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The conclusion of a comprehensive and ambitious trade agreement between the EU and Japan is a top trade priority for economic and strategic reasons. Currently, without a trade agreement, EU exporters to Japan pay more than 1 billion euros a year in tariffs. According to last year’s Sustainability Impact Assessment, the EU exports to Japan will increase by 34% and the EU’s gross domestic product by 0.76%. More than 600,000 jobs in the EU are linked to exports to Japan and this figure will likely go higher with a trade agreement in place. In the EU, the sectors of agri-food, pharmaceuticals, medical devices, motor vehicles and transport equipment are expected to benefit most. Although estimates should always be taken with a pinch of salt, the potential of the agreement is clearly positive. This deal is also important from a strategic point of view. Japan is a de facto strategic partner of the EU and an agreement between two of the largest trading powers in the world would send a strong signal of support to an open and fair rules-based trading order at a time of rising protectionism.
With the reform of the dairy sector in Japan, it is the right time to get the full political backing that is needed to bring the negotiations across the finish line. In the meantime, negotiations have progressed well throughout the eighteen negotiating rounds, namely in the areas of sustainable development, small and medium-sized enterprises, technical barriers to trade, sanitary and phytosanitary measures as well as customs and trade facilitation. The latest negotiation meetings took place in the week of 12 June in Tokyo to continue addressing the remaining key issues: agriculture, public procurement, geographical indications and services. There should be no ‘agreement in principle’ until these key issues are solved. Following the public debates on the Transatlantic Trade and Investment Partnership as well as on the EU-Canada trade agreement (CETA), substance is more important than ever, both in terms of economic benefits and of commitments to sustainable development.
The European Parliament has, in this sense, a demanding and vigilant position since the beginning of the process. The Parliament gave its views about the future negotiations already in 2012, before the Council adopted the negotiating directives. Since then, the monitoring group for Japan of the European Parliament’s International Trade Committee (INTA) has been scrutinising the negotiations and the next debate on Japan at the INTA meeting will take place in July. It is clear for the Parliament that there should be no lowering of EU standards, including on health, environment and labour matters, and the agreement must protect public services and the right to regulate in the public interest. I see, in addition, three main points that are important. First, increased information and transparency about the negotiations and greater involvement of the civil society. In my view, the publication of the EU-Japan negotiating directives by the Council would be, in this context, a major step forward. Second, a strong and ambitious sustainable development chapter with core labour standards. This chapter should have, among other things, a clear commitment by Japan towards the ratification of the fundamental International Labour Organisation Conventions. Third, no inclusion of the private, untransparent and unaccountable ad hoc Investor-to-State Dispute Settlement (ISDS) arbitration in the EU-Japan agreement.
The big debate on ISDS, which was based on legitimate concerns, led to the European Commission’s proposals for a public Investment Court System (ICS) and for a future multilateral investment court. All in all, both sides need to act on the lessons learnt from the past if they want to get wide support, from the ground up, to this future agreement. [...]