27.09.16

The EU-Japan trade negotiations: Political will crucial to move forward

The European Union (EU) and Japan embarked on free trade agreement (FTA) negotiations in 2013 to further consolidate their trade and economic partnership. These trade and investment negotiations aim at reaching an agreement on goods, services and investment, at eliminating tariffs and non-tariff measures (NTMs), as well as at regulating issues of common interest, like public procurement and sustainable development. The European Parliament is closely following the negotiations since the very beginning and, in the end of the negotiations, it will approve the agreement if it is in the best interest of our citizens and businesses, as we expect. Negotiators are working to reach an ambitious and comprehensive agreement with real impact, but concrete political will is now quite crucial to move forward in the negotiations and to enter, thereafter, in the final compromise-finding phase. Much is at stake in these negotiations with the world’s fourth largest economy and its clear positive potential should not be overshadowed in Europe.

Today, at a time of global economic uncertainty, the conclusion of an ambitious EU-Japan trade agreement would create a unique opportunity for jobs and growth in two of the world’s largest economies. Indeed, and although estimates should always be taken with a pinch of salt, a Sustainability Impact Assessment of April 2016 concludes that an ambitious deal would result in a 0.76% increase in the EU’s gross domestic product (GDP) and a 34% increase in exports to Japan. For Japan, the numbers estimated are also favourable. Let us also not forget that, with the conclusion in October 2015 of the Trans-Pacific Partnership (TPP), which is a trade agreement that involves Japan, the United States and 10 other Pacific Rim countries, the EU-Japan FTA is even more necessary to keep the levels of exports and the European market shares in Japan.

The economic and strategic importance of this agreement is straightforward. In this sense, and while insisting on substance over speed, our mutual goal is to reach an ambitious and balanced agreement across all sectors as swiftly as possible. The ratification of TPP is still a question mark, in particular in the United States, but the EU-Japan trade negotiations should not depend, neither in content nor in timeline, on the TPP agreement. I believe that our FTA negotiations with Japan are technically mature and the leaders of the EU and Japan recognised in May the substantial progress made over the sixteen rounds of negotiations. After Japan’s parliamentary Upper House election in July, it is now the right time to get the full political backing that is needed to bring the negotiations across the finish line.

The next round of negotiations, by the end of September, would be a very good moment to show further concrete progress towards an agreement with tangible results to citizens and businesses. I do hope that this September round is productive and that negotiations can fully address the EU’s key concerns, specifically the ones about market access for goods (namely for agricultural products), services and investment, procurement (including railways), as well as those related to NTMs (namely in the automotive sector), the protection of geographical indications and intellectual property rights. In the end, we know that for a win-win outcome, an expanded market access through effective regulatory reforms in Japan will have to be paired by EU tariff concessions, including in important sectors such as the automotive. Regarding the investment protection chapter in specific, the Commission has, since late 2015, a reformed approach called the ‘Investment Court System’ and the European Parliament certainly cannot accept a trade agreement with the old and flawed investor-to-state dispute settlement mechanism.

It is true that in the past months negotiations appear to have reached a stumbling block and that good progress was achieved in a few areas, like regulatory cooperation, services, rules of origin as well as customs and trade facilitation. But it is normal that the most sensitive issues (in this case notably public procurement and those related to the automotive and the agriculture sectors) are left for the last stages of the trade negotiations. For this reason, the EU-Japan negotiations can only become more challenging in the months ahead. The task will not be easy but, according to the 2016 impact assessment, “the EU-Japan FTA adheres to the objective to create ‘smart, sustainable and inclusive growth’, jobs and welfare”, and a contribution to this goal is definitely worthwhile.

In conclusion, as the saying goes, “if there is a will there is a way”. At this mature stage of the negotiations, we need, above all, political will to find compromises and to address the most sensitive issues. Why should we do it and without further delay? Because the EU and Japan are like-minded partners with similar challenges and a swift conclusion of our trade negotiations would help boost jobs, growth and investment at a time when it is most needed. With an ambitious EU-Japan FTA we can take our bilateral economic and trade relations to a new level, help strengthen international rules and standards and revitalise our economies through competitiveness and innovation. Goodbye summer. It is time to work to move the EU-Japan trade negotiations forward.

 

Texto publicado no EP Today