Japanese auto and steel industries welcomed a basic free trade agreement reached Monday between Japan and Thailand, which will remove or lower the Southeast Asian country's tariffs on Japanese auto parts, large vehicles and steel.

Japan Automobile Manufacturers Association Chairman Itaru Koeda hailed the bilateral agreements on the liberalization of auto parts and finished cars, saying that an FTA with Thailand will have great significance as in the cases of accords with the Philippines and Malaysia.

"Although the two countries are to renegotiate some of the items, we hope future negotiations aimed at further liberalization will bear fruit so as to strengthen cooperation between the auto industries of Japan and Thailand," said Koeda, co-chairman of Nissan Motor Co. at a joint press conference of business leaders.

He described the Thai auto industry as "the most important partner" for Japanese automakers.

Akio Mimura, chairman of the Japan Iron and Steel Federation, also said in a statement that the accord "would bring significant gains" to Japanese steelmakers as well as Thai industries which need steel products.

Mimura, president of Nippon Steel Corp., noted that Japanese

manufacturers will enjoy immediate tariff cuts on most of the hot- rolled steel products and on about half of such Japanese export items as seamless steel pipes and electromagnetic steel sheets under the FTA accord.

Hiroshi Okuda, the head of Japan's biggest business lobby, the Japan Business Federation, was also delighted and hoped that bilateral economic ties will become even closer.

Okuda, chairman of Japan's largest carmaker Toyota Motor Corp., called the framework deal "comprehensive and of a high level," and urged the Japanese government to accelerate FTA negotiations with Indonesia and South Korea.

Kakutaro Kitashiro, chairman of the Japan Association of Corporate Executives, also expressed hope that the basic deal with Thailand will help inject momentum to FTA negotiations with Japan's trading partners in Asia, including the Association of Southeast Asian Nations.

Nobuo Yamaguchi, chairman of the Japan Chamber of Commerce and Industry, aired concerns that some of Japan's small- and medium- sized enterprises would face intensified competition through the influx of cheap Thai imports, and sought support for them.

The FTA deal with Thailand is the fifth for Japan, which has FTAs with Singapore and Mexico and reached basic deals with the Philippines last November and Malaysia in May this year.

The latest accord will remove tariffs in Thailand on most auto parts by 2011, gradually lower tariffs on large vehicles and eliminate duties on steel in stages over 10 years.

About 90 percent of 920,000 vehicles produced in Thailand in 2004 were locally manufactured by Japanese carmakers.

Source: Xinhua