EXCLUSIVE: Japan Prepares to Launch Trade Talks with Mercosur

Tokyo, May 3 (Jiji Press)–The Japanese government is preparing to launch trade talks with the Mercosur trade bloc in South America to conclude an economic partnership agreement, Jiji Press learned Sunday. The move comes as the government believes that it is necessary to expand markets and diversify supply chains for critical materials in response to U.S. President Donald Trump’s tariff policy and China’s restrictions on rare earth exports, informed sources said. Earlier this year, Japan and Mercosur held two meetings on their strategic partnership framework, discussing ways to strengthen cooperation in the fields of trade and investment, as well as areas of interest for a potential trade deal. Expectations for a Japan-Mercosur trade agreement are high especially among Mercosur member countries. Brazil, Argentina and Uruguay are major exporters of beef, chicken and soybeans to Japan. Within Japan’s ruling Liberal Democratic Party, meanwhile, members linked to the agricultural industry have been negative about holding trade talks with Mercosur, out of concerns that cheap beef and other products from the region could severely impact the domestic industry. However, the trade environment has changed drastically over the past year, with higher U.S. tariffs making free trade initiatives uncertain. Japanese business circles are calling on the government to start trade talks with Mercosur soon, partly because rare earths are indispensable for a wide range of products, including automobiles and precision instruments. Given the current circumstances, a mood to accept Japan-Mercosur talks is growing within the LDP. “I would tolerate the start of negotiations,” said an LDP heavyweight linked to the agricultural industry. “Depending on negotiations, there could be ways to avoid affecting (Japanese) beef and other producers.” Amid concerns about the prolonged impact of the U.S.-Iran conflict, a Japanese government official said, “Now is a good time (to launch trade talks with Mercosur) from a perspective of economic security.” Mercosur, or the Southern Common Market, was established in 1995. Its current members are Argentina, Bolivia, Brazil, Paraguay and Uruguay. The bloc has a total population of about 300 million and a total gross domestic product of 3 trillion dollars. Japan and Mercosur launched a strategic partnership framework last December. In January, Mercosur and the European Union signed a free trade agreement. END [Copyright The Jiji Press, Ltd.]