Japan edges toward EU free trade talks, but with not much optimism
Mainichi Japan | May 29, 2011
Japan edges toward EU free trade talks, but with not much optimism
TOKYO (Kyodo) — Japan on Saturday inched toward its ambitious goal of a bilateral free trade agreement with the European Union as it agreed to start preliminary talks on the issue, but it still needs to overcome a host of problems to draw its third largest trade partner into full-fledged negotiations.
Some Japanese officials and experts are not very optimistic about the prospects, after nearly one year of bilateral high-level working group meetings to discuss ways to strengthen economic ties apparently produced limited concrete results and as concerns linger over Japan’s political instability.
While agreeing at the Japan-EU summit in Brussels to start what is called a "scoping" exercise suggests that the 27-member European Union has become more serious about the launch of the FTA talks, a Japanese government official familiar with bilateral relations appeared jittery.
"We have already done something similar to a scoping exercise," the official said, adding that the possibility cannot be denied that the upcoming activities will be another occasion for the European Union to press Japan to further lower nontariff barriers than what it has requested so far.
The European Union has been less enthusiastic over a free trade pact with Japan, repeatedly expressing frustration with Japan’s nontariff barriers, such as over automobile technology regulation and government procurement, which the union says have prevented a stronger presence of European businesses on the Japanese market.
The European Union is interested in having restrictive trade measures other than tariffs eased, because Japan does not impose tax on nearly 70 percent of the value of imports from the bloc, including automobiles and machinery, according to the Ministry of Economy, Trade and Industry.
A shift in the momentum, however, came in a rather unexpected way, after Japan suffered a magnitude 9.0 earthquake and ensuing tsunami on March 11, with EU leaders agreeing in late March to consider beginning negotiations to help Japan recover from the damage of the disaster by encouraging exports.
The discussion about the scoping exercise emerged after that, the Japanese official said, in which the two sides again found differences on what the process should mean.
The European Union tried to differentiate the scoping exercise from formal negotiations, saying that it is a step to smoothly proceed with discussions after the two enter into the FTA talks, whereas Japan wanted to regard it as an early stage of the formal negotiations, according to Japanese government sources and others.
As a result of careful preparations, the joint statement released after the summit ended up saying that leaders agreed to start "the process for negotiations" for a free trade pact, which would address all issues of shared interest to both sides including tariffs, nontariff measures, services, investment and public procurement.
The outcome fell short of Japan’s desire to agree on the launch of the FTA talks at Saturday’s meeting, in a possible sign that the European Union is not yet feeling certain it can gain a balanced outcome at the end of the FTA negotiations with Japan.
Hidetoshi Nakamura, an associate professor of international relations at Waseda University, said he feels that Japan and the European Union are still standing at the "threshold" of the overall process toward a possible free trade accord.
"The high-level group was set up last year to make things move forward, but it apparently did not produce substantial results. And the same as always, the European Union is not yet happy about Japan’s efforts to ease nontariff barriers," the expert on Japan-EU ties said.
"From Japan’s point of view, the current situation is far from certain that it can get what it is seeking by clinching the free trade accord (such as on the issue of tariff cuts on car exports)," he added.
Nakamura also pointed to the possibility of a more fundamental problem that may be keeping the European Union cautious — Japan’s political instability seen in recent years.
"The worst scenario for the European Union is to count on the political leadership of Prime Minister (Naoto) Kan to ease regulations and find that he is replaced with another person after the Japan-EU summit, a possibility which I think is not necessarily low," he said.
The divided Diet and a split in Kan’s party remain a risk for Kan as the situation allows the opposition parties to block bills, while political tension has recently increased amid moves by opposition parties to submit a no-confidence motion against Kan’s Cabinet to condemn its handling of the aftermath of the March disaster.
The joint statement also did not set any time frame on how long they aim to spend for the scoping exercise before full-fledged negotiations.
In the case of European Union and Canada, it took about six months between the announcements of starting the scoping work for a potential economic agreement and of launching negotiations.
An EU source said that the scoping exercise "could be six months, could be nine months."
"If you have a good one, then the negotiations can go fast. A minimum for negotiations is...two years," the source said.
But he also warned that possible FTA negotiations could prolong further. "These are going to be the biggest negotiations ever for the European Union. We should not underestimate the amount of work that we still have to do," he said.
