[ Nippon Keidanren ] [ Policy ]

Call for Early Launch of Negotiations for
Japan-GCC Economic Partnership Agreement

September 13, 2005

Nippon Keidanren
(Japan Business Federation)

The global economy today faces increasingly tight supply-demand conditions for key natural resources. Under these conditions, Japan's development of stronger ties with the member countries of the Gulf Cooperation Council (GCC) -- the source of approximately 70 percent of Japan's imports of crude oil -- is critically important to securing energy resources in a continuous and stable manner.

The GCC countries constitute Japan's fourth largest trading partner by region. The scale of Japanese exports to the GCC countries is on par with the scale of exports to countries with which Japan is already negotiating or consulting on economic partnership agreements (EPAs). Moreover, the GCC countries are an extremely promising market for Japanese industries, particularly because of the dynamic expansion of the purchasing power of this region amid the recent rise in crude oil prices. In light of this situation, there is an urgent need to further promote the development of the business environment, including the removal of barriers to trade and investment, in order to enhance economic exchanges between Japan and the GCC countries.

The competition among the leading countries and regions of the world is currently intensifying in the GCC markets, and the GCC countries have already started negotiating free trade agreements (FTAs) with these countries and regions, excluding Japan. Japan cannot afford to be left behind such initiatives taken by other countries and regions. The absence of an EPA will pose a serious concern that only Japan will forcibly continue to shoulder tariff burdens, which will result in substantial economic losses for Japanese industries in general and export industries in particular.

For these reasons, we believe that Japan must actively pursue a comprehensive EPA with the GCC. Such an agreement should include not only elements of an FTA but also cover the energy sector and the improvement of the business environment. The conclusion of such an agreement would be of crucial strategic importance to the historically amicable diplomatic relationship between Japan and the Middle Eastern countries. Similarly, the comprehensive EPA will play an indispensable role in ensuring that Japanese companies will have preferred access to the GCC markets in the future. Therefore, we strongly urge the Japanese government to take necessary steps toward the early launch of negotiations for the Japan-GCC EPA based on mutual agreement with GCC to create a joint study group for the EPA.

* GCC member countries: United Arab Emirates, Bahrain, Saudi Arabia, Oman, Qatar, and Kuwait

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