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| Energy Also Fuels Japan's FTA Drive |
| [Analysis] Resource-poor country sees FTA as an avenue to ensuring stable supplies |
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Hisane Masaki (hmasaki)  |
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Published 2006-12-14 06:09 (KST) |
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Japan is accelerating its drive toward free-trade agreements (FTAs) with trading partners. To be sure, this Japanese move is being largely fueled by an intensifying rivalry with China over leadership in regional economic integration. But it is also being prompted by growing energy security concerns amid increasingly tough global competition for oil, gas and other resources.
In addition to fellow East Asian countries, Japan has recently begun to place priority on resource-rich countries outside of the region as a foreign-policy tool to beef up relations with them and thereby ensure stable supplies of oil, natural gas and other resources. Among those it has approached to open FTA negotiations is the oil-rich Gulf Cooperation Council. Japan opened FTA negotiations with the GCC in September.
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FROM THE SECTION |
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| Resource-poor Japan is rushing to conclude free-trade deals with countries rich in oil, natural gas and other resources, in hopes of strengthening relations with them and thereby ensuring stable supplies in the medium and long terms.
Japan is the world's second-largest crude-oil importer, after the U.S. Japan imports almost all of its oil, about 90 percent of which comes from the Middle East. Japan is also the world's largest importer of liquefied natural gas (LNG). The world's second-largest economy is struggling to diversify the suppliers of oil, gas and other energy resources.
Alarmed by stubbornly high prices for oil and the intensifying global rush for oil, gas and other resources, led by China and India, Japan adopted a "New National Energy Strategy" this year that called for, among other things, strengthening ties with resource-rich countries through such means as increased official development assistance and conclusion of FTAs.
Beneath the recently accelerated Japanese FTA strategy lies an intensifying rivalry with China over energy resources, as well as over political and economic influence in Asia. Japan has increasingly been competing over scarce energy resources with China. The two energy-hungry Asian powers have been locked in the simmering dispute over gas reserves in the East China Sea. Furthermore, they have each lobbied hard for alternative routes for a pipeline from eastern Siberia's oilfields to Pacific Rim nations.
The Japan-Indonesia FTA, on which the two countries reached a basic agreement in late November, will contain a clause to ensure stable energy supplies. It was the first time that Japan had reached an agreement in FTA negotiations with a trading partner to include such an energy clause.
Indonesia is the biggest supplier of LNG to Japan, accounting for 25 percent of 58 million tons Japan purchased from abroad in 2005. Under the deal, Indonesia will hold prior consultations with Japan about restricting oil and gas exports in the event of a surge in domestic demand. Indonesia will also fully implement existing energy-supply contracts between the two countries even when export restrictions are invoked. In return, Japan will increase technical assistance to Indonesia in areas such as coal-to-liquid technology, energy-saving measures and the compilation of long-term supply-demand balance for crude oil, coal and natural gas.
The agreement to include an energy clause in the FTA came as Indonesia has threatened to cut in half LNG shipments to Japan from 2010 -- when long-term contracts expire -- to boost the availability of natural gas for domestic industries amid decreasing oil and natural-gas production at home.
This month Japan and Brunei, another oil and gas producer, also reached a basic agreement in free-trade negotiations. In addition to eliminating tariffs on most products traded between the two countries, including Japanese autos and Brunei's petroleum products, the two countries agreed to include in the pact an energy clause similar to one in the Japan-Indonesia FTA to ensure stable oil and gas supplies.
Japan and the six-member GCC launched FTA negotiations in September. The two sides hope to conclude the pact by the end of 2007. The GCC groups Saudi Arabia, the United Arab Emirates, Bahrain, Oman, Qatar and Kuwait and accounts for more than 70 percent of Japanese crude-oil imports. In the FTA negotiations with the GCC, Japan is seeking a written pledge by the grouping to supply crude oil preferentially to Japan, even in emergencies such as war.
In addition to Indonesia, Brunei and the GCC, Japan has negotiated or plans to negotiate FTAs with some other resource-rich countries, such as Australia, Chile and South Africa. Australia is a major supplier of coal, iron ore and LNG, which together account for more than half of its Japan-bound exports. Australia is also an important country for Japan's civilian nuclear policy.
Japan's New National Energy Strategy, adopted this year, calls for nuclear-energy production to rise from the current 30 percent to between 30 percent and 40 percent or more in 2030. Japan is already the world's third-largest nuclear-power nation in terms of the number of civilian nuclear plants in operation. Australia has the world's largest uranium deposits.
Chile is also rich in such mineral resources as copper, as well as a gateway to the South American regional trade grouping Mercosur. Japan is also eyeing FTA negotiations with South Africa, which is rich in such mineral resources as gold, platinum and diamonds.
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Hisane Masaki is a Tokyo-based journalist, commentator and scholar on international politics and economy. This is part of an article that originally appeared on Asia Times.
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©2006 OhmyNews
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1. Ervin
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Reinaldo , 2007-04-01 23:14
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