Concluding EU-Japan trade talks must be top priority

Concluding the EU-Japan trade agreement would benefit both sides, explains Pedro Silva Pereira.

Pedro Silva Pereira | Photo credit: European Parliament audiovisual

By Pedro Silva Pereira

26 Jun 2017


The EU-Japan trade negotiations, ongoing since March 2013, are moving towards their final stages and an 'agreement in principle' may be in sight. For European trade Commissioner Cecilia Malmström, a deal with Japan is now the main priority. 

This is therefore a timely moment to provide a brief overview of the negotiations, focusing on their significance, objectives, state of play, as well as scrutiny that has been carried out by Parliament's international trade committee.

An agreement with Japan is an important piece in the EU's trade jigsaw for economic and strategic reasons. According to the 2016 independent sustainability impact assessment, EU exports to Japan will increase by 34 per cent and the EU's gross domestic product by 0.76 per cent.

Today, more than 600,000 jobs in the EU are linked to exports to Japan. This figure will likely increase with a trade agreement. Although estimates should always be taken with a pinch of salt, the potential of the agreement is clearly positive.

This deal also makes sense strategically. Japan is a de facto strategic partner of the EU. Both share common values and an agreement between two of the largest trading powers in the world would send a strong signal of support to an open and fair rules-based trading order, countering the current protectionist wave.

The objective is to get a trade agreement on goods, services and investment that eliminates tariffs, non-tariff measures (NTMs) and that addresses issues of common interest like sustainable development. 

The positions are known. The EU wants market access for goods (especially for agriculture and processed agricultural products), services, investment, procurement (including in the railway sector), the dismantling of NTMs (in particular for motor vehicles), as well as the protection of EU geographical indications. 

In the EU, the agri-food, pharmaceuticals, medical devices, motor vehicles and transport equipment sectors are expected to benefit the most.

For Japan, the main interests are the elimination of high tariffs on industrial products, namely cars, car components and electronics, together with the improvement of regulatory issues. This should be, in fact, a highly complementary agreement.

Both sides are committed to reaching a political agreement as early as possible in 2017. Negotiations are very well advanced, namely in the areas of sustainable development, SMEs, technical barriers to trade, sanitary and phytosanitary measures as well as customs and trade facilitation.

Negotiators are now in constant contact to address the remaining key issues: agriculture, public procurement, geographical indications and services. 

It is clear that an 'agreement in principle' will only be possible once these key issues are resolved. 

It is also clear that the European Parliament does not accept a lowering of ambition due to time considerations. Parliament stepped in at an early stage of the process by giving its position in 2012, before the Council adopted the negotiating directives.

Since then, the international trade committee monitoring group for Japan has been scrutinising the negotiations. The next debate on Japan will take place at our committee meeting in July. The Parliament has a demanding position. There should be no lowering of EU standards and the agreement must protect public services and the right to regulate in the public interest.

I see, in addition, three main points that are important. First, increased information and transparency about the negotiations and greater involvement of civil society. In my view, the publication of the EU-Japan negotiating directives by the Council would be, in this context, a major step forward.

Second, a strong and ambitious sustainable development chapter with core labour standards. This chapter should have, among other things, clear commitments to pursue the ratification of the fundamental international labour organisation conventions. 

Third, no inclusion of the private, opaque and unaccountable ad hoc investor-to-state dispute settlement (ISDS) arbitration in the EU-Japan agreement or any other trade agreement. 

The big debate on ISDS, which was based on legitimate concerns, led to the European Commission's proposals for a public investment court system (ICS) and for a future multilateral investment court. All in all, both sides must learn from the past if they want to have wide support for this future agreement.

In conclusion, the European Parliament wants a comprehensive, balanced, progressive, state-of-the-art trade agreement with Japan that defends the EU's interests and values, with real benefits to citizens and businesses, including SMEs. We remain vigilant on how ambitious this agreement will be but I expect nothing less than the level attained on the EU-Canada trade agreement, and hopefully more.

 

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