Diplomatic Bluebook 2001
Chapter II. JAPAN'S FOREIGN POLICY IN MAJOR DIPLOMATIC FIELDS

SECTION 2. ECONOMICS

C. Regional Economic Cooperation

Globalization and technological innovations are changing the face of the international economy. The dramatic technological advances in transportation, information and communications, and other fields have diminished the restriction on the cross-border movement of people, goods, services, capital, and information. Furthermore, together with the development of knowledge-intensive economies these technological trends are promoting the global-scale development of diverse economic entities. The international community is now challenged by the momentous task of constructing systems to ensure that the full potential of technological progress becomes manifest and that the merits of globalization will come to be enjoyed by all countries.

To these ends, first of all it is essential to launch a new round of the World Trade Organization (WTO) promptly and to strengthen the multilateral trading system. At the same time, there is a growing awareness of the importance of advancing inter-regional, intra-regional, and bilateral cooperation to supplement and strengthen the multilateral trading system. Regional trade agreements and bilateral free trade agreements that are consistent with the WTO Agreements do not function as barriers to third-party countries and other countries located outside of the regions concerned. Rather, such agreements promote open trade and contribute to the expansion of global trade overall.

In Europe, the integration of the European Union (EU) continues to advance, and the European Council outlined the future direction for the development of the EU during a Summit Meeting held in Nice, France in December 2000 (see Chapter III, Section 4-A). In North America, the North American Free Trade Agreement (NAFTA), which aims to reduce trade and investment barriers among the United States, Canada, and Mexico, is functioning effectively as a free trade agreement among countries with different levels of market economy maturity. As a result, the volume of trade and investment among these three countries has steadily expanded since NAFTA was signed. Various economic cooperation frameworks have also been established in Africa and in Latin America.

In Asia, the regional economic cooperation framework is being developed through a multi-layered approach. The overlapping mesh of Japan's regional cooperation arrangements include Asia-Pacific Economic Corporation (APEC), Asia-Europe Meeting (ASEM), and ASEAN+3 (Japan, China, the ROK) (see Chapter I, E).

Various trials are also proceeding at the bilateral level toward constructing mechanisms to liberalize and facilitate trade and investment and to strengthen economic linkages. For example, Japan has decided to initiate negotiations with Singapore toward concluding an economic partnership agreement. The Joint Study Group, which was comprised of government officials, prominent academics, and business leaders from Japan and Singapore and which was founded based on the agreement reached at the December 1999 Summit meeting between Prime Minister Keizo Obuchi and Prime Minister Goh Chok Tong, submitted a Joint Study Group Report to the leaders of both governments in September 2000. Based on the contents of this report, former Prime Minister Yoshiro Mori and Prime Minister Goh Chok Tong agreed, at a Summit meeting in October 2000, to initiate negotiations on an economic partnership in January 2001 and to conclude the negotiations by the end of December 2001 at the latest.

For countries all over the world, building up new markets to ensure that the effects of the outstanding technological advances achieved in recent years become fully manifest has now become an urgent priority. The economic partnership agreement between Japan and Singapore aims at promoting comprehensive systematic reforms. Such reforms are required to achieve the proper business environment for the new era within Japan and Singapore, and create more attractive markets. Specifically, the negotiations on this agreement include the areas of liberalization and facilitation of investment and the trade in goods and services, and the strengthening of bilateral economic partnership and linkages in such fields as finance, information and communications, and human resource development.

The Japan-Singapore economic partnership agreement is also expected to supplement the multilateral trading system centered around the WTO because the trade liberalization within the region under this bilateral agreement will exceed the WTO levels and because the agreement will advance the preparation of rules governing areas that lie outside the range of the present WTO Agreements.