7.05.2012

Economics

Free trade agreement
It might be difficult for them to reach an agreement, because Japanese government is trying to support agriculture and fisheries industry by maintaining the high tariff. If they agree to eliminate tariffs, Japan will see an increase in imports of cheap food and products from other nations. What will happen to the local industry? The government will have to come up with a new means to support the farmers. In order to make agriculture more competitive and profitable, they have to increase the scale of their business. Small land will only give small quantity of crop, and small amount of profits. Considering the fact that tariffs on motor vehicles and machinery are already very low, there won't be much benefits that Japan will give out of this trade agreement.  

Negotiations are going slowly, though. Bilateral agreement is already difficult to materialize, how much more for multi-lateral agreements? Each country has its say and tries to maximize the benefit it will get out of the treaty.  

It seems like "being a friendly nation" is used as a strategy to promote free trade treaty. It sounds so noble and attractive when one country says "We enjoy close economic relations. Why don't we further enhance our economic relationship through trade agreement? It will bring both of us prosperity and growth." It looks like there's no reason to deny this generous and friendly offer. Custom-free trade will sure affect primary industries in Japan, and it will discourage people to business in agriculture.

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