After five years of talks, the EU and Japan finalised negotiations on a comprehensive trade deal on Friday (8 December), leaving out investment protection. The deal will open up the EU market to Japanese cars and auto parts and Japan to European dairy and agricultural products.
“The finalisation of the negotiations on the EU-Japan Economic Partnership Agreement (EPA) demonstrates the powerful political will of Japan and the EU to continue to keep the flag of free trade waving high, and sends a strong message to the world,” European Commission President Jean-Claude Juncker said in a joint statement with Prime Minister of Japan Shinzo Abe.
It's done. @EU_Commission and #Japan finalised negotiations of the Economic Partnership Agreement between the #EU and Japan today – a powerful political signal to the world, keeping the flag of free and fair trade high: https://t.co/3YUi5cgXoC pic.twitter.com/S3cJ8Qvm5A
— Jean-Claude Juncker (@JunckerEU) December 8, 2017
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 In the process, Trump has also withdrawn US support for the Trans-Pacific Partnership (TPP), which included Japan and other 11 partners.
The negotiations between the two partners were politically concluded over the summer, but negotiators had to work out the details of the accord in the autumn.
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.
With the agreement, which the Commission says is one of the largest and most comprehensive the two partners have concluded so far, will create a huge economic zone with 600 million people and approximately 30 percent of the world GDP.
“The deal will open up tremendous trade and investment opportunities and will contribute to strengthening our economies and societies,” Juncker and Abe said in the statement.
“We are confident that, once in place, this Agreement will deliver sustainable and inclusive economic growth and spur job creation, while at the same time confirming our commitment to the highest level of labour, safety, environmental and consumer protection standards and fully safeguarding public services.”
The EU and Japan left out the investment protection for now. The two sides agreed to continue negotiating in the early months of 2018.
Tokyo doesn’t want to endorse the EU-sponsored Investment Court System, devised for the first time with Canada in the Comprehensive Economic and Trade Agreement to resolve disputes between investors and states. But the European Commission continues to insist on it.
EU trade chief Cecilia Malmström confirmed during a press conference that the two sides had loads of discussion on investment protection, where Japan prefers the traditional system of ISDS.
“We are advancing in a constructive manner, but we agreed the negotiators will need to continue the talks on that,” she said, noting that investment protection can be integrated into the deal at a later stage.
— European Commission (@EU_Commission) December 8, 2017
Rules about data are missing from the current agreement, but both sides have agreed to revisit this subject again within three years.
Liberal MEP Marietje Schaake believes this needs to happen as soon as possible if Europe wants to lead on digital trade.
“We have come a long way but our work is not yet finished. An ambitious text about the free flow of data between the EU and Japan, setting privacy standards and creating a framework for digital trade should be our ambition. Only then can we speak about a trade agreement fit for the 21st century,” Schaake said.