Japan’s ‘sensitivity’ is holding back trade deal

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On board PM's special aircraft, Oct 21 : India and Japan are unlikely to conclude a comprehensive Economic Partnership Agreement (EPA) during Prime Minister Manmohan Singh's three-day visit to Japan as the two sides are yet to resolve some contentious issues, including "extreme" Japanese sensitivity on agricultural products.

"The extreme Japanese sensitivity on agricultural products" is one of the major impediments in finalising the EPA, sources accompanying Singh to Japan said. Commerce and industry minister Kamal Nath is the only Cabinet minister accompanying Singh.

India is also pressing Japan to open its pharmaceutical market, which, they said, was "highly protective". The two sides are also working on phrasing the rules of origin.

During Singh's previous bilateral visit here in August 2007, the two governments had signed a joint statement on the road map for strengthening their bilateral ties, including on trade and economic front. As part of this, New Delhi and Tokyo set a target of $20 billion by 2010 and had agreed to conclude a Cepa as soon as possible.

India and Japan have been negotiating an EPA for the last two years with an objective of giving boost to the $10 billion bilateral trade by way of eliminating and slashing duties on as much as 90% of the goods and services traded between the Asian countries. While trade negotiators have completed several rounds of discussions, they have not been able to reach a complete agreement.

Prime Minister Manmohan Singh said India hopes to conclude a free trade agreement with Japan by the end of the year, a step that is expected to help significantly expand bilateral trade and investment.

"We are very keen that before the year is out we should have an agreement on a comprehensive economic partnership," Singh said in an interview to a Japanese newspaper Yomiuri Shimbun.

"We have seen substantive progress in our EPA negotiations and I am looking forward to discuss this matter with Prime Minister Singh based on the negotiations the two countries have had so far," Japanese Prime Minister Taro Aso said ahead of Singh's official visit.

Describing the Indian market as "quite huge," Aso said it has been growing at an astonishing pace in recent times.