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Japan | Brussels, 3 July 2013

Good Progress at Second Round of EU-Japan Trade Talks

The EU and Japan today completed the second round of negotiations for a Free Trade Agreement (FTA) just two months after the first round in Brussels. Heading up the EU team which flew to Tokyo for the talks was Mauro Petriccione, Director in the European Commission’s Directorate General for Trade. The Japanese side was led by Ambassador Jun Yokota, Ministry of Foreign Affairs. The second round had started on 24 June.

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The aim is for a comprehensive agreement on 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 second round of negotiations focussed on the text of the agreement in all the areas that will make up the future FTA. The negotiating sessions were divided between fourteen various working groups covering topics ranging from trade in goods, services, investment, competition, government procurement, and trade and sustainable development.

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%.

The next round of negotiations will be in Brussels on 21-25 October 2013 with a further round envisaged early next year.

What is covered in the negotiations?

The negotiations with Japan 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 are 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 last November want the elimination of EU duties and of non-tariff barriers in Japan to go hand-in-hand. They also allow the EU side to suspend negotiations after one year if Japan does not live up to its commitments to remove non-tariff barriers. To protect sensitive European sectors, there will also be 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 EU Member States for their agreement to open negotiations for a Free Trade Agreement with Japan, which they gave on 29 November 2012.

The negotiations were officially launched on 25 March 2013 by President Jose Manuel Barroso, President Herman Van Rompuy and Japanese Prime Minister Shinzo Abe. The first round of the negotiations took place on 15-19 April 2013 in Brussels.

EU-Japan Trade relations

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.

In 2012 EU exports to Japan had reached a value of €55.5 billion, mainly in the sectors of machinery and transport equipment, chemical products and agricultural products. In 2012 EU imports from Japan accounted for €63.8 billion, with mostly machinery and transport equipment and chemical products. In 2012, EU imports and exports of commercial services from and to Japan were €15.5 billion and €24.1 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).

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