MINERALS SECTOR WELCOMES JAPAN AUSTRALIA ECONOMIC PARTNERSHIP AGREEMENT

The Australian minerals sector welcomes the entry into force of the Japan Australia Economic Partnership Agreement today.

The JAEPA is a high-quality trade agreement that substantially liberalises Australia’s trade with the world’s third largest economy, increases market access for Australian goods and services, opens up investment opportunities, and links Australia more firmly into evolving regional economic architecture.

As an export oriented sector, the minerals sector will always be supportive of agreements that more closely integrate Australia’s economy with those of the Asia-Pacific region.

Japan’s commitments are by far the most liberalising it has negotiated to date with any of its trading partners.

The agreement will strengthen the already formidable relationship between Japan and the Australian resources sector.

Over the past five decades Japan’s industrialisation and outward foreign direct investment (FDI) have helped to underpin the expansion of the Australian minerals and energy sector.

Minerals and energy exports already account for more than 80 per cent of Australian merchandise exports to Japan. And Japan is the third largest investor in Australian mining. In fact, Japanese companies now invest more in mining in Australia than in any other country - as much as in all of the Americas and more than eight times as much as in the rest of Asia.

Australia’s two most important commodity exports – coal and iron ore worth nearly $23 billion last year – do not face tariff or border barriers in Japan.  The key issue here is that Australia currently accounts for more than 60 per cent of Japan’s coal imports and nearly 60 per cent of Japan’s iron ore imports.

An important priority is to maintain this market share in the face of strong competition from other resource suppliers, such as Indonesia (in the case of thermal coal) and Brazil (in the case of iron ore). This agreement, including the commitments in the special Chapter on Energy and Resources, will provide Japan with additional confidence that Australia will continue to be a steady and reliable supplier of these and other commodities.  In doing so, it will help reduce pressure for diversification of supply that occasionally emerges in Japan.  

The agreement will also eliminate tariffs on minerals exports that are currently worth $310 million. In particular, tariffs will be eliminated on imports of unwrought nickel, coke and semi-coke coal, aluminium hydroxide, ferro-manganese and titanium dioxide.

The wide scope of the undertakings on investment should provide a solid foundation for increasing two-way direct investment. In particular, raising FIRB thresholds should encourage more direct investment in resources and energy in Australia.

The minerals sector sees this agreement as the natural successor of the 1957 Australia-Japan Commerce Treaty and the 1977 Basic Treaty of Friendship and Cooperation. This agreement builds on those two deals and should strengthen the overall relationship substantially.

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