Japans FTA policy and movement of Japanese Companies towards the FTA era in East Asia

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2. Table of Contents Cultivation of a good economic relationship with East Asia emerging markets AFTA�s impact on Japanese affiliated manufacturers in Asia Exploitation of FTA by Japanese affiliates and the problems they face 2

5. (2005.10.03:NNA)FTA???????????????[??] -------------------------------------------------------------------------------- ??????????????1??2????????(FTA)???????????????????????????2006?1??????????????????FTA??????07?3??????06????FTA????????????? ?????05?1?1?????????(MFN)???10%??????????????????????????5%?????????????10%???????????50%?????????????????????????????????????????????????125????????????????????�???????????114????????? 2005/12/15-19:09 FTA?????????=??�????????? ???????(?????)15???????????????????????????15?????????????????????????????????????????(FTA)?????????(EPA)???????????????????????? ??????????????????????????????????????????????????????????????????????????????????????????????????????????????2010?????????????500??????????????????04???????180??????????????????????????????????????????????????????????????????3??????????????????????????????? ????????????????????????????????????????????????????????????????????????? ??????????????????????????????????????????????????????????????????????????????????????????????????????????(????)?????????15?????????????????????????????(?) (2005.10.03:NNA)FTA???????????????[??] -------------------------------------------------------------------------------- ??????????????1??2????????(FTA)???????????????????????????2006?1??????????????????FTA??????07?3??????06????FTA????????????? ?????05?1?1?????????(MFN)???10%??????????????????????????5%?????????????10%???????????50%?????????????????????????????????????????????????125????????????????????�???????????114????????? 2005/12/15-19:09 FTA?????????=??�????????? ???????(?????)15???????????????????????????15?????????????????????????????????????????(FTA)?????????(EPA)???????????????????????? ??????????????????????????????????????????????????????????????????????????????????????????????????????????????2010?????????????500??????????????????04???????180??????????????????????????????????????????????????????????????????3??????????????????????????????? ????????????????????????????????????????????????????????????????????????? ??????????????????????????????????????????????????????????????????????????????????????????????????????????(????)?????????15?????????????????????????????(?)

7. Table of Contents Cultivation of a good economic relationship with East Asia emerging markets AFTA�s impact on Japanese affiliated manufacturers in Asia Exploitation of FTA by Japanese affiliates and the problems they face 7

8. �ASEAN Free-Trade Area (AFTA),� which is the oldest FTA in East Asia, tends to be regarded as a low-level, practicably problematic, or rarely-used FTA. I would like to talk about whether this evaluation is true and to explain the actual progress of tariff reduction under the framework. Under AFTA, the reduction of tariff rates on trade within the region started in 1993. It became widely recognized by the industrial sector and by Japanese companies by around 2003, when the tariff rates for all items in ASEAN6 were reduced to 5% or less. It started to be utilized mainly in the automotive industry, where tariff rates had previously been rather high. So far, tariffs have already been eliminated for more than 80% of all items in ASEAN6, and it is being accelerated in the homestretch towards their complete elimination by 2010. As for CLMV, they have promised to reduce tariff rates for all items to 5% or less, by 2006 in Vietnam, by 2008 in Myanmar and Laos and by 2010 in Cambodia. Ultimately, it is scheduled for tariffs to be eliminated completely by 2015, which is 5 years after the elimination of tariffs in ASEAN6. �ASEAN Free-Trade Area (AFTA),� which is the oldest FTA in East Asia, tends to be regarded as a low-level, practicably problematic, or rarely-used FTA. I would like to talk about whether this evaluation is true and to explain the actual progress of tariff reduction under the framework. Under AFTA, the reduction of tariff rates on trade within the region started in 1993. It became widely recognized by the industrial sector and by Japanese companies by around 2003, when the tariff rates for all items in ASEAN6 were reduced to 5% or less. It started to be utilized mainly in the automotive industry, where tariff rates had previously been rather high. So far, tariffs have already been eliminated for more than 80% of all items in ASEAN6, and it is being accelerated in the homestretch towards their complete elimination by 2010. As for CLMV, they have promised to reduce tariff rates for all items to 5% or less, by 2006 in Vietnam, by 2008 in Myanmar and Laos and by 2010 in Cambodia. Ultimately, it is scheduled for tariffs to be eliminated completely by 2015, which is 5 years after the elimination of tariffs in ASEAN6.

11. Around 2003, when AFTA was beginning to be practically utilized, there was a restructuring of the production and procurement system in the automotive industry. Before that, Japan-affiliated automobile manufactures in ASEAN countries were obligated by tariff barriers to produce components by themselves, regardless of their production volume. However, with AFTA, these manufactures became able to concentrate the production of automobile parts in countries that are good at producing them, and to complement each other among the area, which resulted in increased cost-competitiveness. Under ordinary circumstances, it would have been more efficient to produce an entire vehicle at a specific base, such as in Thailand, and to supply them to the region. However, because the withdrawal of automobile manufacturers, which have a very broad base, would have made a considerable impact on the community, these manufacturers decided to start concentrated production and exchange of certain components. Around 2003, when AFTA was beginning to be practically utilized, there was a restructuring of the production and procurement system in the automotive industry. Before that, Japan-affiliated automobile manufactures in ASEAN countries were obligated by tariff barriers to produce components by themselves, regardless of their production volume. However, with AFTA, these manufactures became able to concentrate the production of automobile parts in countries that are good at producing them, and to complement each other among the area, which resulted in increased cost-competitiveness. Under ordinary circumstances, it would have been more efficient to produce an entire vehicle at a specific base, such as in Thailand, and to supply them to the region. However, because the withdrawal of automobile manufacturers, which have a very broad base, would have made a considerable impact on the community, these manufacturers decided to start concentrated production and exchange of certain components.

13. The FTA network is being established within the entire region, and ASEAN�s FTAs are becoming rather like the core that connects East Asia. There are currently five FTAs in the East Asia that are promoted by ASEAN. Among them, the FTAs with China and South Korea have already been concluded and tariff reduction measures have been taken. Tariffs between ASEAN and these two countries will be eliminated by 2010, the same year as AFTA. ASEAN also signed an agreement with Japan this April. It will become effective and tariff reductions will finally start on December 1st this year. Talks between ASEAN-India and ASEAN-Australia/New Zealand also led to an agreement this August, and the FTA will be signed at the East Asia Summit to be held in December. Tariff reduction will start from January of next year at the earliest. Among Japan-affiliated companies in ASEAN, there are very high expectations for the FTA with India in particular, for its potential of use. There are still only a limited number of companies that have established business bases in India, and if they can tap into the Indian market from their ASEAN export bases using the FTA, it means they can enter the enormous emerging market in India without the need to take the risk of establishing a business base there. It will also become possible to utilize resources effectively, both in terms of cost and human resources. The FTA network is being established within the entire region, and ASEAN�s FTAs are becoming rather like the core that connects East Asia. There are currently five FTAs in the East Asia that are promoted by ASEAN. Among them, the FTAs with China and South Korea have already been concluded and tariff reduction measures have been taken. Tariffs between ASEAN and these two countries will be eliminated by 2010, the same year as AFTA. ASEAN also signed an agreement with Japan this April. It will become effective and tariff reductions will finally start on December 1st this year. Talks between ASEAN-India and ASEAN-Australia/New Zealand also led to an agreement this August, and the FTA will be signed at the East Asia Summit to be held in December. Tariff reduction will start from January of next year at the earliest. Among Japan-affiliated companies in ASEAN, there are very high expectations for the FTA with India in particular, for its potential of use. There are still only a limited number of companies that have established business bases in India, and if they can tap into the Indian market from their ASEAN export bases using the FTA, it means they can enter the enormous emerging market in India without the need to take the risk of establishing a business base there. It will also become possible to utilize resources effectively, both in terms of cost and human resources.

15. 15 <????????> ???????=????(?????�?????)�???? ????????????????????0~15%? �??????????????????????????????????????????8%?16%?24%?3????????????????24%???????????? <??????????> �2005?4???????????????(VAT)??????????????????????????????????????????????? �?????????????????????4%????? �?????????????OCTROI????(?????????)???? ???(07?2?21?????)??????????? �????????????????????????????????????20%(06?3?~20%)? �???????????????????????? �????????EH?????????????????(HS843780)? �???????????????????????????? 2007/03/19-13:49 ??????????????4????=?????????-?? ?????16????????(??????????????????)?16???????????????????????????ISHII HYOKI(THAILAND)CO.,LTD.????????????????????????????????????????????????????????????????? ???4??????????9000??????????85%????????????????(?) Aug07 (?) 2007 ???????????CRT?????[??] ????(??�??????)?6???????(CRT)??????????????????????????????????????????????????????�???????1?????????????????3???????????????????????????????? ?????????????�???????(?????)????????????????????????????????????????????????12??????????????????????????????(?????)????????? ???(?????)?2003?7??????20~30????CRT?????????????????135????????390????????????????????????????420????????????????????????????? ????????????????�???????OEM(????????????)?????????????????????????????????????????????????????IR�??????????????????????????????????????? ??????�???????(?????)?1989?????????370?????????490????????2002???850????????????????????????????????????????????????????????????????? ?????2003???????????????????????????????????????????????????CRT?????????????????????????????????????????????????????? ?????????????????3??? 12?7?8?0???�NNA ??????�?????(?????)(TMTL)?6??????????????????1??????3???????????????5,000??????5????????????????5%????????????????????????????? ?????????????????????????????????????2000~3000cc????????????????????????? ???20~25???3S(??�????�????)????????????????????????????????? ???????????(CEO)???????????2003????????????????????????????????????????????????????????????????? ?????????????????????????????????????????10??????????????1???????????????????3?5,000??????13???????? ????????40????????39???????????????????????50%?????????????????(FTA)????????????? <????????> ???????=????(?????�?????)�???? ????????????????????0~15%? �??????????????????????????????????????????8%?16%?24%?3????????????????24%???????????? <??????????> �2005?4???????????????(VAT)??????????????????????????????????????????????? �?????????????????????4%????? �?????????????OCTROI????(?????????)???? ???(07?2?21?????)??????????? �????????????????????????????????????20%(06?3?~20%)? �???????????????????????? �????????EH?????????????????(HS843780)? �???????????????????????????? 2007/03/19-13:49 ??????????????4????=?????????-?? ?????16????????(??????????????????)?16???????????????????????????ISHII HYOKI(THAILAND)CO.,LTD.????????????????????????????????????????????????????????????????? ???4??????????9000??????????85%????????????????(?) Aug07 (?) 2007 ???????????CRT?????[??] ????(??�??????)?6???????(CRT)??????????????????????????????????????????????????????�???????1?????????????????3???????????????????????????????? ?????????????�???????(?????)????????????????????????????????????????????????12??????????????????????????????(?????)????????? ???(?????)?2003?7??????20~30????CRT?????????????????135????????390????????????????????????????420????????????????????????????? ????????????????�???????OEM(????????????)?????????????????????????????????????????????????????IR�??????????????????????????????????????? ??????�???????(?????)?1989?????????370?????????490????????2002???850????????????????????????????????????????????????????????????????? ?????2003???????????????????????????????????????????????????CRT?????????????????????????????????????????????????????? ?????????????????3??? 12?7?8?0???�NNA ??????�?????(?????)(TMTL)?6??????????????????1??????3???????????????5,000??????5????????????????5%????????????????????????????? ?????????????????????????????????????2000~3000cc????????????????????????? ???20~25???3S(??�????�????)????????????????????????????????? ???????????(CEO)???????????2003????????????????????????????????????????????????????????????????? ?????????????????????????????????????????10??????????????1???????????????????3?5,000??????13???????? ????????40????????39???????????????????????50%?????????????????(FTA)?????????????

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17. Table of Contents Cultivation of a good economic relationship with East Asia emerging markets AFTA�s impact on Japanese affiliated manufacturers in Asia Exploitation of FTA by Japanese affiliates and the problems they face 17

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