EU Ministers Give Go-Ahead for Launch of Japan Trade Talks
EU trade ministers have formally given the green light for Brussels to begin negotiations with Tokyo for a bilateral trade deal, officials announced late last week. The news comes as the 27-country bloc continues its efforts to finalise trade pacts with Canada, Colombia, and Peru, among others, while exploring options for new negotiations with other trading partners in an effort to create jobs and foster economic growth in the struggling eurozone.
Japan talks set to begin
“I am delighted that the Council has today decided to give the Commission ‘the green light’ to start trade negotiations with Japan. We now have a clear mandate - confirmed by all the member states - which sets out Europe’s objectives,” EU Trade Commissioner Karel De Gucht said last Thursday, following news of the Council’s approval.
The EU trade chief added that Japan has already removed various non-tariff barriers up front - such as by granting liquor licenses to European operators - ostensibly to assuage concerns raised in recent months over whether Tokyo would be willing to lower non-tariff barriers enough to align with EU interests.
“Such moves have given us all the reassurance we could reasonably expect before a formal negotiation is opened. And no other partner has ever gone as far as Japan before we sat down at the negotiation table together,” De Gucht continued.
“Europe is not naïve,” he added. “Europe is going into these negotiations with our ‘eyes wide open’.”
While momentum toward launching talks with Japan has been building over the past few months, some EU legislators and member states have expressed concern that some sectors - particularly automobiles - might suffer as the result of a trade deal, unless Tokyo dramatically lowers non-tariff barriers in these areas. The massive influx of cars from South Korea after Brussels’ FTA with Seoul took effect last year has fuelled these fears further among European automakers, especially those in France and Italy.
The negotiating directives approved by the European Council’s trade ministers require Japanese non-tariff barriers to be eliminated in parallel to any tariff reductions on the EU side. They also direct the Commission to suspend negotiations if progress in non-tariff barriers, railways, and urban transport roadmaps are not seen within a year of the talks’ launch. There is also a safeguard clause to protect sensitive EU sectors, according to the Commission.
The European Commission had requested permission in July from the bloc’s 27 member states to begin the proposed trade talks. (See Bridges Weekly, 25 July 2012) The European Parliament had granted its own approval this October, with the caveat that Tokyo would need to deliver “clear results” in trying to remove non-tariff barriers. (See Bridges Weekly, 31 October 2012)
As Tokyo and Brussels together make up over one-fifth of global trade, advocates hope that a trade deal could provide a much-hoped-for boost to the EU economy and to Japan, which itself has encountered its own challenges in its efforts to recover from last year’s earthquake and tsunami.
“This is an important political decision - and necessary - if we want to foster growth and jobs in Europe,” De Gucht added, noting that an FTA could potentially generate more than 400,000 jobs and 0.8 percent GDP growth for the EU. “That’s exactly what our economies need. And we will do it by ensuring we open up the Japanese market and by ensuring we give European business real opportunities in Japan.”
Negotiations are expected to begin at the next EU-Japan summit, according to recent reports from Bloomberg.
Canada, EU talks
The EU has been attempting to move forward on other proposed bilateral deals as well over the past month, with its current negotiations with Canada repeatedly finding themselves in the spotlight as the year draws to a close. Negotiators have said that they wish to conclude the trade talks by the end of 2012, though some contentious issues still remain unresolved between the two sides.
In this context, De Gucht met with his Canadian counterpart, Trade Minister Ed Fast, on 23 November in an attempt to resolve some of these problems on a political level. According to the European Commission, the two trade officials are now set to instruct their negotiators to narrow gaps on outstanding issues, with the goal of clinching a deal in the coming weeks.
“I am pleased that our meeting at a political level has provided the momentum needed to spur on the negotiations into the home strait,” De Gucht said following the meet. “It’s clear that there has been significant progress but some important work remains to be done.”
The talks - which were launched over three years ago - are reportedly struggling over issues such as agricultural market access, intellectual property protections, and public procurement. (See Bridges Weekly, 21 November 2012) Negotiators have set repeated deadlines over the years for finishing the talks, only for these to fall through.
Colombia, Peru FTA
Meanwhile, the European Parliament is soon expected to vote on whether to approve a free trade agreement with Colombia and Peru, six months after the bloc’s trade ministers formally signed off on the deal. (See Bridges Weekly, 6 June 2012) Members of the Parliament’s trade committee endorsed the deal just last week; the pact may be reviewed by the full Parliament as early as this month.
The trade pact - expected to slash €500 million in duties alone - will liberalise all trade in industrial and fisheries products among the participating economies, and also includes provisions on trade in services, public procurement, and intellectual property rights.
The deal also includes a commitment to implement international conventions on labour rights, along with a clause focused on preserving a high level of environmental protection standards on all sides. Labour and human rights have been a long-standing concern on the EU side, despite commitments made by the Latin American countries involved regarding the implementation of the deal’s human rights clause.
Notably, the Parliament’s trade committee also signed off last week on “stabilisation mechanisms for bananas,” which were negotiated in response to concerns among banana growers in the outermost regions of the 27-country bloc - for instance the Canary Islands, Guadeloupe, and Martinique. These producers fear that the EU’s reduction of import tariffs for bananas could put them at a disadvantage relative to their Colombian and Peruvian competitors.
The mechanisms negotiated in the committee would allow the European Commission to suspend the bloc’s preferential customs duty for a period of up to three months, should banana imports surpass certain levels. However, such mechanisms must still be approved by the European Parliament before taking effect.
ICTSD reporting; “EU Nations Authorize Start of Free-Trade Talks With Japan,” BLOOMBERG BUSINESSWEEK, 29 November 2012; “EU-Japan free trade agreement clears major hurdle,” DEUTSCHE WELLE, 29 November 2012.
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