JAPAN NEGOTIATING FREE TRADE AGREEMENT WITH GULF

C O N F I D E N T I A L TOKYO 006298 SIPDIS SIPDIS E.O. 12958: DECL: 10/27/2016 TAGS: ETRD PREL ZP JA SUBJECT: JAPAN NEGOTIATING FREE TRADE AGREEMENT WITH GULF COOPERATION COUNCIL MEMBERS Classified By: Ambassador J. Thomas Schieffer for reasons 1.4(b),(d) ¶1. (C) SUMMARY: Japan has entered into Free Trade Agreement (FTA) negotiations with the countries of the Gulf Cooperation Council (GCC) and is hopeful an agreement can be inked as soon as possible, according to MOFA and METI sources. A major motivating factor for the Japanese is the fact that China is also in the process of negotiating an FTA with the GCC, and the Japanese fear their goods and services will be at a competitive disadvantage should the Chinese beat them to it. END SUMMARY. ¶2. (C) Takashi Kanazawa of MOFA's Second Middle East Division recently confirmed to Embassy Tokyo Political Officer that a second round of FTA negotiations between Japan and the GCC was held in Tokyo in mid-September, following initial meetings hosted in Riyadh last May. Progress is being made, albeit slowly, he said. Kanazawa reported that the two sides had exchanged lists of goods and services to be included under an agreement and that Japan hopes to be able to meet again to continue negotiations in December. However, a planned GCC summit in early December may push back Japan's talks to late December or early January. In the meantime, working level intersessional meetings are scheduled to take place in Riyadh during November. ¶3. (C) Kanazawa's remarks were confirmed to Embassy Tokyo Economic Officer by Hideyasu Tamura, Deputy Director of the Ministry of Economy, Trade and Industry's (METI) Economic Partnership Division of the International Trade Policy Bureau. Tamura reported that nearly 90 percent of imports from the GCC to Japan consist of oil. The rest is comprised mainly of petro-chemical products, textiles, and shrimp. A five percent common external tariff that is currently levied on oil will be subject to the FTA negotiations. According to Tamura, exports from Japan to the GCC consist mainly of motor vehicles and electric appliances, as well as other goods and services. Japan also desires to see direct investment included in the negotiations. ¶4. (SBU) Both Tamura and Kanazawa said that the Japanese delegation was comprised of representatives from MOFA (which has the lead),METI, the Ministry of Finance, and the Ministry of Agriculture, Forestry, and Fisheries. According to Kanazawa, the GCC delegation was led by Dr. Hamad Sulaiman ¶A. Albazi, Kuwaiti Deputy Minister of Finance for Economic Affairs in his capacity as the head of the GCC Executive Secretariat. Other leading members of the approximately 40 SIPDIS member delegation were: -- Kuwait: Dr. Saud E. Al-Malq, Ministry of Commerce and Industry, Director General for International Organizations; -- UAE: Juma Mohammed Al-Kait, Ministry of Economy, Director of the WTO Department; -- Qatar: Dr. Khaled Yousef Al-Derbesti, Ministry of Economy and Trade, Director of the Trade and Economic Promotion Department; -- Kuwait: Adnan Al-Kandari, Ministry of Finance, Supervisor of International Affairs; -- Oman: H.E. Dr. Abdulmalik Abdullah Al-Hinai, Under Secretary of the Ministry of National Economy; and SIPDIS -- Bahrain: Mohammed Ali Taleb, Ministry of Finance, Director of Economic Relations. ¶5. (C) According to Tamura, the target date for completing the FTA is still undefined, but the Japanese are anxious to conclude the agreement quickly. They are aware that the GCC has been negotiating an FTA with the European Union for over ten years and has recently entered into negotiations with China. Japanese business leaders are urging the government to move quickly, concerned that if other countries or trading blocs conclude FTAs with the GCC first, Japan's goods and services will be at a disadvantage in the GCC marketplace. SCHIEFFER