much more than economics and trade and growing wealthy together. It’s about respect, it’s about values. That’s why this is such a very strong partnership."
Abbott, 56, is visiting Tokyo during his first North Asian trip since coming to power seven months ago. He is seeking to deepen trade and security ties with Japan while not damaging relations with China, Australia’s biggest trading partner. Japan, China and South Korea, which Abbott will also visit, buy more of Australia’s iron ore, coal and other exports than the rest of its customers combined.
The agreement is a "major windfall" for Australian beef, the country’s biggest agricultural export to Japan, Abbott’s office said in the statement. Cheese exporters will gain "significant new duty-free access" and tariffs on canned products such as tomatoes, peaches and pears, plus fruit and vegetable juices, will be removed, according to the statement.
The trade deal with Japan could help spur progress on the U.S.-led Trans-Pacific Partnership to link the economies of 12 countries around the Pacific.
The agreement "with Australia will probably proceed ahead of TPP, so there will be a gap in tariffs between Australian beef and U.S. beef," said Japan’s Ambassador to the TPP talks, Hiroshi Oe. "That will be very difficult for the U.S. beef industry. I think it would be good if that became an incentive for reaching an early agreement."
Trade talks between Australia and Japan began in 2007, during Abe’s first term in office. Abbott has touted Japan as Australia’s "closest friend in Asia" and has pledged to strengthen defense ties at a time when China is flexing its military muscle in the region and Sino-Japanese ties have frayed.