Council of Ministers on the Promotion of Economic Partnership

Basic Policy towards further promotion of Economic Partnership Agreements (EPAs), approved by the Council of Ministers on the Promotion of Economic Partnership on December 21, 2004

1. Economic Partnership Agreements (EPAs), against the background of growing economic globalization, contribute to the development of Japan's foreign economic relations as well as the attainment of its economic interests as a mechanism to complement the multilateral free trade system centering on the WTO. Simultaneously, EPAs facilitate promotion of structural reforms of Japan and its partners.

2. These EPAs contribute to the creation of international environment further beneficial to our country from the politically and diplomatically strategic views through, among others, fostering the establishment of an East Asian community.

3. Having concluded an EPA with Singapore and having signed one with Mexico, our country has reached agreements in principle on the major elements of the EPA with the Philippines. Negotiations with Thailand, Malaysia and the Republic of Korea are currently in progress. Furthermore, it has been agreed that negotiations with ASEAN as a whole will be initiated from next year. These efforts are designed to realize our policy to promote economic partnerships with East Asia as its focus, and the Government shall do its utmost to conclude these EPAs as soon as possible.

4. In addition to the above-mentioned negotiations, the Government will study the possibility of negotiations with other countries/regions, taking into account the progress of the on-going negotiations as well as the importance of EPAs to our economy and society. In identifying countries or regions to negotiate with, the Government shall consider overall factors including the economic and diplomatic perspectives and the situation of these countries and regions; more specifically, the attached criteria shall fully be taken into account.

5. In that process, considering the state of economic relations with the proposed partner, the Government shall review possible alternative measures of economic partnership to Free Trade Agreements (FTAs), such as conclusion of an investment agreement or a mutual recognition agreement and improvement of investment environment.

6. The Government shall endeavor to ensure that the promotion of EPA negotiations will facilitate Japan's negotiations at the WTO. In addition, based on the experience of the past negotiations, the Government shall endeavor to conduct negotiations and operations more efficiently, further develop the necessary human resources, and make extensive use of experts in the private sector.

[Attachment]

Criteria on Identifying Countries/Regions to negotiate with on the FTAs/EPAs

In identifying countries or regions to negotiate with, the Government shall take the following perspectives into comprehensive consideration:

1. Creation of international environment beneficial to our country

1-1 Whether or not it will facilitate the efforts towards community building and stability and prosperity in East Asia.

1-2 Whether or not it will contribute to the efforts to strengthen our economic power and to tackle political and diplomatic challenges.

1-3 Whether or not it will reinforce Japan's position at multilateral negotiations, including the WTO talks, through partnership and cooperation with the related countries/regions.

2. Attainment of economic interests of Japan as a whole

2-1 Whether or not it will substantially expand and facilitate exports of industrial, agricultural, forestry and fishery products, trade in services, and investment, through the liberalization of trade in goods and services and of investment; whether or not it will improve the business environment for Japanese companies operating in the partner countries/regions, through harmonization of various economic systems such as protection of intellectual property rights, as well as through facilitation of movement of natural persons.

2-2 Whether or not it is indispensable to eliminate economic disadvantages caused by absence of EPA/FTA.

2-3 Whether or not it will contribute to stable imports of resources and safe food and to diversification of its suppliers.

2-4 Whether or not it will promote Japan's economic and social structural reforms, thereby making economic activities efficient and vibrant; whether or not, in the sectors of agriculture, forestry and fisheries, it will adversely affect Japan's policy of food security and its on-going efforts towards structural reforms in these sectors.

2-5 Whether or not it will further promote acceptance of professional or technical workers, thereby stimulating Japan's economy and society and promoting its further internationalization .

3. Situation of the partner countries/regions and feasibility to realize EPA/FTA

3-1 Which products are difficult for each party to liberalize given the current trade relations between Japan and partner countries/regions; whether or not both parties are able to give appropriate consideration to such difficulties.

3-2 Whether or not it will cause friction or problems with other countries/regions, which might be affected in the field of trade and investment.

3-3 Whether or not the concerned countries/regions are capable of implementing the commitments under the WTO and EPA/FTA.

3-4 Whether or not an FTA focusing on tariff reduction and elimination is the best means of economic partnership with the concerned countries/regions.

Basic Policy towards further promotion of Economic Partnership Agreements (EPAs), approved by the Council of Ministers on the Promotion of Economic Partnership on December 21, 2004
1.	Economic Partnership Agreements (EPAs), against the background of growing economic globalization, contribute to the development of Japan's foreign economic relations as well as the attainment of its economic interests as a mechanism to complement the multilateral free trade system centering on the WTO. Simultaneously, EPAs facilitate promotion of structural reforms of Japan and its partners.
2.	These EPAs contribute to the creation of international environment further beneficial to our country from the politically and diplomatically strategic views through, among others, fostering the establishment of an East Asian community.
3.	Having concluded an EPA with Singapore and having signed one with Mexico, our country has reached agreements in principle on the major elements of the EPA with the Philippines. Negotiations with Thailand, Malaysia and the Republic of Korea are currently in progress. Furthermore, it has been agreed that negotiations with ASEAN as a whole will be initiated from next year. These efforts are designed to realize our policy to promote economic partnerships with East Asia as its focus, and the Government shall do its utmost to conclude these EPAs as soon as possible.
4.	In addition to the above-mentioned negotiations, the Government will study the possibility of negotiations with other countries/regions, taking into account the progress of the on-going negotiations as well as the importance of EPAs to our economy and society. In identifying countries or regions to negotiate with, the Government shall consider overall factors including the economic and diplomatic perspectives and the situation of these countries and regions; more specifically, the attached criteria shall fully be taken into account.
5.	In that process, considering the state of economic relations with the proposed partner, the Government shall review possible alternative measures of economic partnership to Free Trade Agreements (FTAs), such as conclusion of an investment agreement or a mutual recognition agreement and improvement of investment environment.
6.	The Government shall endeavor to ensure that the promotion of EPA negotiations will facilitate Japan's negotiations at the WTO. In addition, based on the experience of the past negotiations, the Government shall endeavor to conduct negotiations and operations more efficiently, further develop the necessary human resources, and make extensive use of experts in the private sector.

[Attachment]
Criteria on Identifying Countries/Regions to negotiate with on the FTAs/EPAs

In identifying countries or regions to negotiate with, the Government shall take the following perspectives into comprehensive consideration:
1.	Creation of international environment beneficial to our country
	1-1	Whether or not it will facilitate the efforts towards community building and stability and prosperity in East Asia.
	1-2	Whether or not it will contribute to the efforts to strengthen our economic power and to tackle political and diplomatic challenges.
	1-3	Whether or not it will reinforce Japan's position at multilateral negotiations, including the WTO talks, through partnership and cooperation with the related countries/regions.
2.	Attainment of economic interests of Japan as a whole
	2-1	Whether or not it will substantially expand and facilitate exports of industrial, agricultural, forestry and fishery products, trade in services, and investment, through the liberalization of trade in goods and services and of investment; whether or not it will improve the business environment for Japanese companies operating in the partner countries/regions, through harmonization of various economic systems such as protection of intellectual property rights, as well as through facilitation of movement of natural persons.
	2-2	Whether or not it is indispensable to eliminate economic disadvantages caused by absence of EPA/FTA.
	2-3	Whether or not it will contribute to stable imports of resources and safe food and to diversification of its suppliers.
	2-4	Whether or not it will promote Japan's economic and social structural reforms, thereby making economic activities efficient and vibrant; whether or not, in the sectors of agriculture, forestry and fisheries, it will adversely affect Japan's policy of food security and its on-going efforts towards structural reforms in these sectors.
	2-5	Whether or not it will further promote acceptance of professional or technical workers, thereby stimulating Japan's economy and society and promoting its further internationalization .
3.	Situation of the partner countries/regions and feasibility to realize EPA/FTA
	3-1	Which products are difficult for each party to liberalize given the current trade relations between Japan and partner countries/regions; whether or not both parties are able to give appropriate consideration to such difficulties.
	3-2	Whether or not it will cause friction or problems with other countries/regions, which might be affected in the field of trade and investment.
	3-3	Whether or not the concerned countries/regions are capable of implementing the commitments under the WTO and EPA/FTA.
	3-4	Whether or not an FTA focusing on tariff reduction and elimination is the best means of economic partnership with the concerned countries/regions.