Saturday

27th Aug 2016

EU tiptoes toward trade pact with Japan

  • Japan's economy was devastated by the earthquake and tsunami in March (Photo: wikipedia)

Senior European and Japanese officials have indicated their support for a free trade agreement (FTA), although EU officials remain cautious over Japan's willingness to lift trade barriers.

Meeting for a bilateral summit in a castle outside Brussels on Saturday (28 May), the two sides agreed to launch a "scoping exercise" with immediate effect, in order to define the remit of eventual trade negotiations.

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Future trade talks must be "substantial and meaningful" and "tackle all the real issues", said European Commission President Jose Manuel Barroso.

Japan's devastating earthquake and tsunami in March shattered exports and plunged the Asian economy into recession, prompting a show of support for free trade discussions from European leaders.

While Tokyo has since pushed for the formal start of the trade talks, Brussels and other European capitals remain cautious, pointing in particular to Japanese restrictions on public procurement contracts and foreign direct investment.

"Usually the give and take is conducted in the negotiation itself ... but the EU wants the Japanese to show a sign prior to negotiations," Japan's chief trade negotiator complained to this website earlier this month.

For their part, EU officials say the Japanese are masters at negotiating one-sided FTAs, and are therefore seeking to clarify the rules of the game prior to the formal start of talks.

Bilateral trade between the EU and Japan - the world's largest and third largest economies, respectively - is already at €110 billion a year.

But trade levels have eroded by 30 percent over the past 10 years and Tokyo is wary of losing out to its Asian rival South Korea, which recently negotiated an FTA with Europe.

"I'm convinced this will lead to a far-reaching economic partnership agreement," Japanese Prime Minister Naoto Kan said after Saturday's meeting.

European Council President Herman Van Rompuy was also optimistic about the outcome.

"By launching a 'scoping exercise' we have set the course towards a Free Trade Agreement between the Union and Japan. We still have a long way to go , but the objective is now clear," he said.

"Some might say that we have not gone far enough. I say, we should not underestimate the political meaning of our decision."

The former Belgian prime minister and fan of the Japanese-style haiku poems said he was also convinced that Japan would emerge stronger from the earthquake, tsunami and ongoing battle to cool nuclear reactors at the Fukushima nuclear power station.

Reading out his latest haiku to Kan, Van Rompuy said: "The three disasters / Storms turn into a soft wind. / A new, humane wind."

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