Japan Brussels, 25 March 2013
A Free Trade Agreement between the EU and Japan
The EU and Japan today officially launched the negotiations for a Free Trade Agreement (FTA). The aim is for a comprehensive agreement in goods, services and investment eliminating tariffs, non-tariff barriers and covering other trade-related issues, such as public procurement, regulatory issues, competition, and sustainable development. The first round of negotiations will be held in Brussels from 15 to 19 April 2013.
Japan is the EU's 7th largest trading partner globally and the EU’s 2nd biggest trading partner in Asia after China. Conversely, the European Union is Japan’s 3rd largest trading partner, after China and the United States. Together the European Union and Japan account for more than one third of world GDP.
An agreement between the two economic giants is expected to boost Europe’s economy by 0.6 to 0.8 % of its GDP and will result in growth and the creation of 400.000 jobs. It is expected that EU exports to Japan could increase by 32.7%, while Japanese exports to the EU would increase by 23.5%
What will the negotiations cover?
The negotiations with Japan will address a number of EU concerns, including non-tariff barriers and the further opening of the Japanese public procurement market. Both sides aim at concluding an agreement covering the progressive and reciprocal liberalisation of trade in goods, services and investment, as well as rules on trade-related issues.
The negotiations will be based on the outcome of a joint scoping exercise, which the EU and Japan completed in May 2012. In the context of this exercise, both parties demonstrated their willingness and capacity to commit to an ambitious trade liberalisation agenda. The Commission has also agreed with Japan on specific 'roadmaps' for the removal, in the context of the negotiations, of non-tariff barriers as well as on the opening up of public procurement for Japan's railways and urban transport market.
Given the importance that the elimination of non-tariff barriers has for achieving a level playing field for European businesses on the Japanese market, the negotiating directives adopted by the Council foresee a parallelism between the elimination of EU duties and of non-tariff barriers in Japan. They also authorise the suspension of the negotiations after one year, if Japan does not live up to its commitments on removing non-tariff barriers. To protect sensitive European sectors, there is a safeguard clause.
What has happened so far
At the EU-Japan Summit of May 2011, the EU and Japan decided to start preparations for both an FTA and a political framework agreement and stated that on the basis of a successful scoping exercise, the Commission would seek the necessary authorisation from the Council for negotiations.
After one year of intensive discussions, in May 2012, the Commission has agreed with Japan on a very ambitious agenda for the future negotiations covering all EU market access priorities. On 18 July 2012 the European Commission asked the EU Member States for their agreement on opening negotiations for a Free Trade Agreement with Japan. On 29 November 2012 the Council decided to give the Commission 'the green light' to start trade negotiations with Japan.
EU-Japan Trade relations
Japan is the EU’s second biggest trading partner in Asia, after China. In 2011 EU exports had reached a value of €49 billion, mainly in the sectors of machinery and transport equipment, chemical products and agricultural products. In 2011 EU imports from Japan accounted for €67.5 billion, with mostly machinery and transport equipment and chemical products. In 2011, EU imports and exports of commercial services from and to Japan were €15.9 billion and €21.8 billion. Japan is a major investor in the EU. In 2011 the EU inward FDI stock had reached a value of €144.2 billion. Japan's inward FDI has increased markedly since the mid-1990s, but remains very low in comparison with other OECD countries (EU investments worth €85.8 billion in 2011).