Brussels, 02/03/2015 (Agence Europe) - At their ninth session of talks, held in Brussels from 23 to 27 February, European and Japanese negotiators made progress in the work to consolidate the negotiation texts, the Commission announced after the conclusion of the work. The next round will be held in Tokyo in April.
With the exception of intellectual property (including geographical indications), which will be discussed at the inter-session work, all of the main subjects were on the discussion table last week. These are: the chapters on market access (goods, services and public procurement), technical barriers to trade (NTB), the rules on investment, sanitary and phytosanitary measures (SPS), regulatory cooperation and transparency. “The progress made this week has helped to move forward the consolidation of the texts in several areas”, a Community source close to the dossier told us on Friday 27 February.
The parties also moved forward their discussions on the second list of Japanese non-tariff measures, which the EU wishes to scrap. The aim for the European side was to explain its demands regarding this list, which it put before the Japanese side in December 2014, the European source explained. This second list of Japanese non-tariff barriers includes some 20 automobile safety measures and many measures regarding food, particularly additives.
In these free-trade negotiations, which were launched in March 2013, the EU particularly expects Japan to respond to a number of problems faced by its companies on the Japanese market, particularly non-tariff barriers and access to public procurement, an area in which the EU expects concessions from Tokyo, particularly in the rail sector (see EUROPE 11185).
As regards public procurement, “we are having important discussions”, a European source confirmed on Friday. The EU hopes to proceed to an exchange of offers “as soon as possible”.
As for access to the market for agricultural and industrial projects, there is nothing new to report at this stage. The exchange of tariff offers took place last spring. At this point, the lists of sensitive products have not been announced.
On the Japanese side, the red lines usually relate to rice, sugar, beef, pork and dairy products. These sensitive agricultural products will not be the subject of a Japanese offer until the talks reach their final stages. In the field of agriculture, the EU also hopes to secure from Japan a broader protection of geographical indications than that laid down in the Japanese legislation alone.
For Europe, the main red line is the automotive sector. The car trade is a key element of the negotiations, with Japan calling for full tariff removal from the Europeans, with the EU calling in exchange for a drastic reduction, or even the removal altogether, of technical and regulatory barriers in the Japanese automotive sector.
Investment is another key chapter of the negotiations, both in terms of investor protection - the negotiations provide for an investor-state dispute settlement clause (ISDS) to be included, for which Japan has made very clear requests - and as regards access to the market, in which the EU has very strong interests. Its balance of foreign direct investment (FDI) stocks remained very much in the negative to Japan in 2012, standing at -€62.2 billion (€161.5 billion in incoming FDI from Japan compared to €98.8 billion in outgoing FDI to Japan).
Overall, these negotiations between two major developed economies are “highly complicated”, the European source close to the dossier acknowledged. However, the negotiators still hope to reach an agreement in principle by the end of this year. “That is what we are working towards. Will we succeed? That remains to be seen”, this source told us on Friday. The next round is scheduled for late April in Tokyo.
The anticipated gains of the future EU/Japan agreement are considerable, as it would bring about an increase in EU GDP in the order of 0.6% to 0.8%. EU exports to Japan could rise by more than 30%, Japanese exports to the EU by more than 20%, the Commission estimates.
In 2013, the EU imported goods from Japan to the value of €56.6 billion and exported €54.1 billion' worth to the Japanese archipelago, or a deficit of €2.5 billion. However, it maintained its surplus at €9.2 billion for its balance of services (€23.3 billion in exports, €14.1 billion in imports). (Emmanuel Hagry)