JAPAN NEGOTIATING FREE TRADE AGREEMENT WITH GULF

C O N F I D E N T I A L TOKYO 006298

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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

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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

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-- 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