Bridges Weekly Trade News Digest • Volume 9 • Number 11 • 6th April 2005

Japan-Mexico FTA Comes Into Force


Japan’s free trade agreement (FTA) with Mexico came into effect on 1 April. The accord, signed in 2004 after over two years of hard negotiations, is Japan’s first comprehensive FTA to affect its heavily protected agriculture sector, lowering tariffs on Mexican exports including pork, chicken, and oranges.

A latecomer to the international race to strike bilateral and regional trade agreements, Japan has been emulating the EU, the US, and China in recent years, exploring possibilities for bilateral FTAs in East Asia and elsewhere. Agriculture was not an issue in its only other FTA, a 2002 pact with Singapore, since the island city-state produces none of the farm products so sensitive to Japan.

The accord is to phase out tariffs on 90 percent of goods within ten years, by which time 98 percent of Japanese exports and 87 percent of Mexican ones will receive duty-free market access. It immediately lowers tariffs on Mexican pork through the establishment of a low-tariff import quota. Japanese pig farmers have never faced competition before. Similar quotas have been established for chicken, beef, oranges, and orange juice. Tariffs on Mexican mangoes and avocados have been eliminated. The quotas will be expanded in 2009. Mexico has established a tariff-free import quota for Japanese automobiles; it is to eliminate tariffs on them altogether in seven years.

The pact includes provisions on investment and intellectual property rights, areas that have proved controversial in other FTAs for their potential negative effects on environmental and public health concerns. Some analysts, however, suggest that the agreement will encourage Japanese firms to shift production to Mexico in order to gain access to the US and Canadian markets under the North American Free Trade Agreement (NAFTA).

Bloomberg reports that if Japan does eventually agree to start FTA talks with Australia, it would be unlikely to include agricultural products.

ICTSD reporting; “Japan-Mexico FTA takes effect; mango tariffs nil,” JAPAN TIMES, 2 April 2005; “Mexican free trade under way,” ASAHI SHIMBUN, 2 April 2005; “Japan adjusts to free trade deal,” BBC NEWS, 1 April 2005; “Japan to Exclude Agriculture in Australian Accord, Review Says,” BLOOMBERG, 6 April 2005.