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Viewing cable 06TOKYO1084, Japan Sees U.S.-Korea FTA As Positive

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Reference ID Created Released Classification Origin
06TOKYO1084 2006-03-01 06:02 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Tokyo
VZCZCXYZ0002
RR RUEHWEB

DE RUEHKO #1084 0600602
ZNR UUUUU ZZH
R 010602Z MAR 06
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC 9186
INFO RUEHUL/AMEMBASSY SEOUL 7045
RUEHBJ/AMEMBASSY BEIJING 0850
RUEHBK/AMEMBASSY BANGKOK 3459
RUEHGP/AMEMBASSY SINGAPORE 6520
RUEHML/AMEMBASSY MANILA 0612
RUEHKL/AMEMBASSY KUALA LUMPUR 1627
RUEHHI/AMEMBASSY HANOI 0879
RUEHJA/AMEMBASSY JAKARTA 4059
RUCPDOC/USDOC WASHDC
UNCLAS TOKYO 001084 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT PASS USTR FOR AUSTRS CUTLER AND STRATFORD 
 
USDOC FOR ITA-DAS LEVINE AND OFFICE OF JAPAN/NMELCHER 
 
E.O. 12958:  N/A 
TAGS: ETRD ECON PREL JA KS CH
SUBJECT:  Japan Sees U.S.-Korea FTA As Positive 
Influence on Regional Trade Talks 
 
REF:  Tokyo 1010 
 
1.  (SBU)  Summary:  Although Japanese business circles 
believe a U.S.-Korea free trade agreement (FTA) is 
unlikely to produce much liberalization in sectors of 
greatest interest to Japan, the Japanese government 
sees the negotiations between Korea and the United 
States as a possible catalyst for restarting Japan's 
own moribund discussions with Seoul.  According to a 
senior official of Japan's Ministry of Economy, Trade, 
and Industry (METI), a successful U.S.-Korea FTA could 
serve as an alternate model to the less substantive 
agreements China has promoted in the region.  The 
official suggested that an update on efforts by both 
the United States and Japan to pursue FTAs be an agenda 
item for the next U.S.-Japan sub-cabinet dialogue.  End 
summary. 
 
2.  (SBU)  The Japanese Government has a strong 
interest in the progress of U.S.-Korea FTA negotiations 
(i.e. timeline, substance, etc.), METI Trade Policy 
Bureau Director-General Toshiaki Kitamura told EMIN in 
a meeting February 24.  (Reftel reports Kitamura's read- 
out of the visit to China by METI Minister Nikai.)  In 
contrast, however, the Japanese business sector has 
shown little interest in the proposed U.S.-Korea FTA. 
The main reason, Kitamura thought, was that Japan's 
business leaders assume that even the US will not be 
able to conclude the agreement easily because the 
Koreans are very tough negotiators.  The business 
community doubts that the two sides will reach a 
comprehensive free trade agreement that liberalizes 
trade in key sectors of interest to Japanese companies 
and underestimates the potential impact on key Japanese 
industries like automobiles and machinery as well as on 
investment.  Kitamura himself, however, believed the 
U.S.-Korea FTA would be comprehensive and have a strong 
impact on Japanese industries. 
 
3.  (SBU)  Kitamura said that an ambitious U.S.-Korea 
FTA could stimulate Japan's own "economic partnership 
agreement" (EPA) negotiations with Korea because both 
sets of negotiations would be conducted along similar 
timelines -- provided that Japan and Korea could resume 
EPA negotiations shortly.  Kitamura even suggested 
that, if both the United States and Japan conclude FTAs 
with Korea, the three nations ought to subsequently 
consider a "triangular" FTA.  According to Kitamura, 
this arrangement could serve as a counterweight to 
Chinese efforts to serve as the "hub" for a system of 
bilateral FTAs in East Asia. 
 
4.  (SBU)  Kitamura explained that FTA/EPA negotiations 
between ASEAN-China, ASEAN-Korea and ASEAN-Japan should 
be completed in 2007 if all goes smoothly. (In 
particular, he said the ASEAN-Japan EPA negotiation 
should be finalized by March 2007.)  Kitamura expected 
that China would endeavor to take the initiative to 
promote its own standards for FTAs as a model for other 
agreements in the region.  In considering how Japan and 
the United States could react to such a situation, 
Kitamura indicated that the U.S.-Korea FTA could be a 
foundation for the strategic counterbalance to China's 
efforts. 
 
5.  (SBU)  Kitamura stressed the importance of 
strengthening bilateral transparency measures to share 
information regarding FTA/EPA negotiations each side 
has been conducting.  He thought this would make an 
excellent topic to discuss at the next U.S.-Japan sub- 
cabinet meeting. 
 
Schieffer