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Column: Japan should craft new strategy to give spurs to trade deal with EU

  • 2015-12-14 15:00:00
  • , Sankei
  • Translation

(Sankei: December 13, 2015 – p. 7)

 

 By Hideyuki Hasegawa, deputy editorial writer with Sankei Shimbun

 

 Forging multifaceted economic partnerships with other countries is essential to Japan’s growth, as it is facing the challenge of a shrinking domestic market. The Trans-Pacific Partnership agreement plays a key role in this initiative and is expected to create momentum for Japan’s other trade talks. On what trade negotiations will the TPP have an impact?

 

 One example is Japan’s economic partnership agreement with the European Union. It should be concluded in line with the TPP.

 

 The EU agreed with Japan to start EPA talks in 2013, inspired by the TPP. A huge economic partnership, such as the TPP, was designed to lead the world to set out new global trade and investment rules. The EU was said to have feared it might be left behind in this global trend.

 

 Given this background, the TPP agreement is expected to give spurs to the EU to conclude its EPA talks with Japan. But things are not so easy due to complexities involved in the trade negotiations.

 

 Negotiations over the Japan-EU EPA and TPP have many things in common. For example, Denmark is the third largest pork exporter to Japan, followed by the U.S. and Canada. Denmark is becoming increasingly concerned that the TPP may force it to compete from a position of disadvantage. This factor may help Japan and the EU speed up their trade negotiations.

 

 By contrast, the U.S. removal of a 2.5% tariff on Japanese cars over a period of 25 years under the TPP agreement may become a flashpoint that could lead to deepening division between Japan and the EU. Several EU members argue they have every right to demand they spend a longer period to eliminate the region’s 10% auto tariff. Japan needs to be prepared for the possibility that France and Italy, auto producers, will play hardball.

 

 It is difficult to translate the fruits of the TPP into many areas. One example is cheese. Under the TPP deal, Japan accepted the phase-out of tariffs on cheddar and gouda, but managed to keep the existing tariffs on camembert intact. But the EU wants tariffs to be eliminated on the varieties that Japan protected from zero-tariff rules and is pressuring Japan to open up its market further.

 

 The TPP calls for a higher level of trade liberalization and common rules based on the zero-tariff principle. It is a framework that can become a new international standard. But Japan and the EU are mature economies, and what they are interested in incorporating into their trade deal is different from the TPP. Their points of contention are also different from the Pacific-rim trade pact.

 

 Meanwhile, the TPP agreement should significantly impact negotiations on the Regional Comprehensive Economic Partnership, which encompasses Japan, China, South Korea, India and Southeast Asian countries. This trade framework, which China attaches importance to, sets out a lower level of trade liberalization. Whether RCEP talks can maintain momentum depends on how much the TPP membership will expand.

 

 One thing that should be kept in mind is that the TPP and the Japan-EU EPA are trade frameworks laid out by liberal states. Japan is part of the RCEP negotiations, but it must remember that it should not side with China, which is becoming increasingly inclined to step up its hegemony without sufficient respect for the rule of law. With this in mind, Japan must deepen its economic partnership strategies. (Abridged)

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