Japan eyes huge Asia trade bloc

A free trade pact could give Japan's economy a boost

Japan has plans for a huge Asian free trade bloc of 16 nations that would help integrate economies in the region.

The grouping would include about half the world's population and be larger than both the EU and North American Free Trade Agreement (Nafta).

The agreement would include China and India, the world's two fastest growing economies.

It would also include the Association of South-east Asian Nations (Asean), Australia, New Zealand and South Korea.

Takeshi Fujimoto, deputy director of Japan's Ministry of Economy, said the proposal is set to be made public on Friday.

Mr Fujimoto, who is keen on further integration, said Japan wanted to finish negotiations by 2010.

Based on the ministry's estimates, the trade pact would increase Japan's gross domestic product (GDP) by about 5 trillion yen ($42.5bn), and the GDP of all those countries involved by about 25 trillion yen.

There are strong calls from the industrial sector for a free trade agreement with China Takeshi Fujimoto, Japan's Ministry of Economy

Relationship problems

Attempts by Japan to accelerate a regional tree trade agreement have been stalled by difficult relations with China.

They have been aggravated by a conflict over a visit by Japan's prime inister Junichiro Koizumi's to Tokyo's Yasukuni shrine.

Millions of Chinese were killed in World War II by the Japanese and the shrine includes over 1,000 war criminals among the dead.

Former Japanese Prime Minister Ryutaro Hashimoto recently held talks in Beijing with the Chinese President, Hu Jintao, in an attempt to improve relations.

Mr Fujimoto said that while there were various political issues, Japan's businesses had a high interest in such a deal.

"There are strong calls from the industrial sector for a free trade agreement with China," said Mr Fujimoto.

Clinching a deal

Ken-ichi Takayasu, a senior economist for the Japan Research Institute, said the scale of the planned bloc would be a challenge.

"I think it would be a bit difficult. The more countries are involved the harder it will be to clinch a deal," added Mr Takayasu.

Mr Takayasu also speculated that wanting to include Australia, India and New Zealand could be intended as a check on China.

Japan has already closed economic agreements with Singapore, Mexico and Malaysia.

Meanwhile, China already has a free trade deal with the 10-nation Asean.