While India and Japan are engaged in talks to create a Comprehensive Economic Partnership Agreement (CEPA) in goods and services, Japan is increasingly looking at India as a strategic partner for creating an East Asian Community, said Tetsuya Watanabe, Director, Asia and Pacific Division, Trade Policy Bureau, Ministry of Economy Trade and Industry (METI), in interaction with Nayanima Basu. Excerpts:
Where do the negotiations for creating a comprehensive economic partnership agreement (CEPA) with India stand currently? Does Japan have the required political will to conclude the deal?
We began our EPA (Economic Partnership Agreement) or CEPA negotiations in January 2007 and held 12 rounds of negotiations so far. We have achieved major progress in the past negotiating rounds and are close to successful conclusion of the agreement. Deepening bilateral economic relations between India and Japan is an urgent issue and we do have the strong will to conclude a mutually beneficial agreement.
What are the main stumbling blocks that could act as a deal breaker between India and Japan for a broad-based CEPA?
We have talked on issues on which both sides are interested. Although some of those issues still remain, we can reach a conclusion by making our best efforts to resolve the issues.
India has put forward its main areas of interest in terms of greater market access in services and pharmaceuticals sectors – what is Japan’s position in this?
We are well aware of India’s interests in expanding access to Japanese market in the field of services and pharmaceuticals. We are still negotiating on these issues.
What is the deadline for concluding the talks for India-Japan CEPA and do you think if this is achievable?
Our leaders agreed to accelerate our negotiation at the last summit meeting in Delhi in December 2009, though they did not mention a clear timeline to conclude the negotiation. We believe we will be able to reach the conclusion by making efforts with each other to resolve the remaining issues.
Last year, during the visit of Japanese Prime Minister Yukio Hatoyama, both sides had issued a joint statement vowing to scale up bilateral trade between India and Japan to $20 billion by 2010-2011 from $13 billion at present. Are both the countries as much engaged to reach this target?
Economic exchanges between India and Japan remain rather small for our economic scales and presence in the world economy so far. However, our economic potential is so big, I feel the figure of $20 billion is not too ambitious. We hope the conclusion of the CEPA would boost our close economic partnership and contribute to expanding bilateral trade between us significantly.
The next round of India-Japan negotiations for CEPA is scheduled to be held in March 2010. Will the talks on CEPA be of topmost priority?
We are still in contact with each other to schedule the next round of negotiations. In the last summit meeting in December 2009, Prime Minister Hatoyama extended his invitation to Prime Minister Singh for their next Annual Bilateral Summit in Japan in 2010. The actual date will be decided through diplomatic channels. We are willing to utilise every opportunity to narrow the gaps between both sides in the ongoing negotiations.
What is the opinion of your industry and businesses in having a partnership agreement with India?
Japanese industry have great interest in India not only as an attractive market but also as an important manufacturing base because of its huge population, high economic growth rates and the expansion of the emerging middle class.
In 2008, India overtook China as the topmost destination for foreign direct investment In Asia. This tendency will be accelerated when we conclude the CEPA. Also, India is a big power which shares common values with Japan such as democracy and market economy. India is an important strategic partner for us to realize an “East Asian Community” as well. We do hope the conclusion of EPA/CEPA would contribute to economic development of East Asia as well as development of our bilateral partnership.
What is the stand of the new government on the recent negotiations going on at the World Trade Organisation (WTO) for a multilateral trade deal? What are Japan’s main demands?
We have to conclude the Doha Round as soon as possible and strengthen the multilateral trade system. The Doha Round includes negotiations on the liberalisation of environmental goods and services. This will help spread products and technologies that reduce the environmental load, and is a vital part of combating climate change. We stress that liberalising trade in energy efficient products is especially effective in this regard.
The US has made it clear that it wants developing countries to offer more in terms of greater market access and flexible tariffs than what was promised in the December texts in the WTO negotiations. Do you also support that position? Also, do you think the deadline of 2010 to close the impending talks, is possible?
We support the idea that discussions should be based on the progress already made. Leaders' commitment to conclude the round in 2010 is crucial. We should seek it at every opportunity, as long as there is a chance.
