Japan Australia Economic Partnership Agreement

Newsletter Update 7

Australia-Japan Free Trade Agreement – Seventh Negotiating Round

The seventh round of negotiations on the Australia-Japan Free Trade Agreement (FTA) was held in Canberra from 27 to 31 October. The next round is scheduled for February 2009 in Tokyo.

The two sides continued discussions concerning offer and request issues related to market access in services and investment. The clarifications and information received as part of this process over the past two rounds have now allowed the two sides to agree that formal market access requests will be exchanged at the next round of negotiations.

Now that the initial stage of preliminary requests is complete, it is very important that interested exporters raise with us any remaining commercial issues they would like to see addressed in the negotiations, before the February session. To assist in identifying the kinds of services and investment issues that could be raised, please refer to our questionnaire.

With respect to market access for goods, the discussion at this round focused on sugar. We sought to gain a better understanding of Japan’s border measures affecting imported sugar, and demonstrate to Japan that it will be possible to provide preferential treatment to imports from Australia without seriously damaging Japan’s agricultural sector. We will continue this discussion at the next round, when we will also explore other products of interest to Australia. We also had a short discussion on non-agricultural market access, during which Japan asked us to improve our offer on manufactured products of interest to Japan.

We made steady progress on many of the draft chapter texts, although a good deal of technical work remains.

On trade in services, we continued useful discussions on particular provisions that will apply to all Australian service suppliers in the Japanese market. At this round, we placed a particular emphasis on access to the Japanese market for Australian professionals.

On telecommunications, the two sides have achieved a much better understanding of each other’s regulatory regimes, which will help in advancing discussions on the proposed text in coming rounds. We had a positive session on the movement of natural persons (which covers the temporary entry of businesspeople into Australia or Japan for work purposes), and signs are good that some key Australian offensive interests may be met. The two sides resumed discussions on a financial services chapter, and had useful exchanges on coverage, prudential regulation and a possible committee structure once negotiations are complete.

On investment, we narrowed divergences across the text. While both sides have a similar approach to the key liberalisation provisions, the coverage of performance requirements remains subject to further discussion.

The discussion on trade in goods was constrained by Japan’s preference to wait until market access negotiations are further advanced before negotiating on certain issues, including possible safeguards provisions. We said we would prefer to negotiate on all aspects of this chapter.

Good progress was made on the chapter on customs procedures, including on arrangements for issuing advance rulings. There are few outstanding issues where we differ on substance. We made some useful progress in the session on rules of origin, although differences in the two sides’ approaches were highlighted in discussion on product-specific rules.

At this round, the two sides held further discussions on some of Japan’s specific proposals on energy and mineral resources and food security. Japan has reinforced the importance of including provisions on these subjects in the FTA. We sought a more detailed indication from Japan of its particular priorities in these areas and clarified some of Japan’s interests as a result. We said we were prepared to work with Japan to develop provisions that would address Japan’s concerns, but this was without prejudice to whether Australia could agree to include any specific provisions in the FTA, which would depend on progress in other parts of the negotiations.

We now have a consolidated text – albeit with many square brackets – for the chapter on technical barriers to trade. A number of difficult issues remain, however, and more work will need to be done to narrow the differences. Possible FTA provisions on sanitary and phytosanitary cooperation were not discussed at this round as the relevant experts on the Japanese side were unable to attend. We will resume discussions at the next round.

Work on the e-commerce chapter is also continuing with Australia and Japan having similar objectives for much of this, but with finalisation of the text being complicated by our differing regulatory approaches. We will also need to consider carefully the implications of Japan’s proposal for the inclusion of an article on digital products, such as software. On government procurement, we are making progress in working through text proposals for the chapter to ensure that it will be consistent with both sides’ procurement systems, and will be moving to a consolidated text for the next round. Once the main provisions are agreed, we will be in a position to begin market access negotiations in this area.

Good progress was made in the intellectual property and competition policy chapters negotiations. Discussions were based on the draft negotiating text and revised text proposals made by Australia and Japan. Substantial agreement has been reached on a majority of provisions. Australia and Japan agreed on further intersessional work towards resolving remaining differences.

We welcome input on issues of relevance to the Australia-Japan FTA negotiations. For further information, please email JapanFTA@dfat.gov.au.

Japan FTA Taskforce, Department of Foreign Affairs and Trade