- POSTED: 22 Jul 2014 18:58
Japan and Mongolia signed a free-trade deal Tuesday, as Tokyo looks to tap the fast-growing economy and its vast supply of natural resources.
TOKYO: Japan and Mongolia signed a free-trade deal Tuesday, as Tokyo looks to tap the fast-growing economy and its vast supply of natural resources. Japanese Prime Minister Shinzo Abe and Mongolian President Tsakhiagiin Elbegdorj announced the deal in a joint statement, with the pair set to hold a press briefing in Tokyo from 7:00 pm local time (1000 GMT).
Under the deal that covers a range of products including beef and cars, all Mongolian exports to Japan and 96 per cent of Japanese products sent to Mongolia will be exempt from tariffs within the next decade, officials said.
The agreement could help foster stability in the region, a foreign ministry official added, as Japan works to resolve the case of Japanese citizens abducted during the Cold War by North Korean agents. Mongolia is one of the few countries that has formal diplomatic relations with Pyongyang, which is regularly criticised for stoking regional tensions. "(We're) hoping to deepen ties with Mongolia to work together on keeping stability in northeast Asia," the official said.
The trade deal includes a so-called investor-state dispute settlement (ISDS) clause, which allows firms to pursue compensation claims if they think government policy has damaged their investment - which has been criticised for giving firms too much power over public policy.
"It's important that the ISDS clause is included in the deal, as it encourages Japanese companies to invest in Mongolia," a senior trade ministry official told AFP. "The trade balance between Mongolia and Japan is currently a surplus for Japan, but that can change quickly if mineral imports rise," he added.
Japan-Mongolia trade stood at 31.20 billion yen ($307 million) last year, far behind Tokyo's massive trade relationships with the United States and China. In April, Japan reached a broad trade agreement with Australia and is working on a wide-ranging deal with the European Union and the so-called Trans-Pacific Partnership (TPP), a vast Pacific-wide deal led by the United States.
Resource-rich Mongolia, wedged between Russia and China, has seen big economic growth in recent years as global firms eye its vast natural resources. In May, Pyongyang agreed to reinvestigate the kidnapping of Japanese citizens during the 1970s and 1980s, in what appeared to be a significant breakthrough on an issue that has long hampered Tokyo's relations with Pyongyang. They have no formal diplomatic ties.
Japan earlier this month lifted some of its own sanctions on North Korea following the apparent deal.
North Korean agents kidnapped dozens -- and possibly hundreds -- of Japanese citizens to help train spies in language and customs. The actual number and fate of some of the abducted remains a point of contention, with Tokyo saying Pyongyang had not come clean on the issue.