Trade negotiations between the European Union (EU) and Japan are an important piece of EU’s trade policy puzzle, which includes plans for free trade agreements (FTAs) with major partners. The FTA with Japan, the world’s fourth largest economy, is indeed the EU’s second most economically important negotiation, after the Transatlantic Trade and Partnership Agreement (TTIP) with the United States. But to be the second most important negotiation does not mean that the first should take precedence: it would be a mistake to wait for TTIP to conclude the negotiations with Japan. The economic case for a deep and comprehensive FTA with Japan is hence quite straightforward: a future deal can boost EU’s growth and jobs as there is a huge potential from Japan’s further opening to European exporters and investors. But one must also bear in mind how important this agreement is from the strategic point of view: increasing the scope of both political and economic cooperation with Japan is crucial for the new geostrategic scenario.
True, the EU-Japan economic relations remain underdeveloped and trade has been declining over the past two decades. Tariffs – which are high on food, drink and agricultural products – and in particular non-tariff measures (NTMs) – like technical barriers to trade and sanitary and phytosanitary measures – are one of the main reasons for this untapped potential. In fact, Japan has one of the OECD’s lowest import penetration rates and of inward foreign direct investment (FDI), which clearly indicates how structurally closed the Japanese market is. Therefore, the European Commission estimated, in 2012, that an ambitious FTA with Japan could add 0.8 percent to the EU’s gross domestic product, increase 33 percent of EU’s exports to Japan and create 400 000 new jobs in Europe. These estimates, which will be complemented by a sustainability impact assessment in early 2016, are to be taken with a pinch of salt, but they indicate the large potential of freer EU-Japan trade relations.
The EU-Japan FTA negotiations, which were launched in March 2013 and with twelve rounds of talks held so far, will have to address key EU concerns. The joint statement of the 2015 EU-Japan summit clearly mentions these issues, notably the ones “related to market access for goods, services and investment, procurement including railways, as well as those related to NTMs and the protection of geographical indications (GIs) as well as intellectual property rights”. The aim is therefore to establish a new regulatory framework and to get a balanced deal in all sectors and to conclude it swiftly – but without compromising substance – in order to take the bilateral economic and trade relations to a new level.
Good progress has been made in these negotiations, but much remains to be done before the conclusion of a comprehensive and ambitious agreement with Japan. We still need to settle important outstanding issues and negotiations will become, consequently, more challenging in the months ahead. The steps Japan took so far – namely on NTMs, and especially in the automotive sector – show real willingness to open up the Nippon economy. But it is important to note that the European Parliament (EP) took the stance, in its 2012 resolution on EU trade negotiations with Japan, that sensitive EU tariffs should not be reduced without corresponding elimination of Japanese NTMs and obstacles to public procurement. I am confident that Japan will continue the progress made and that the EU will be able to respond to our country partner’s expectations.
One must see the EU-Japan FTA negotiations also in light of Japanese Prime Minister Shinzo Abe’s “Abenomics” economic policy, which is aimed at economic growth also through structural domestic reform and includes greater exposure to international competition. That is why Japan is currently involved in trade negotiations with a number of partners, including the EU and the United States (that have FTAs in place with South Korea, a direct competitor for Japan’s exports). The Trans-Pacific Partnership (TPP) – negotiated between Japan, the United States and ten other countries in the Pacific region – is more advanced than negotiations with the EU. According to the Japanese Ambassador to the EU, Mr. Keiichi Katakami, the EU trade discussions do not depend on the TPP negotiations. I do hope he is right: the EU-Japan trade and investment discussions should not hinge on Japan’s success in TPP talks and the final offers for an agreement with the EU should not be based on what will be agreed in TPP.
As rapporteur for the EU-Japan FTA in the European Parliament and Chairman of the Monitoring Group for Japan in the International Trade Committee, I will continue to follow closely these negotiations, making sure that the content of the agreement is substantial and that protects EU’s interests. We all know that a good agreement on NTMs is crucial. But it is also important to ensure the opening of Japan’s public procurement market, protect the GI’s, establish a new Investment Court System (replacing the old investor-state dispute settlement), include a robust sustainable development chapter, while taking into account the sensitivity of certain sectors (if necessary, through a safeguard clause). We want a far-reaching and ambitious agreement, which is in the best interest of our citizens and enterprises, and we will work for it. The EP, which, since the Lisbon treaty, has the right to veto trade agreements, will only give its approval if the right conditions are there.
To conclude, the ongoing trade negotiations with Japan – a strategic and like-minded partner of the EU – are very important as they can provide a great stimulus for both economies, resulting in considerable benefits in terms of growth and jobs. Promising progress has been made so far, but work must continue and political motivation needs to be there to achieve a balanced and satisfactory outcome for what can become one of the most important free-trade corridors in the world.
Texto publicado no EP Today