Economic issues to dominate India-Japan summit

A day after making a suo motu statement in Lok Sabha on the global financial meltdown and assuring people that their wealth are entirely safe in private banks as there is no risk of failure of any Indian bank, Prime Minister Manmohan Singh left New Delhi Tuesday on a five-day visit to Japan and China.

A number of political, economic and security ties including a free trade agreement will come up in a bilateral meeting of the fourth Indo-Japan summit from October 21-23.

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From there Dr. Singh on Oct 23 will fly for China to participate for the first time in the seventh Asia-Europe Meeting (ASEM) Summit from Oct 24-25.

On the eve of PM’s departure for Japan, Foreign Secretary Shiv Shankar Menon addressing a press conference said India was grateful for Tokyo’s support in achieving waiver from Nuclear Suppliers’ Group (NSG) and at the International Atomic Energy Agency (IAEA).

However, even after Japan gave unconditional support to India in securing waiver from NSG, nuclear cooperation between the two countries appears distant away. Menon denied any possibility of bilateral nuclear cooperation at this stage, however, he felt nuclear issues would come up in the meeting between Dr. Singh and his recently elected Japanese counterpart Taro Aso.

Menon said that a roadmap for the strategic and global partnership had been laid last year and we are looking forward to go ahead through discussions.

India-Japan relations though have improved considerably in recent years with frequent high-level visits and intense deliberations; it is however not appearing for the two countries to conclude India-Japan comprehensive economic partnership agreement (CEPA).

India and Japan had made some progress in the last round of CEPA negotiations held in Tokyo earlier this month, but Japan’s rigid ness to not open its pharmaceutical sector for the drugs manufactured in India has created a fresh blockage in the negotiations, which might take several months to sort out the disagreement.

The CEPA is a comprehensive free trade agreement aimed at reduction or elimination of tariffs in bilateral trade of both goods and services as well as facilitation of foreign investment between the two countries. It stands on four pillars: trade liberalisation, regulatory convergence, economic precedents for the international system, and trade security.

Japan is also not willing to a Mutual Recognition Arrangement (MRA) in pharma that would facilitate India and Japan to identify the testing procedures and standards used in other country for their goods. India wants to have a standard testing mechanism such as US Food and Drug Administration, but Japan is rigid to implement its own set of testing measures. Japan, however, is agreed in having MRAs in Telecom and electronic equipment.

Healthcare and banking are the other two sectors India wanted Japan to open up for trade, but the latter is still reluctant; on the other hand, Japan has asked India to open up its auto-components sector, but India after detailed deliberations with domestic industry has showed its unwillingness. Thus the two countries are at deadlock on several issues, which might take some more time to melt down.

Dr. Singh will attend the ASEM summit at Beijing. ASEM is a grouping of 27-nation in which India was admitted in 2006, but participating for the first time at the highest level. The participants will deliberate on political, economic, social and cultural issues, comprising matters related to sustainable development.

Asia and European Union will exchange views on the financial crisis as well as the problems of energy and food security and climate change.