Japan's Prime Minister Junichiro Koizumi is expected to travel to Mexico early next month with the aim of finally concluding a bilateral free-trade agreement (FTA). The deal has been long in the making: it was due to have been signed in October last year, while Mexico's president, Vicente Fox, was in Japan, but last-minute disagreements over sensitive agricultural exports meant the plan had to be postponed. A final agreement was reached during negotiations in March this year, but the deal has yet to be adopted formally. The signing ceremony is expected to take place in Mexico City in early September.

The free-trade deal, known as the Japan-Mexico Economic Association Agreement, will be Mexico's first such agreement with an Asian nation and will be only Japan's second FTA in total. Its first, with Singapore, offered few clues as to Japan's willingness to negotiate on contentious trade issues as it did not cover agricultural exports - one of the most politically sensitive areas for Japan. Disagreements over quotas for specific agricultural products, including pork and orange juice, came close to scuppering the arrangement completely earlier this year, when Mexican negotiators effectively issued an ultimatum by threatening to withdraw from the deal unless it could be concluded in March.

The FTA, it is hoped, will allow Mexico to increase its exports to Japan by 11%, chipping away at its US$5bn trade deficit. Japan's concessions on food in particular will make it easier for Mexico to export more to Japan. The Mexicans hope that the deal will enable them to create 227,000 jobs in the food-processing sector over the next 10 years. For its part, Mexico will reduce tariffs over the next 10 years on steel and cars coming from Japan. In addition, Mexico has promised to make it easier for Japan to make bids for public works in Mexico. The FTA is expected to increase Japan's access to North America and reduce the price of some Japanese goods.

There has already been some evidence of benefits for Mexican exporters of the new trade relationship between the two countries. For example, it was announced on 8 July that the first sales of Mexican beef to Japan had been arranged, worth US$250m. Mexico's Agriculture Ministry said the deal was made during the Foodex 2004 expo in Japan in March.

However, the FTA will not resolve all outstanding trade issues between the two nations. President Fox, during an interview with Japan's Yomiuri newspaper on 7 July, said that he was still not satisfied with the remaining import barriers on farm products Japan imposes. Although he said he was 'satisfied with the agreement and hope that excellent results will be achieved,' he questioned the 'low tariffs [which] are imposed on some farm products', which meant that 'Japan's market has not been fully liberalized. We want to see whether the situation will improve.'

The Yomiuri reported that the Mexican government would urge Japan, after the FTA was concluded, to open its market further. According to the terms of the FTA the two countries are due to discuss tariff rates on beef, chicken, oranges, and orange juice one or two years after the agreement comes into effect. Mexico's ultimate aim is to persuade Japan to abolish all tariffs on agricultural imports.

• Mexico to set up joint commission with Pakistan 
  On 10 July, at the conclusion of the visit of a Mexican delegation to Islamabad, Pakistan and Mexico agreed to establish a joint economic commission to strengthen commercial ties between the two countries. As well as focusing on improving cooperation in fields such as trade, education, science and technology, culture, and tourism, the commission will explore joint initiatives at multilateral forums such as the UN and the WTO.
  
  The Mexican delegation was headed by Hector Valezzi Zafra, the director-general of the Asia Africa and Middle East section of Mexico's foreign-affairs ministry, who held consultations with Saeed Khalid, Pakistan's additional secretary for the Americas in Islamabad's own foreign-affairs ministry.