East Asia is an extremely important region for Japan in the light of its geographical proximity, close economic ties, and prospects for further growth in the coming years. On the occasion of the inaugural East Asia Summit, to be held in Malaysia in December 2005, Japan's business community expresses its strong desire for a further reinforcement of economic relations with the countries of this region.
In particular, the member states of the Association of Southeast Asian Nations (ASEAN)--with which Japanese companies have built strong and mutually complementary business relationships over many years--continue to be valuable centers of production and markets for Japanese industry as a whole. ASEAN's importance is growing, moreover, due not only to recent progress in regional economic integration but also to the need to achieve balanced development throughout East Asia.
For these reasons, in addition to the Economic Partnership Agreements (EPAs) that Japan is currently promoting on a bilateral basis with various ASEAN countries, an agreement on the Japan-ASEAN Comprehensive Economic Partnership (AJCEP) is indispensable. The agreement should promote intra-ASEAN transactions and trade with countries with which Japan does not have a bilateral EPA, as well as enhance the investment and other business environments.
Realizing the AJCEP would facilitate the freer and smoother establishment of operating bases in Japan and throughout the ASEAN region and promote a division of labor and system of cooperation at an even deeper level. This would give Japanese companies greater flexibility in their overseas operations, such as by allowing high-value-added parts and materials produced in Japan to be exported to ASEAN plants for processing and assembly, from where the finished products could then be shipped to other ASEAN countries at preferential tariff rates. The agreement would contribute to mutual development, as ASEAN member states would benefit from expanded investment in new production facilities by Japanese companies.
In East Asia today, China and South Korea are accelerating their efforts to establish free trade agreements with ASEAN as a whole. Japanese industry is engaged in intense competition with Chinese and Korean companies for the ASEAN market. If Japan were to fall behind these moves toward the formation of EPAs, it would not only see its competitiveness undermined but also risk being unable to maintain its domestic production facilities for high-value-added products.
Desiring to strengthen economic ties throughout East Asia, we, the business community of Japan, strongly call for expeditious negotiations for, and an early conclusion of, the AJCEP that would achieve enhanced liberalization, be comprehensive in scope, and contain simple and clear cumulative rules of origin.