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Australia - Japan FTA study heralds new level of economic cooperation.



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Media release

Wednesday, 20 April 2005 - MVT32/2005

Australia-Japan FTA Study Heralds New Level of Economic Cooperation

Trade Minister Mark Vaile today welcomed the announcement by Prime Minister John Howard and Japanese Prime Minister Junichiro Koizumi that Australia and Japan will undertake a study on the feasibility of a free trade agreement (FTA).

"This feasibility study is great news for Australia. Japan is by far our largest export destination, so this is an excellent opportunity for us to elevate our bilateral relationship and explore ways to deepen our economic linkages, Mr Vaile said.

"The decision to pursue a study with Japan

demonstrates the importance the Government places on securing our future in a competitive global marketplace and further strengthening relationships with our key trading partners in the Asia-Pacific region. Australia is also undertaking FTA negotiations with China, Malaysia, ASEAN and the United Arab Emirates," Mr Vaile said.

"The study will provide an analysis of the advantages and disadvantages of an FTA for both countries, which will then enable us to make a considered decision on how to proceed.

"I know that a possible FTA with Australia causes concern in some sectors in Japan, but the study is a move forward and my personal view is that an Australia-Japan FTA is not unrealistic.

The two way trade between Australia and Japan is valued at $44.3 billion. Australian exports to Japan were worth a staggering $25.6 billion in 2004.

Australia supplies 60 per cent of Japan's coal and iron ore and 13 per cent of its LNG

requirements. Australia currently provides 91 per cent of Japan's beef imports. Japan is the third largest foreign investor in Australia and the second largest source of inbound tourism.

Today's announcement followed the release of a Joint Study into trade and investment liberalisation between Australia and Japan, undertaken as part of the Trade and Economic Framework (TEF) signed in July 2003.

"The TEF Joint Study into liberalisation with Japan found that Australia's GDP would be boosted by 0.7 per cent which, over 20 years, translates to A$39 billion in present value terms.

"Japan too would gain significantly over this period, achieving an additional A$27 billion in economic growth and $68 billion in consumption," Mr Vaile said.

Media Contact: Carissa Buckland 02 6277 7420