Japan and India Endorse Free Trade Agreement, Discuss Future Relations

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Oct. 27 – Japanese Prime Minister Naoto Kan and Indian Prime Minister Manmohan Singh officially agreed on Monday to support a bilateral free trade agreement, signaling intentions by Japan to wean itself off of imports from China as well as an expansion of India’s role in the region.

After recent territorial disputes and rumored Chinese government-imposed bans on rare earths exports, Japan may be seeking to develop closer ties with the region’s other rapidly growing economy.

Japan and India, respectively the second and third-largest economies of Asia, have always maintained steady relations, but their relationship certainly leaves room for improvement. Currently India only makes up for 1 percent of Japan’s total trade by value, the Japanese foreign ministry reported.

For India, this agreement comes following recent friendly overtures by the United States, indicating a growing pattern of moves to position India as the region’s natural counterweight to China.

Under the free trade agreement, officially known as the Comprehensive Economic Partnership Agreement (CEPA), the two countries will pledge to remove tariffs on goods that comprise 94 percent of two-way trade flows within 10 years after the deal is inked. The FTA will also strengthen mutual understandings of intellectual property rights and ease restrictions on travel and work between India and Japan.

“The Japan-India CEPA will elevate the strategic and global partnership between Japan and India to a new level…and promote economic development by increasing the cross-border flows of goods, persons, investment and services,” a joint declaration between the leaders of Japan and India issued on Monday said.

The CEPA will needsto be ratified by Japan’s parliament, the Diet, before it becomes law.

The two leaders also plan to push forward on a joint civilian nuclear pact, despite protests from some anti-nuclear Japanese activists who still remember the devastation wrought by the nuclear bombs that fell on Hiroshima and Nagasaki. Under the deal, Japanese firms will export nuclear power technology to India, even though it did not sign the Nuclear Non-Proliferation Treaty and has conducted its own nuclear weapon tests.

Both leaders expressed enthusiasm and pledged to work together to advance their bids to become permanent members of the U.N. Security Council, an official source told Kyodo News International.

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