Brussels, 27/10/2014 (Agence Europe) - On Friday 24 October, the European Commission announced that the free trade talks between EU and Japan had “advanced further” at the end of the seventh round of technical level negotiations in Brussels on 20-24 October.
The two parties made “further efforts” to advance the talks in almost all the areas under negotiation - customs duties, technical barriers to trade, access to public procurements, trade in services, investment, sanitary and phytosanitary (SPS) measures, regulatory cooperation, transparency and protection of intellectual property including geographical indications - the Commission announced. The chapters on rules of origin, trade facilitation and customs will be discussed between the formal sessions of technical negotiations - the next round of which is scheduled to take place in Tokyo during the second week of December.
In its press release, the Commission states that the EU is waiting for Japan to address a certain number of issues affecting European businesses on the Japanese market - particularly non-tariff barriers and access to public procurement. The gains expected from the future EU-Japan agreement are significant as the agreement would lead to a rise in EU GDP of 0.6% to 0.8%. EU exports to Japan could increase by over 30%, while those of Japan to the EU could increase by over 20%, according to the Commission.
The Commission and Japanese government hope for an agreement by the end of 2015. Outgoing European Commissioner for Trade Karel De Gucht and Japan's Minister for the Economy Toshimitsu Motegi agreed in mid-July to accelerate the talks that were started in June 2013 with a view to an agreement by the end of 2015. This is a commitment that was recently confirmed both by the new European Commissioner for Trade Cecilia Malmström (who will take up office on 1 November) and by Japan's Prime Minister Shinzo Abe on the sidelines of the ASEM summit in mid-October, said the Japan Business Council in Europe last week.
In 2013, the EU imported €56.6 billion of goods from Japan and exported €54.1 billion there - in other words there was a deficit of €2.5 billion. However, the EU maintained its surplus at €9.2 billion for its balance of services (€23.3 billion in exports, €14.1 billion in imports). The balance for foreign direct investment (FDI) stocks remained clearly negative for the EU with regard to Japan in 2012, standing at -€62.2 billion (€161.5 billion of FDI entering Japan compared with €98.8 billion of FDI leaving Japan).
European concession on railways. On 21 October, the EU formally lifted its objections to the delisting of three Japanese railway companies from the scope of application of the WTO's government procurement agreement (GPA) - companies which were previously held with a majority stake by the Japanese state (East Japan Railway Company, Central Japan Railway Company and West Japan Railway Company). The decision taken by the Council on 21 October will enable the WTO committee on the GPA to take action on lifting the EU's last reservations on this request for delisting that was made by Tokyo in 2001.
The EU's approval of this delisting is nevertheless accompanied by a joint statement from Germany, France and Greece - which are among the biggest railway equipment manufacturers globally - to ask for firm commitments from Japan on access to its railway market for European companies. This is a Japanese market that remains very closed as the EU share is 0.3% (when the EU represents nearly 60% of the global construction of railway service material). Germany, France and Greece are calling on Japan to reduce the scope of application for the operational security clause (OSC) in the future negotiations as this clause enables Japan to invoke reasons of seismic danger to prevent European equipment manufacturers from competing in calls for tender, and the clause thus enables Japan to protect its operators. Japan is also asked to ensure a reciprocal and substantial exchange of offers, non discriminatory treatment for European suppliers in its access to public procurement, and collaborative behaviour from the three delisted companies.
Represented by Unife, the European industry is nevertheless concerned about “insufficient measures and guarantees” provided by the Japanese party. “Not only does the OSC remain an obstacle (…) but the European Union has also agreed to allow the delisting of three key entities. As the procurement of the three Japan Railway companies encompass around 60% of the Japanese rail market, which is not only high-speed rail, but suburban and regional as well, the European rail industry is worried that by excluding them from the WTO rules, market access to EU suppliers will continue to be limited”, Unife states in a press release. It therefore calls on the Commission “to ensure a true level playing field between European and Japanese rail markets is achieved by the end of the negotiations”. Unife also insists that the future agreement ensure “that companies, whether private or public, are bound to respect the WTO principles”, as is the case with European companies. (EH)