EU, Japan Leaders Pledge to Speed Up Trade Talks

4 June 2015

Leaders from the EU and Japan agreed last week at a Tokyo summit to speed up the pace of their bilateral trade negotiations, which have been underway since 2013. The push to advance the discussions comes as both trading partners are also working to advance other “mega-regional” trade talks, namely the Transatlantic Trade and Investment Partnership (TTIP) and Trans-Pacific Partnership (TPP).

The trade deal, referred to as both an Economic Partnership Agreement (EPA) and Free Trade Agreement (FTA), is being negotiated in parallel with a Strategic Partnership Agreement (SPA) between the two sides. Both were key topics during the 29 May meeting, which saw the EU represented by Commission President Jean-Claude Juncker and Council President Donald Tusk. Japan was represented by Prime Minister Shinzo Abe.

“The SPA and EPA/ FTA hold the potential to lift our relations to a new strategic level,” leaders said in a joint press statement following the meeting, highlighting the importance of reaching a “highly comprehensive and ambitious” trade deal.

This deal, they added, should particularly focus on areas such as goods, services, and investment market access; government procurement, with the inclusion of railways; non-tariff measures; and intellectual property issues, including the protection of geographical indications.

“To this end we have entrusted our negotiators with the mandate to settle the outstanding differences with a view to reaching agreement encompassing all the key issues preferably by the end of 2015,” they affirmed.

While Abe has been pushing for a deal reached by year’s end, EU officials have suggested that the talks could go on into next year if the substance requires it.

“I strongly believe in the necessity to have a free trade agreement with Japan being concluded as soon as possible, possibly by the end of this year. If not, in the first months of 2016,” said Juncker following the meetings in Tokyo.

Along those lines, the EU Commission chief said, a five-point “Action Plan” has been submitted to Abe on ways to move forward in the negotiations.

Malmström outlines key areas for EU

 EU Trade Commissioner Cecilia Malmström, who was also in Tokyo for meetings with various Japanese ministers, including Foreign Affairs Minister Fumio Kishida and Minister of Economy, Trade, and Industry Yoichi Miyazawa, outlined in a speech what Brussels currently envisions as an “ambitious” trade deal.

“We believe that if this deal is worth doing, it’s worth doing right. We have to be ambitious on the substance as well as on the timing,” she said at Keindanren, the Japan Business Federation.

An ambitious deal, she said, would specifically involve outcomes in tariffs, investment, public procurement, and regulatory compatibility.

For example, on tariffs, the two sides should aim for elimination, including in areas such as food, agriculture, and cars, while respecting “core sensitivities.” On public procurement, she noted that the two sides have already reached a deal on “non-discriminatory and transparent access to procurement” by Japan’s top railway companies, suggesting that similar ambition across all public tenders at both city and central government levels is an EU goal.

Regulatory compatibility, for its part, “is essential” for ensuring major gains from trade, with the EU trade chief qualifying that cooperation in this area will not entail undermining consumer and environmental protections. Meanwhile, an improved investment climate is necessary for boosting investment flows.

Two years in

The launch of the talks was announced in March 2013, with the first round of negotiations held the following month. To date, ten negotiating rounds have been held on the proposed agreement, with the latest one being convened in April and the next one expected in July. (See Bridges Weekly, 27 March 2013)

The European Commission then conducted a review of the talks in 2014 in order to determine whether sufficient progress had been made in non-tariff barriers, railways, and urban roadmaps, a requirement under the mandate given to EU negotiators by the bloc’s trade ministers.

The directives approved by the European Council's trade ministers in late 2012 – prior to the launch of the negotiations – also required that Japan's non-tariff barriers be eliminated in parallel to any tariff reductions on the EU side.

TPP, TTIP in the background

The two trading partners combined make up over a third of global GDP, according to EU data. Japan is the EU’s second largest trading partner in Asia, preceded only by China, with goods trade between the two sides being dominated by products such as motor vehicles, electrical machinery, optical and medical instruments, chemicals, and pharmaceuticals.

The push for a bilateral trade pact comes as both Tokyo and Brussels pursue various avenues for boosting trade, and in turn their growth and jobs prospects, with other key partners. For example, the EU is working to advance talks for the planned TTIP deal with the US, while Japan is one of the 12 countries involved in the TPP.

The former is not expected to be completed until 2016 at the earliest. The latter, for its part, could be finished in the coming months, depending partly on whether Washington lawmakers sign off on major trade legislation. (For more on the US process, see related story, this issue)

ICTSD reporting; “Japan-European Union Summit to Discuss Stalled Free Trade Deal,” AGENCE FRANCE PRESSE, 29 May 2015; “Japan, EU agree to speed up talks on trade deal,” AGENCE FRANCE PRESSE, 29 May 2015.

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