EU, Japan race to overcome obstacles to trade deal

4th May 2011, Comments 0 comments

Japan and the EU are racing to leapfrog obstacles holding up a much-anticipated free trade deal between the world's third economic power and its leading market, officials said on Tuesday.

With little over three weeks to go before an EU-Japan summit provides the backdrop for announcing an historic deal to launch free trade talks, Tokyo's Foreign Minister Takeaki Matsumoto held a whirl of talks with European Union officials Monday and Tuesday.

"This is a very important moment for Japan," his spokesman Satoru Satoh said. "Japan is suffering from the quake and tsunami, the economy is our most important task."

"The launch of an economic trade agreement now would be a good gesture."

There were no signs of tangible progress after Matsumoto's face-offs with the EU's Trade Commissioner Karel De Gucht and Internal Market Commissioner Michel Barnier, according to sources on both sides questioned by AFP.

But European business officials and EU sources voiced optimism about a breakthrough before this year's annual Japan-EU summit on May 27 and 28.

"They were good, cordial meetings, we hope to move forward to open negotiations," said an EU source.

"There is political will," said Satoh. "Japan hopes for an announcement at the summit."

Prompted by Britain, leaders of the 27-nation bloc in March called for the speedy launch of negotiations for a free trade agreement (FTA) to aid recovery in disaster-struck Japan -- but on the proviso that Tokyo move to lift restrictions to trade.

"The removal of tariff and non-tariff barriers could deliver over 40 billion euros ($60 billion) of additional European exports to Japan, and more than 50 billion euros of additional exports from Japan to the European Union," British Foreign Secretary William Hague said after talks with Matsumoto in London.

Trade ties have consistently shown a strong surplus in favour of Japan -- the EU currently being Japan's third largest trade partner while Japan is Europe's fifth.

Tokyo's better record "is partly a reflection of continuing market access problems for foreign firms in Japan," a European Commission report said this year.

That view from the EU's executive arm is shared by European business leaders, who say Tokyo is failing to offer companies real market access.

"We want to see clear signs from Japan that it is open to us," said a business sector lobbyist who asked not to be identified. "We want to do business with Japan but there must be a clear give and take."

European firms complain of unfair treatment in the government procurement market, comparing for example a 312-billion-euro procurements market (2.5 percent of EU GDP) open to Japanese companies in 2007, to a 22-billion-euro share (0.5 percent of Japan's GDP) offered to EU firms.

Also under fire from EU players are a range of non-tariff barriers, such as Japan's failure to recognise international standards on products such as medical devices, meaning only half of the devices used in the EU and US markets are available in Japan.

The EU is urging Japan to lower non-tariff barriers -- which also include the strength and safety certification procedures on construction materials and cars -- as a condition for pursuing economic partnership talks.

Tokyo is asking the EU to slash the high tariffs it currently slaps on Japanese automobiles, liquid crystal display televisions and other products.

Japanese concerns over a new trade deal have been fuelled by a free trade accord struck between the EU and South Korea last year, triggering fears in Tokyo that domestic companies will become less competitive than their rivals.

At stake in current talks is the EU's insistence that Japan agree to a roadmap towards free trade before announcing a deal. Japan for its part wants a prior commitment before tackling the obstacles.

"At the summit we should get an announcement," said Satoh. "The rest can be resolved later in the process of negotiations."

© 2011 AFP

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