FTA concerns delay Tokyo summit
By Sébastien Falletti in Seoul | Wednesday 27 June 2012
The EU and Japan have postponed their annual bilateral summit due to the reluctance of several key member states to negotiate a far-reaching free trade agreement (FTA) with Tokyo,
Europoliticshas learnt. The two sides could not agree on a date for their annual summit that was originally expected to take place before the summer break, according to several diplomatic and business sources. The key factor behind this delay is the lack of readiness in Brussels to launch FTA talks, which have been long sought after by Japanese businesses. “There will be no negotiations launched by the summer as too many member states remain unconvinced of the advantages of a free trade deal,” said a representative of a leading European business organisation. Hence, the European Commission has dropped its original plan to get a negotiating mandate during the 28-29 June European Council.
Several key member states, including Germany and France, are still reluctant to give the go ahead to free trade talks with the world’s third largest economy. Although several sectors, such as chemicals or wine and spirits, are expected to gain from a trade liberalisation deal, Berlin and Paris are concerned that Japanese manufacturers would be the main winners. While Japanese manufacturers see tariffs as their main obstacle to expansion and will get immediate and tangible benefits from an FTA, the EU industry sees the removal of unfriendly legislation as a top priority. The elimination of so-called non-tariff trade barriers could be a long and frustrating process delivering only limited market opportunities.The European Services Forum (ESF) is in a favour of launchingf the talks but remains cautious regarding the potential gains.
Generally speaking, several key member states question Tokyo’s determination to open up its market in key sectors, such as public procurement or financial services. Hence, Japan’s pledge, made last December at the WTO to open up its public procurement market within the framework of the Agreement on Government Procurement (GPA), has yet to materialise.
The Danish EU Presidency has been pushing for the launch of the talks during the first half of the year, with the support of other Nordic countries and the UK. However, the Danish push was met with scepticism by a majority of member states. Therefore the European Commission has not formally proposed a negotiating mandate although it concluded successfully a so-called ‘scoping exercise’ with Tokyo, on 31 May. During these preparatory talks, Japan expressed its determination to open up on several issues, including railway infrastructure, a top priority for the European side.
Yet, the appetite for a FTA with Tokyo remains limited among European business organisations and member states as Japan is seen as a mature market with little gain to make compared with the emerging Asian markets. “This is a difficult market to penetrate and it will remain the case even with a good FTA. Meanwhile, there are so many other markets that are moving at a faster pace,” said a business representative. European businesses question the relevance of investing so much energy in complex bilateral negotiations with only limited gains expected at the end of the process.
Against this backdrop, the bilateral annual Japan-EU summit is expected to take place in Tokyo during the autumn, once the ongoing debate within the Council will have settled.
“The world is closely watching”
Japan has turned up the heat on EU leaders ahead of their critical summit, scheduled for 28-29 June, urging them to take decisive steps to stem the eurozone financial crisis. “The coming EU summit will be a key milestone. The world is closely watching how it will respond to Spain’s request for support,” said Japanese Finance Minister Jun Azumi, on 25 June. “I am expecting the EU to respond firmly to this matter,” added Azumi during a press conference held after a regular cabinet meeting in Tokyo.