Japanese, European Leaders Push for Swift Conclusion to Trade Talks

23 March 2017

Japanese Prime Minister Shinzo Abe met with German Chancellor Angela Merkel on Sunday 20 March in Hanover, renewing calls to finalise negotiations on a EU-Japan free trade accord and defending open and fair trade.

The meeting, on the occasion of the opening of the CeBIT digital trade show for which Japan is this year’s partner country, came on the first leg of a four-day European tour that also saw Abe meet with leaders in France, Italy, and the seat of the European Union in Belgium.

Abe, Merkel tout “free trade” commitment

How to address the growing debate over what constitutes “free trade” and “fair trade,” particularly in a context of changing political leadership in key economies and a parallel rise in anti-globalisation sentiment, was one of the topics on the docket for the Abe-Merkel meeting.

"Japan, having benefited in abundance from the benefits of free trade and investment, wants to be the champion upholding open systems alongside Germany," Prime Minister Abe told reporters after meeting with Merkel.

“To do so it will be necessary to have rules that are fair and can stand up to democratic appraisal,” the Japanese leader added.

"At a time when we are being forced to argue about free trade, open borders and democratic values with many, it is a good sign that Japan and Germany are shaping the future to the benefit of the people," stated the chancellor, according to a news item issued by the German Federal Government.

“We want to link our societies with one another and let them deal fairly with one another and that is what free trade is all about,” Merkel continued.

The comments came shortly after Merkel held talks with US President Donald Trump in Washington on trade and other subjects. Neither Abe nor Merkel mentioned the American president explicitly in their remarks.

Abe had earlier engaged in separate talks with Trump to explore avenues for bilateral cooperation on trade and to discuss possible next steps for the Trans-Pacific Partnership, a 12-nation free trade pact from which the United States withdrew shortly after Trump’s inauguration in January.(See Bridges Weekly, 2 February 2017)

The Abe-Merkel discussions also came shortly after a meeting of G20 finance ministers and central bank governors in the German city of Baden-Baden, where officials debated how to address trade and the concept of protectionism in their communiqué.

Germany currently holds the rotating G20 presidency, with a leaders’ summit planned for early July in Hamburg. (For more on both Trump and the G20, see related stories, this edition).  

Abe, EU leaders eye 2017 “agreement in principle”

In Brussels on Tuesday, both Prime Minister Abe and leaders from the European Union met to provide direction to ensure a swift conclusion to the EU-Japan free trade agreement(FTA), otherwise referred to as an economic partnership agreement (EPA), ideally by the end of this year.

Abe met with both European Council President Donald Tusk and European Commission President Jean-Claude Juncker in the Belgian capital. Along with the FTA, the leaders were also expected to discuss preparations for the May summit of G7 leaders, being hosted this year by Italy in the Sicilian city of Taormina.

According to a statement delivered by Tusk ahead of the Japan-EU meeting, leaders from all sides were planning to use this week’s discussions to give trade negotiators “a clear political direction” going forward.

Talks for the bilateral trade pact have been ongoing since 2013, with the seventeenth and most recent round concluded in September 2016.

The launch of those negotiations nearly four years ago was heralded as a “historic event,” even as trade officials acknowledged that the sensitivities on certain key topics such as non-tariff barriers could make the upcoming talks very complicated. (See Bridges Weekly, 27 March 2013)

Currently, the issues that have yet to be resolved reportedly concern Japanese automobile non-tariff measures and improved market access for European agricultural exports, both areas that were already expected to be difficult to address. (See Bridges Weekly, 23 February 2017)

The planned agreement would seek to strengthen economic ties between the partners by cutting tariffs and barriers, building a stable and transparent operational environment to facilitate trade and investment, and strengthening services and public procurement market access.

When taken together, Japan and the EU comprise over a third of global GDP, where Japan follows China as the 28-member bloc’s second largest Asian trading partner.

“We shall try to aim for agreement in principle at the earliest possible date” in order to “show the symbol of free trade to the world,” Prime Minister Abe said, according to comments reported by Bloomberg.

“Our negotiations with Japan are now in a decisive and hopefully final stage,” said Juncker in his own remarks on the subject.

Suggesting that the two sides are “confident” that they can reach a deal this year in light of the leaders’ discussions, the EU Commission chief added that he is “heartened by the progress” made so far because both trading partners know that “openness will continue to drive our economies and societies forward.”

“We will continue to look out towards the world, rather than return to isolationism,” Juncker said, emphasising that free trade is a vehicle for fair trade to the mutual benefit of all parties.

The EU Commission president also suggested, however, that the outstanding issues in the planned trade pact are the toughest ones.

Meanwhile, Tusk also referred to the upcoming Brexit negotiations with the UK, noting that the European bloc will do everything in its power to minimise any negative impacts on foreign trading partners, including with regards to Tokyo.

Along with a trade deal, the European Union and Japan are also negotiating a legally binding Strategic Partnership Agreement, which would cover bilateral cooperation on topics ranging from climate change to international development policy.

ICTSD reporting; “EU, Japan Forge Ahead in Trade Talks as Trump Gives Impetus,” BLOOMBERG, 21 March 2017; “Merkel, Abe Call for EU-Japan Deal to Stem Trade Barriers,” BLOOMBERG, 19 March 2017; “Germany’s Merkel and Japan’s Abe urge free trade with jabs at U.S.,” REUTERS, 19 March 2017; “Abe sets off on 4-day trip to Europe,” KYODO, 19 March 2017; “Abe to meet with EU leaders later this month,” KYODO, 10 March 2017;  “Angela Merkel and Japan’s Shinzo Abe make subtle digs at Donald Trump at German tech event,” THE INDEPENDENT, 20 March 2017.

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