EU-Japan one step closer to signing trade deal

(L-R) Japan's Prime Minister Shinzo Abe is welcomed by European council President Donald Tusk and EU commission President Jean-Claude Juncker in Brussels, Belgium, 21 March 2017. [Olivier Hoslet/EPA]

The European Union and Japan will sign a political agreement during a summit on Thursday (6 June) that will pave the way towards inking a trade deal by the end of the year.

A political agreement will not end the negotiations, which started four years ago though. It is always announced when both sides agree there is no turning back and enough is on the table to satisfy both sides,  Hosuk Lee-Makiyama, director of the European Centre for International Political Economy (ECIPE) told EURACTIV.com.

Now, the technical staff will have to hash out the details. Top negotiators have tried to iron out differences over auto tariffs in the EU and Japanese agriculture trade concessions, as well as issues like rules of origin.

Sticking points

Japan is reportedly proposing a low-tariff import quota on some categories of European cheese, which is proving to be a contentious aspect of the negotiations.

In the auto sector, Tokyo is set to request an elimination of tariffs in seven years after the trade pact comes into effect, the Japan Times reports. The EU, meanwhile, is believed to be asking for duties to be scrapped in 10 years instead.

Some other politically sensitive elements of the deal are clearly left for the next round, such as investment protection and data flows. “Count another extra year – at least – too see the final shape of the agreement,” said expert Iana Dreyer from Berderlex.

Věra Jourová, EU Commissioner for Justice, Consumers and Gender Equality, and Haruhi Kumazawa, commissioner of the Personal Information Protection Commission of Japan, met in Brussels on Monday (3 July) to advance on data protection.

They said that recent reforms in privacy legislation have increased convergence between the EU and Japanese systems. This offers new opportunities to further facilitate smooth and mutual data flows, in particular through simultaneous finding of an adequate level of protection by both sides, reads a Commission statement.

Trade Commissioner Cecilia Malmström and agriculture Commissioner Phil Hogan visited Japan last week and returned on Saturday (1 July), confident both sides can reach a political agreement.

“We have sufficient convergence so that our officials can discuss in the coming days to iron out the remaining details” the Commission tweeted on Saturday, confirming “substantial progress… on a number of sensitive agricultural issues”.

“We’re almost there. I’m quite confident that our leaders can agree on a package when they meet on 6 July”, tweeted Malmström.

She also said the package would “tear down almost all customs duties between us that are worth a lot of money, billions actually”.  EU exports to Japan overall “could be boosted by one third”.

Tough negotiations still ongoing

A special trade policy committee meeting dedicated to the Japan pact is pencilled in the diaries of the member states on Brussels on Wednesday (5 July).

Japanese Foreign Minister Fumio Kishida said he will be in Brussels on Wednesday for another round of talks with the EU trade chief, aiming to finalise the agreeement.

“Tough negotiations are still ongoing. I can’t prejudge, but I will join the talks with a strong determination to realise” a free trade agreement in principle, Kishida said today ahead of his two-day trip. “I will work to the bitter end to achieve the best results for Japan,” he said.

Japan is the EU’s sixth largest trading partner in the world. For Japan, the EU occupies third place. The volume of trade between the two totalled an estimated €125 billion in 2016.

The EU is accelerating negotiations on all fronts with the advent of the Trump era. In his plans to boost homegrown companies, Trump has proposed a 20% tax on imports and has taken an ambiguous, wait-and-see approach on the Transatlantic Trade and Investment Partnership (TTIP).

In the process, the president has also withdrawn US support for the Trans-Pacific Partnership (TPP), which included Japan and other 11 partners.

Europe moves to pick up free trade scraps as Trump ditches TPP

President Donald Trump signed an executive order formally withdrawing the United States from the 12-nation Trans-Pacific Partnership trade deal yesterday (23 January) as Europe sniffed a chance to pick up the free trade the US is turning its back on.

During a summit in March, European Commission President Jean-Claude Juncker said he was “very confident” of a “swift agreement this year”.

On Saturday, Malmström said that a deal would send a “strong signal to the rest of the world that the EU and Japan believe in free trade”.

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