(2) Japan`s free trade agreement strategy – the specific points to be considered by Japan`s major trading partners are East Asia, North America and Europe, three regions accounting for 80% of Japan`s trade. Compared to free trade agreements with the countries of North America and Europe, all of which are industrialized countries, free trade agreements with East Asia will bring the greatest additional benefits through further liberalization. As can be seen from the simple averages of tariff rates (United States, 3.6%; European Union, 4.1%; China, 10%; Malaysia, 14.5%; Republic of Korea, 16.1%; Philippines 25.6%; and Indonesia, 37.5%, East Asia, the region where Japanese products accounted for the highest share of trade, has the highest tariffs. Trade liberalization with East Asia will help facilitate the activities of Japanese companies that face competition from ASEAN and China and, in many cases, have relocated their production sites to sites in East Asia. (1) In view of the evolution of economic globalization, it is important to maintain and strengthen the free trade system. While the World Trade Organization continues to play an important role in these efforts, free trade agreements (FTAs) offer a way to strengthen partnerships in non-WTO areas and to achieve liberalization beyond the levels achievable under the WTO. This is why free trade agreements are a very useful way to broaden the scope of Japan`s economic relations with other countries. While our ultimate goal is to strengthen an economic partnership with ASEAN as a whole, we should first make rapid efforts to establish bilateral economic partnerships individually on the basis of the Japan-Singapore Economic Partnership Agreement with key ASEAN member states (including Thailand, the Philippines, Malaysia and Indonesia) , who have shown positive interest in a bilateral free trade agreement with Japan. Given the progress of bilateral agreements, we should begin a process of extending these agreements to the agreement between Japan and ASEAN as a whole. (1) Compliance with WTO agreements Three points must be considered.
First, tariffs and other trade rules should not be higher or more restrictive than tariffs and other corresponding trade rules prior to the establishment of the free trade agreement. Second, they must eliminate tariffs and other trade rules that are restrictive for most of all trade. Third, they must complete the ATR within 10 years, at least in principle. The reference to «the bulk of total trade» implies that countries must achieve a favourable standard of liberalization in terms of trade volume against international standards (based on the figures provided, the NAFTA average is 99%, while the average for the Free Trade Agreement between Mexico and the EU is 97%). (2) The political and diplomatic benefits of trade agreements strengthen Japan`s negotiating power in WTO negotiations and the outcome of free trade negotiations could influence and accelerate WTO negotiations. Deepening economic interdependence leads to a sense of political trust between the countries that are parties to these agreements and expands Japan`s global diplomatic influence and interests.