Negotiations toward the Agreement between Japan and the Republic of Chile for a Strategic Economic Partnership (the Japan-Chile EPA) began in February 2006. An agreement in principle was reached in September, and on 27 March 2007, the EPA was signed in Tokyo by Chilean Foreign Minister Alejandro Foxley and Japanese Foreign Minister Taro Aso. This is the fifth EPA that Japan has signed, following agreements with Singapore, Mexico, Malaysia and the Philippines.
2. Significance of Japan-Chile EPA conclusion
The conclusion of this EPA is significant on three counts.
First, the EPA will improve conditions for Japanese firms in their trade with and investment in Chile. Chile has already concluded free trade agreements (FTAs) with more than 40 counties, including the US, the EU, China and Korea, with Japanese firms consequently operating under inferior conditions to firms from these countries. Conclusion of the Japan-Chile EPA will inter alia liberalize trade in goods and services and strengthen investment protection, securing for Japanese firms the same competitive conditions as enjoyed by other countries' firms.
Second, the EPA will ensure a stable supply of copper and other mineral resources. Japan already imports mineral resources such as copper and molybdenum from Chile, but conclusion of this EPA will generate closer bilateral relations with Chile and provide greater legal stability for Japanese firmsf investment in Chilean mines, helping to secure a stable supply of mineral resources to Japan.
Third, the EPA will secure a business foothold from which to move into South America. Chilefs success in political democratization and economic modernization position it as a model South American state, and Chile has also formed a free trade network with the other South American countries. Utilization of this EPA will enable Japanese firms to actively expand their business operations into the South American market using Chile as a base.
3. Main points of the Japan-Chile EPA
The main points of the EPA are as follows.
Looking first at industrial goods in the context of market access of trade in goods, Chile agreed to eliminate tariffs on automobiles, which are Japanfs biggest export to Chile, as well as on machinery and electronics/electrical equipments, immediately on the entry into force of the EPA. Japan agreed to progressively eliminate tariffs on refined copper, a product that Chile is interested in exporting.
In the area of agricultural, fishing and forestry products, Japan agreed to gradually phase out tariffs on silver salmon and trout and bottled wine, and to set tariff quotas for beef and pork, etc.
These steps will remove tariffs on 99.8 percent of Japanfs exports to Chile and 90.5 of Japanfs imports from Chile, or around 92.0 percent of total trade between Japan and Chile, within 10 years.
As for liberalizing trade in services, Japan and Chile agreed in principle to accord the otherfs service suppliers most-favored-nation treatment and national treatment, and not to require the otherfs service suppliers to establish a local presence.
For investment, it was agreed that each party shall in principle accord to the other partyfs investors most-favored-nation treatment and national treatment; that neither party may impose performance requirements; and that dispute settlement procedures between the partyfs investors and the other party shall be established.
For intellectual property, it was agreed that the parties shall ensure adequate, effective and non-discriminatory protection; streamline administrative procedures; ensure systemic transparency; and institute measures for the exercise of intellectual property rights in cases of, for example, intellectual property rights infringements, etc.
On improvement of the business environment, it was agreed to establish a Committee on Improvement of Business Environment to promote trade and investment activities between Japan and Chile. The Committee shall comprise government officials from both parties, with private-sector representatives also able to participate.
As a comprehensive agreement, the EPA also covers financial services, the entry and temporary stay of nationals for business purposes, sanitary and phytosanitary measures, technical regulations, standards and conformity assessment procedures, government procurement, customs procedures, and competition.
The Japan-Chile EPA should further enhance mutually complementary economic relations between the two countries, and we hope for the early entry into force of this comprehensive agreement to enable the peoples of both countries to enjoy its benefits as soon as possible.
Institute for International Studies and Training (IIST)
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