European Union officials in Brussels today called for the launch of talks with Japan on a free-trade agreement, seeking to expand economic ties with Asia. The European Commission, the EU’s regulatory body, presented its proposal for negotiations with Japan on removing commercial barriers such as tariffs. The commission also aims to scale back non-tariff barriers in the Japanese market for financial services and for key goods such as cars and pharmaceuticals.
“Trade liberalization remains the cheapest way we have to stimulate our economy,” European Trade Commissioner Karel De Gucht told reporters in Brussels. “The ball is now in the member states’ court. I would ask them to seize this opportunity and to give the commission a mandate to start negotiations soon.”
De Gucht said a free trade deal with the world’s third largest economy could increase the EU’s gross domestic product by almost one percentage point, boost EU exports to Japan by one third, and add 400,000 extra jobs across the 27-nation bloc.
The EU is sidestepping perpetually stalled World Trade Organization efforts to open markets by instead seeking trade deals with individual countries or groups of nations.
The 27-nation bloc struck a trade accord with Korea that took effect last year and is close to ratifying a pact with Colombia and Peru that will strengthen European ties with Latin America after earlier agreements with Mexico and Chile. The EU is also nearing completion of comprehensive free-trade negotiations with Canada and considering seeking a similar deal with the U.S.
“If growth in the next 20 years is likely to come from Asia, then overlooking Japan would be a serious mistake in our trade strategy,” De Gucht said in a speech following the European Commission’s decision to ask EU countries for a mandate to negotiate with Japan on their behalf.
EU leaders are expected to grant the Commission its mandate at their next summit, in October. Talks could start early next year and would take a couple of years to conclude.
A free-trade agreement with Japan is not assured, however, and the European Parliament must sign off on any final agreement. Issues such as public procurement, ranging from building roads to supplying software, and openness to car imports are potential conflict areas.
Japan allows foreign bidders on less than 3 percent of public contracts, and efforts by Germany and France to get Tokyo to show a willingness to open up have so far failed, say industry lobbyists who are pushing for a trade agreement.
“I know that there are concerns about the additional competition a deal with this developed economy would bring, and about Japan’s current regulatory barriers,” De Gucht said.
