Japan Seeks Investment Treaties with Saudi Arabia, Kuwait for oil and Rare Earth

Sunday, December 19, 2010

TOKYO --Japan aims to sign investment treaties with Saudi Arabia, Kuwait and other countries next year to secure stable supplies of crude oil, rare earths and other key resources, Japanese government sources said.

The government is in talks with Saudi Arabia, Kuwait, Kazakhstan, Papua New Guinea, Colombia, and Angola, and is also negotiating with its Chinese and South Korean counterparts on a three-way treaty. The goal is to reach investment pacts to help Japanese firms gain the rights to develop and ship resources back to resources-poor Japan, the sources told Nihon Keizai Shimbun.

"Talks with the seven countries, other than Angola, are in the final stages, so we will likely be able to sign pacts with these countries sometime next year," a senior Foreign Ministry official said, adding that Tokyo will also begin talks with Algeria and Qatar in 2011 "and is confident" it will be able to conclude agreements with them within the year.

Resource-rich countries in Asia, the Middle East and Latin America are important suppliers of industrial resources. Observers say Japan lags behind the U.S., China and European governments in resource diplomacy, so it wants to close the gap by signing investment pacts with as many countries as possible.

Investment treaties in specific industries, unlike free trade deals, can usually be wrapped up less than a year after talks begin.

The government is eager to help Japanese firms expand into countries with which it signs investment pacts. Tokyo has so far concluded trade agreements that include investment provisions with 24 countries, including Egypt, Thailand and Chile.

Analysts said the importance of Middle East for Japan, as a source of crucial materials and energy resources, is increasing.

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