Identifier
Created
Classification
Origin
06TOKYO4660
2006-08-16 08:13:00
CONFIDENTIAL
Embassy Tokyo
Cable title:  

MOFA SAYS ASEAN PLUS 3 FTA PROCESS ADVANCING

Tags:  ECON ETRD EINV PREL JA APECO 
pdf how-to read a cable
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FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC 5434
INFO RUEHZU/ASIAN PACIFIC ECONOMIC COOPERATION
RUEHNE/AMEMBASSY NEW DELHI 8081
RUEHFR/AMEMBASSY PARIS 4988
RUEHFK/AMCONSUL FUKUOKA 7685
RUEHHK/AMCONSUL HONG KONG 6054
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RUEHGV/USMISSION GENEVA 2901
C O N F I D E N T I A L SECTION 01 OF 03 TOKYO 004660 

SIPDIS

SIPDIS

DEPT PASS USTR FOR AUSTR CUTLER
USTR ALSO FOR NEUFFER, BEEMAN, AND MEYERS
GENEVA ALSO FOR USTR
PARIS FOR USOECD

E.O. 12958: DECL: 08/15/2016
TAGS: ECON ETRD EINV PREL JA APECO
SUBJECT: MOFA SAYS ASEAN PLUS 3 FTA PROCESS ADVANCING


TOKYO 00004660 001.2 OF 003


Classified By: Ambassador J. Thomas Schieffer.
Reason: 1.4 (b,d)

C O N F I D E N T I A L SECTION 01 OF 03 TOKYO 004660

SIPDIS

SIPDIS

DEPT PASS USTR FOR AUSTR CUTLER
USTR ALSO FOR NEUFFER, BEEMAN, AND MEYERS
GENEVA ALSO FOR USTR
PARIS FOR USOECD

E.O. 12958: DECL: 08/15/2016
TAGS: ECON ETRD EINV PREL JA APECO
SUBJECT: MOFA SAYS ASEAN PLUS 3 FTA PROCESS ADVANCING


TOKYO 00004660 001.2 OF 003


Classified By: Ambassador J. Thomas Schieffer.
Reason: 1.4 (b,d)


1. (C) Summary: The ASEAN Plus 3 Economic
Ministers, when they meet next week in Kuala
Lumpur, will likely recommend the creation of a
formal intergovernmental study group as a prelude
to actual free trade agreement (FTA) negotiations
among the 13 ASEAN Plus 3 countries. According
to an official of the Japanese Foreign Ministry,
Japan's "ASEAN Plus 6" (ASEAN Plus 3, along with
Australia, India, and New Zealand) idea will
likely come up at a working lunch of the Economic
Ministers of those sixteen countries on August
24, where the Japanese plan to propose the
creation of an "academic study group" to examine
that concept. The Foreign Ministry official,
however, was not confident that a decision to
pursue the idea would emerge from the August 24
lunch, but did indicate the possibility that an
endorsement of the ASEAN Plus 6 proposal (for a
study only) might emerge from the East Asian
Summit meeting in December. End summary.

--------------
ASEAN Plus 3 Econ Ministers To Recommend Next
Step Toward FTA
--------------


2. (SBU) ECOUNS and Econoff met August 14 with
Atsuyuki Oike, Director of the Economic
Partnership Division of Japan's Ministry of
Foreign Affairs (MOFA). Oike oversees all
Japan's FTA and Economic Partnership Agreement
(EPAs) negotiations and has been kept in the job
for over two years already -- a relatively long
time in MOFA terms -- because of his expertise.
Oike will also be MOFA's representative on the
delegation to the ASEAN Economic Ministers
meeting in Kuala Lumpur the week of August 21.
(Note: Economy, Trade and Industry Minister
Toshihiro Nikai will head the Japanese
delegation. End note.)


3. (SBU) Oike said that the ASEAN Plus 3
Economic Ministers, based on the report of a

multinational academic study group, will likely
decide to recommend to their respective leaders
the creation of a formal intergovernmental study
group as the prelude to possible FTA negotiations
among the 13 ASEAN Plus 3 countries. The actual
establishment of the intergovernmental group,
however, would need to be directed by the ASEAN
Plus 3 leaders themselves who will meet during
the annual ASEAN summit/East Asian Summit in
December. The intergovernmental study would be
expected to last about two years before
substantive negotiations would begin.

--------------
No Diplomatic Groundwork for Nikai Proposal
--------------


4. (C) Asked about Chief Cabinet Secretary
Abe's apparent endorsement two weeks ago of the
"ASEAN Plus 6" (ASEAN Plus 3, along with
Australia, India, and New Zealand) idea, floated
by Minister Nikai earlier this year, Oike said
that Japan's policy was the same as explained at
the U.S.-Japan sub-cabinet working group in June.
Nonetheless, Nikai will likely raise it at a
working lunch of the Economic Ministers of the
sixteen "ASEAN Plus 6" countries on August 24,
according to Oike. At that event, Japan plans to
propose the creation of another academic study
group, composed this time with participants from
Australia, New Zealand, and India, to examine the
question of wider participation in any regional

TOKYO 00004660 002.2 OF 003


FTA. However, Oike noted, no document or joint
statement has been prepared for that meeting, nor
has Japan raised this proposal directly with the
other participating countries. Consequently, he
was not confident that a decision to launch an
academic study group on the ASEAN Plus 6 idea
would emerge from the August 24 lunch. Oike did
acknowledge the possibility that an endorsement
of the proposal (for a study only) might come out
of the EAS meeting in December. As of now, he
thought India would enthusiastically support the
idea, Australia would be a bit cautious, and New
Zealand would fall somewhere in between.

-------------- --
Japan Relatively Weak Entering Discussions, but,
in the End, Indispensable
-------------- --


5. (C) Oike admitted that Japan could very
easily become isolated in an intergovernmental
study group on an ASEAN Plus 3 FTA because of its
insistence on inclusion of provisions related to
deregulation and investment. The Chinese and
Koreans, he indicated, were in basic agreement on
their model for advancing regional integration,
i.e., moving step-by-step from trade
liberalization focused on tariff reductions and
gradually increasing the scope of liberalization.
(He said the Chinese, though, were adamantly
opposed to making commitments on "behind the
border" issues like deregulation and investment.)
Japan, however, lacked a similarly agreed basis
for regional economic integration and was much
more capable of achieving what it wanted on a
bilateral basis rather than through inevitably
complicated negotiations with ASEAN collectively
-- let alone ASEAN plus China and Korea -- Oike
noted.


6. (C) Oike confessed that Japan's own
discussions with ASEAN had not gone well because
Japan wanted to have a more comprehensive
package. That said, he believed Japan would have
some leverage in the ASEAN Plus 3 discussion
because, even though Japan might be isolated, it
could not be easily excluded -- there is no
"ASEAN Plus 2," and the ASEAN states, in
particular, want Japan as a participant in any
regional economic accord.


7. (C) Apart from the lack of a Japan-ASEAN
agreement, the other critical link missing was
any sort of economic agreement or understanding
with China, Oike stressed. Although Japan's FTA
negotiations with South Korea were suspended, a
few rounds of discussions had, at least, taken
place and a basis had been laid for further
talks. No such foundation exists with China,
however.

--------------
Bilateral Talks Unlikely to Be Affected
--------------


8. (C) Oike indicated that the start of the
ASEAN Plus 3 intergovernmental FTA study group
would not affect Japan's ongoing bilateral FTA
negotiations with ASEAN members. He expressed
confidence that Japan would sign the long-
negotiated agreement with the Philippines in the
very near future, hopefully before Prime Minister
Koizumi leaves office in September. (Oike added
that the main sticking point with the
Philippines, contrary to press reports, related
to investment measures and not to the movement of
workers.) In contrast, Japan has not been
pushing to sign the agreement with Thailand, the

TOKYO 00004660 003.2 OF 003


text of which has been completed for several
months, because it does not want the agreement to
become an issue in Thai domestic politics during
the current political uncertainty in that
country. Oike also noted that the negotiations
with Indonesia, in which he has participated
personally, had been progressing well.

--------------
U.S. Engagement Still Important
--------------


9. (SBU) The engagement of the United States in
the process of East Asian economic integration
remained important, according to Oike. He
recognized that APEC continued to be the main
institution through which the United States
wished to exercise its influence. Oike added
that Japan also valued APEC and would, in fact,
be hosting APEC in the year 2010.

--------------
Comment
--------------


10. (C) Oike was fairly frank regarding Japan's
weak prospects at Kuala Lumpur of further slowing
down the move toward an ASEAN Plus Three FTA.
Nevertheless, we believe that his assessment of
the interests, particularly among ASEAN members,
of keeping Japan active in the process is also
probably correct. Consequently, one key issue
will be the extent to which the Japanese are
willing to bargain hard to secure their interests
on deregulation and investment in the face of
political pressures and practical impediments
that would tend to push the process toward a
"lowest common denominator" deal on trade in
goods alone. Another issue is whether the "ASEAN
plus 6" idea will get enough steam behind it to
eclipse the ASEAN plus 3 project, especially if
the latter falters.

SCHIEFFER