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03/12/2016

Open up to our beer, EU to tell Japan in trade talks

Agriculture & Food

Open up to our beer, EU to tell Japan in trade talks

A beer garden in Bavaria. [Shutterstock]

Japan needs to open up its beer market to European exports if Tokyo and Brussels are to agree one of the world’s biggest free trade deals next year, according to an EU document prepared for the next round of talks in December.

Japan and the European Union are seeking to strike a deal at the end of 2015, but EU countries, including France and Germany, question Tokyo’s willingness to change often little-known rules and product specifications that Europe says serve as trade barriers.

At an eighth round of talks on 8 December, EU negotiators will tell their Japanese counterparts that more rules governing the import of alcoholic beverages need to change, and EU negotiators will seek to change Japan’s definition of what constitutes beer.

“For beer, the impact on trade is rather significant,” said the EU document obtained by Reuters.

“Many of the European beers cannot be marketed as beers in Japan because of insufficient – according to the Japanese legislation – malt content or because they have some ingredients such as coriander,” it said.

Coriander seeds are used in Belgian and German wheat beers to add a citrus flavour.

Japan’s beer market is the world’s third largest in terms of profit generation, but is dominated by domestic producers Kirin, Asahi, Sapporo and Suntory.

Europeans have a negligible presence, with joint ventures allowing local production of premium beers such as Heineken.

European industry believes Japan has special regulations on everything from beer to music and imported cars.

Overall, an EU-Japan trade agreement could lift the economic output of both sides by almost 1%, according to the European Commission, the EU executive. Japan is the EU’s seventh-largest export market.

A Japan-EU deal would also fit into an emerging patchwork of sophisticated accords between the world’s richest countries following the failure of global free-trade talks.

The EU document on Japan is the trade bloc’s second list of so-called non-tariff barriers and follows progress on tackling the issue this year.

EU trade negotiators had been told to pull the plug on talks, which began in April 2013, if Japan did not show sufficient progress on non-tariff barriers. In May, Brussels said it was broadly satisfied with Japan’s progress, allowing negotiations to continue.

Background

The European Union and Japan agreed on 25 March to launch talks on one of the world's most ambitious trade deals.

>> Read: EU, Japan agree to launch trade talks

Brussels and Tokyo want to deepen a relationship that encompasses one-third of global economic output but is hampered by regulations closing industries to outsiders.

Japan is the EU's seventh largest export market buying €69 billion worth of European goods in 2011.

For Japan, the EU ranks as its third-biggest market with shipments of 6.5 trillion yen (€52.95 billion) in 2012.

Japan already has low or zero import tariffs on many EU goods, so the real prize for Europe is removing special regulations on everything from music to imported cars.

One of the EU's key requests is getting access to Japan's public procurement market.

The European Commission believes a free-trade deal could lift the economic output of both sides by almost 1% each.

But EU carmakers are sceptical about the deal, saying numerous barriers hinder exports to Japan, including environmental standards and tax breaks for "light" cars.

>> Read: France, Italy win safeguard clause in EU-Japan trade pact

Timeline

  • 8 Dec.: Next round of EU-Japan trade talks in Tokyo
  • 2015-2016: Talks expected to wrap up

Further Reading

European Commission