Commissioner urges opening of EU-Japan trade negotiations

The European commission has asked member states to "give the green light" for the opening of negotiations on a free trade deal with Japan, EU trade commissioner Karel De Gucht has announced. Reports Gerald Callaghan

By Gerald Callaghan

19 Jul 2012

Member states were urged to allow trade negotiations to progress with Tokyo, as Japan is "a major political and economic partner", said De Gucht, who added that the deal would strengthen ties with Europe's "second biggest trading partner in Asia".

Speaking at a press conference on Wednesday, the Belgian official suggested that, over the next 20 years, global economic growth would be primarily driven by economies in Asia, and warned that it would be "a serious mistake" to overlook Japan in the EU's trading strategy.

At a summit in June, EU leaders agreed that trade was pivotal in ensuring growth and the emergence of EU economies from the sovereign debt crisis. The EU considers the signing of trade accords with the 80 countries where negotiations have already begun to be of high importance, which could in turn lead to the creation of over two million jobs and contribute nearly €275m to Europe's ailing economy.

Japan is the world's third largest national economy, accounting for nearly nine per cent of world trade, with EU-Japan trade estimated at €120bn per year. De Gucht highlighted that together "the EU and Japan account for over one third of the world gross domestic product (GDP)".

"Opening up the Japanese market even further could increase the EU's GDP by almost another percentage point, and boost EU exports to Japan by one third", he said.

The commission believes there is enough support in the 27 member states to proceed with the initiative and give it the mandate to negotiate with Japan on behalf of the EU, with a first round of negotiations taking place at the beginning of next year.

"Opening up the Japanese market even further could increase the EU's GDP by almost another percentage point, and boost EU exports to Japan by one third" - Karel De Gucht

De Gucht said that a large proportion of EU industry has "expressed support" for the free trade negotiations, but indicated that there are some concerns about the competition issues that a deal "with this developed economy" would bring.

The EU automotive industry has raised concerns over the possible trade deal with Japan following the EU-South Korea FTA that came into effect on 1 July last year. South Korean auto makers exported 400,000 cars to the EU from July 2011 to May 2012, up 40 per cent compared to the previous year, according to data from Seoul's customs agency, far outpacing EU exports to South Korea, which rose 13 per cent over the same period, to 73,000 cars.

European automakers, struggling with weak demand at home, are understandably sceptical over the deal with Tokyo after the close relationship between carmakers and their suppliers made it difficult for foreign companies to break into the South Korean market.

European automobile manufacturers association president Sergio Marchionne said last month that South Korea's increasing car exports were a "warning sign" ahead of a free trade deal with Japan, Asia's biggest car exporter.

Attempting to alleviate fears, De Gucht outlined plans to "reassess the initiative after one year to take stock" of Japanese efforts to reduce non-tariff barriers, and if it becomes clear that Japan cannot deliver on the proposed reductions then negotiations would stop.

The commencement of a free trade agreement with Japan is not assured and the European parliament must sign off on any final agreement, with MEPs also airing concerns last month that a free trade deal with Japan could harm the car industry in Europe.

MEPs pointed to demands made last year for a roadmap to deal with non-tariff barriers in Japan and said the commission's report on the current state of play has failed to address their concerns.

However, they agreed that the opportunity for closer trade links with Japan and their potential to help create jobs and growth in Europe should not be missed.

Read the most recent articles written by Gerald Callaghan - Commission outlines plans to tackle EU's 'throw-away society'

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