Japan deal: The EU's most important bilateral trade agreement?
The EU’s wide-ranging trade agreement with Japan will require Parliament’s final approval, explains Pedro Silva Pereira.
The European Parliament will soon face a crucial decision on the most important bilateral trade agreement ever concluded by the EU.
The work of the European Parliament began early in the process, with the involvement of 28 Japan monitoring groups in the international trade committee over the years.
The EU-Japan economic partnership agreement was concluded in December and Parliament now has two main tasks at hand: to analyse the final text and hear all stakeholders ahead of the final vote.
Parliament has already started debating the agreement with Japan; on 9 July, the international trade committee will hold a public hearing.
Following the signature of the agreement in mid-July, I will present a draft recommendation and a draft resolution, which will then receive contributions from other committees.
In mid-September, the international trade committee will have its third mission to Tokyo to meet with the Japanese government, Parliament and civil society. The final vote on the agreement is expected to take place in the December plenary.
The EU-Japan economic partnership agreement covers market access (of goods, services and public procurement), regulatory cooperation and the modernisation of trade rules (for example, intellectual property rights, trade barriers and corporate governance).
The agreement does not include a dispute settlement mechanism for investment, nor substantive commitments on free flow of data.
Negotiations on investment protection continue on a separate track based on the European Commission’s proposal for an investment court system (not on the old, private investor-state dispute settlement mechanism).
For the data flows, the trade agreement includes a review clause to examine the issue within three years.
If these processes reach a conclusion, they should be subject to a separate ratification procedure in the new Parliament.
Meanwhile, a self-standing process for an ‘adequacy decision’ with Japan is being monitored by the civil liberties, justice and home a airs committee, which will ensure high data protection standards.
The main results of the EU-Japan economic partnership are the following.
Japan will remove significant barriers for EU agricultural exports (for instance, on European wine and pig meat) and 205 EU designated geographical indications will be protected.
There will be a significant reduction in trade barriers, particularly in the car sector, as Japan will apply UNECE international regulations, as well as on textiles, the pharmaceutical sector, medical devices and cosmetics. For its part, the EU will also eliminate a number of tariffs.
On public procurement, Japan will remove the ‘operational safety clause’ - which undermined the participation of European producers in the Japanese railway market - and transparency will be greatly improved. In addition, this will be the first trade agreement with a chapter on small and medium sized-enterprises.
The economic balance of this trade agreement is an important point but it is not the only one for the Parliament’s final assessment.
Three other major aspects can be highlighted: the strategic dimension of the agreement, regulatory cooperation and the sustainable development chapter.
First, the EU-Japan economic partnership agreement comes at a time of US President Donald Trump’s erratic trade policy. This trade agreement with a strategic ally can send a strong message in favour of an open and rules-based trade order. In addition, it gives the EU trade agenda a strong opportunity to take the lead in the Asia-Pacific region.
Second, regulatory cooperation matters to those citizens that do not want to see a lowering of the EU’s high standards on labour, environment or food.
Therefore, this chapter needs to be voluntary and the agreement must protect the right to regulate in the public interest.
Third, the European Parliament wants a strong and ambitious sustainable development chapter. The current discussions on labour and environmental issues in EU trade agreements make clear that there is room for improvement regarding its effectiveness and enforceability.
With this in mind, I vigorously championed the inclusion of a specific ‘review clause’ on the enforceability mechanisms of the sustainable development chapter and I am glad to see that this is now present in the final text.
This agreement also includes political commitments to pursue ratification of the fundamental International Labour Organisation (ILO) conventions.
We therefore expect clear progress from Japan towards ratifiying the two remaining ILO core conventions (on discrimination and on the abolition of forced labour) sooner rather than later.
Finally, this is the first EU trade agreement with a commitment to implement effectively the Paris agreement on climate change. This is, of course, welcomed and should be followed in future trade agreements.
A good trade agreement with Japan is one that is balanced, defends EU interests and values, promotes sustainable development and brings benefits for citizens and companies. The European Parliament will now do its part to ensure that this is the case.
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