Confirmation at highest political level of agreement in principle sealing EU-Japan free trade talks
During the 24th EU-Japan summit which was held in Brussels on Thursday 6 July, the leaders of the EU – European Council President Donald Tusk and European Commission President Jean-Claude Juncker – and Japan's Prime Minister Shinzo Abe confirmed the agreement in principle that was concluded the previous day by European Trade Commissioner Cecilia Malmström and the head of Japanese diplomacy, Fumio Kishida, and that seals the negotiations for a Japan-EU free trade agreement (JEFTA) (see EUROPE 11823). The two parties hope to complete the agreement definitively by the end of the year by coming to an agreement on its investment protection chapter. Its implementation would not come about before 2019.
A message to Donald Trump. During Abe's visit to Brussels in March, "we promised to do everything in our power to conclude political and trade talks between Japan and the European Union on the eve of the G20 summit. And we did it", Tusk stated.
On Thursday, European and Japanese leaders confirmed their agreements in principle that have been concluded in tandem with the bilateral agreements negotiated by the EU and Japan since spring 2013: the economic partnership agreement (free trade agreement) and the strategic partnership agreement (SPA) that encompasses it. The SPA will govern relations at political level (including cooperation on security and crisis management, and migration crises) and cooperation in around 30 sectors (including energy, science and technology, and also data protection, with the signature on Thursday of agreements in these fields) and will ensure the coherence of the economic partnership agreement.
"We, as the European Union, firmly believe in the political purpose of a world which is built on openness, cooperation and trade (...) Although some are saying that the time of isolationism and disintegration is coming again, we are demonstrating that this is not the case. That the world really doesn't need to go a hundred years back in time. Quite the opposite", Tusk stated, in a message aiming implicitly at the protectionist and isolationist policy of US President Donald Trump.
"And do you know why this agreement was possible? Because it's not just about common trade interests. It is, above all, about the shared values that underpin our societies, by which I mean liberal democracy, human rights and the rule of law", Tusk added.
"We agreed in principle on a future economic partnership agreement. The depth of this agreement goes beyond free trade. It's impact goes far beyond our shores.
It makes a statement about the future of open and fair trade in today's world. It sets the standards for others. And it shows that closing ourselves off to the world is neither good for business, nor for the global economy, nor for our workers.
As far as we are concerned, there is no protection in protectionism", Juncker meanwhile commented.
"We have been able to show strong political resolve so that the EU and Japan can fly the free trade flag high", Abe said for his part.
Launched in March 2013 and progressing gradually ever since, the JEFTA negotiations picked up speed since Donald Trump took up office in early 2017 and since his quick decision to withdraw the US from the Transpacific Partnership (TPP) that was sealed with Japan and ten other Asia Pacific countries in 2015. Since Trump's decision, Tokyo has focused its negotiations on the EU.
JEFTA "will bring the economies of the EU and Japan closer together by addressing issues linked to market access for goods, services and investments, procurement, including railways, as well as those linked to non tariff measures and the protection of geographical indications and intellectual property rights. It will enable our common commitment to international standards to be strengthened for ever closer cooperation in the future", Juncker stated.
"With this agreement in principle, the EU and Japan are showing the world and its citizens that free trade, together with clear and transparent rules fully respecting and upholding our values, remains an important tool for promoting prosperity in our societies. Our economic partnership agreement will be the basis of a strategic partnership for free and fair trade against protectionism", Juncker concluded.
Last hurdle is settling investor-state investment disputes. Juncker also spoke of JEFTA's gains for Europe. For businesses in the EU, it will open up new possibilities in a market of 127 million people living in the fourth richest economy in the world. It has the potential to increase EU exports to Japan by more than a third, and would help cut the €1 billion worth of customs tariffs EU exporters have to pay every year.
European and Japanese leaders have tasked their negotiation teams with moving ahead quickly to finalising the agreement in order to be able to start domestic ratification procedures swiftly.
As well as coming to an agreement on the technical details of the agreement in principle that was sealed in recent weeks, the two parties need to continue their discussions on one last major stumbling block – the chapter on investment protection.
Beyond the differences between the two parties on investment protection and standards on this, the issue of the mechanism for settling investor-state disputes remains open.
The EU wants to negotiate on this issue on the basis of the investment court system (ICS) for arbitrating in investment disputes (a system promoted by the EU in its agreements with Canada and Vietnam, and at the multilateral level), with the hope of establishing a multilateral investment court.
Japan still needs to be convinced. It recently obtained the inclusion of ISDS mechanisms in the recent free trade agreements it concluded and continues to be a supporter of this much criticised arbitration system. (Original version in French by Emmanuel Hagry)
