Japan's ASEAN policy to play key role in its reform drive

    TOKYO, Dec. 12 (Xinhuanet) -- After three decades of relations, Japan's ties with the Association of Southeast Asian Nations (ASEAN) appear to be a crucial test of Tokyo's determination to push through much needed domestic structural reforms. 

    The highlight of Japan-ASEAN relations during a two-day summit talks between the two sides, which concluded Friday, is Japan's negotiations for free trade agreements (FTAs) with three Southeast Asian countries scheduled for next year.

    The summit was indeed a historic one on the ground that it enabled Japanese and ASEAN leaders to reaffirm their "special relationship" and set out a basic direction of future cooperation in the fields of free trade and structural reform.

    Japanese Prime Minister Junichiro Koizumi and leaders from Malaysia, the Philippines and Thailand agreed that they should begin the bilateral FTA negotiations, which are expected to be tough going but could give Japan a new role once they are successfully completed.

    "I think this basically relates to what has been described as the third opening of Japan," said Chin Kin Wah, a senior fellow at the Institute of Southeast Asian Studies in Singapore. "It is not a painless exercise."

    Reform-minded policy-makers and scholars have been calling for Japan to embark on a "third opening" of the country. The first opening, undertaken under the Meiji Restoration in 1868, propelled Japan onto the path of modernization, and the second opening, launched with Japan's defeat in World War II, turned the country into the world's second largest economy.

     The biggest stumbling block to the upcoming FTA talks lies whether Japan can further open up its heavily protected agricultural market, especially to Thailand which is a major farm exporter.

     Although it is already the world's largest importer of agricultural products, Japan is still under pressure to buy more from abroad. The sensitive issue of agriculture is likely to be a big sticking point in the FTA talks with the three nations, as was the case in Japan's FTA negotiations with Mexico.

     After FTA talks with Mexico broke down in October over the issue of imports of Mexican pork and orange juice, Koizumi seemed to change his tune and said Japan cannot close its door to farm imports.

     He has subsequently decided to set up a special committee, which will directly report to him, to coordinate policies of government ministries and agencies on the country's FTA negotiations, a sign of his commitment to free trade.

     Meanwhile, the Ministry of Agriculture, Forestry and Fisheries has also begun to devise a plan to accelerate structural reform within the farm sector, which is small-scale, aging and uncompetitive.

     Japan has an FTA with Singapore, a nonagricultural nation. In addition to the three Southeast Asian states, Tokyo is also preparing to start FTA talks with the 10-member Association of Southeast Asian Nations as a whole in early 2005 so as to create a regional FTA in 2012.

     Another issue is likely to be the movement of professionals. The Philippines and Thailand want Tokyo to allow their professionals to work in Japan -- nurses and other caregivers for the Philippines and masseurs for Thailand.

     "Enhancing the mobility of people will be most beneficial to Japan," said Shujiro Urata, professor of international economics at Waseda University. "As Japan's population is expected to start declining soon, we need to have some new blood from abroad to sustain growth."

     But Tokyo remains cautious about accepting Philippine and Thai workers apparently because it believes letting them come to Japan would take jobs away from Japanese at a time when the jobless rate is at record high levels.

     Another aspect is that the surging number of crimes committed by foreigners in the country in recent years has raised deep concerns about public safety, reputedly one of the best in the world, thereby hampering serious debates on freeing up the labor market.

     As part of efforts to revitalize the economy, Koizumi has set a goal of doubling foreign direct investment into Japan in five years, a move that could transform the nation into a more efficient and vibrant society.

    "Foreign investment into Japan will not rise unless the high-cost structure is rectified," Kyodo News quoted a government official. "Accepting more professionals from abroad will be the first step toward reducing costs, attracting more foreign investment and eventually remodeling our country."

    Japanese analysts believed that Japan and ASEAN appear to be at a crossroads amid the rapidly changing political and economic landscape in East Asia.

    Some ASEAN officials also turned their attack against Japan's bureaucracy which is notorious for being rigid and slow in decision-making, saying a flexible policy would bring more favorable effects on both Japan and ASEAN. Enditem