The European Union and Japan have committed to completing a free trade agreement by the end of 2017. Speaking at a meeting between Japanese Prime Minister Shinzo Abe and his EU counterparts in Brussels on Tuesday, Commission President Jean-Claude Juncker said, “Following our discussions today, I am very confident this will pave the way for a swift agreement this year.”
The EU and Japan have been in negotiations to sign a free trade and economic partnership agreement since 2011. Japan is the EU’s sixth biggest trading partner with €125 billion in trade passing between Japan and the EU in 2016. Together they account for more than one third of world’s GDP.
In a press release following the the meeting Mr Juncker said: “This agreement will give Japan and the European Union the best of both worlds: it opens up a major new market to each other while creating a level playing field and protecting our industries and workforces from unfair trading practices.”
In return for reduced tariffs on Japanese cars imports, the EU is looking for greater access to the Japanese market for its agricultural exports and for it to be made easier for European companies to bid for public procurement contracts in Japan.
Data protection has proved a sticking point in negotiations as both Japan and the EU require companies that retain customer data to do so on servers located in Japan and the EU respectively. This increases costs for companies who would like to see data protection standards harmonised to avoid the need to run servers in both territories, but European negotiators have stalled on closing this chapter of the talks because Japan’s data protection standards are significantly weaker than those in Europe.
The meeting comes just days after EU and Japanese finance ministers met with their G20 counterparts in the German city of Baden-Baden. This was the first such gathering to be attended by Donald Trump’s Treasury Secretary, Steve Mnuchin, who shares Mr Trump’s protectionist outlook and suspicion of free trade deals. Reflecting Washington’s influence at the meeting, the final declaration, which normally includes a strong anti-protectionist statement, only made a weakly worded commitment that the G20 will continue “working to strengthen the contribution of trade to our economies.”
The withdrawal of the US from the Trans-Pacific Partnership talks and their subsequent collapse came as a major blow to Japan’s trade agenda and added extra impetus to signing an agreement with the EU as both sides try to uphold the the values of open trade between nations.
Speaking in Germany on Monday, Mr Abe said, “In the midst of troubling protectionist trends, I find it important for Japan and the EU to cooperate with the United States as well, to give the world a model of free trade.”