Japanese Foreign Minister Fumio Kishida flew into Brussels on Wednesday for the final sprint toward what promises to be the world’s biggest trade deal.
His mission is to resolve some of the thorniest outstanding topics — such as dairy tariffs and duties on cars — in the final hours before Japanese Prime Minister Shinzō Abe arrives for what both sides hope will be a landmark political agreement at an EU-Japan summit on Thursday. If Brussels and Tokyo strike an accord, it will cover more than a quarter of global economic output.
Before boarding his flight from Tokyo, Abe struck an upbeat note and claimed the deal would have “a great significance in promoting free trade in the world.”
EU Commissioner for Trade Cecilia Malmström is similarly bullish. “We hope that we could triple our agriculture exports,” she said over the weekend. “EU exports to Japan overall could, according to our calculations, be boosted by one-third.”
Commission projections predict that EU exports of processed food could rise by up to 180 percent and export of chemicals could surge by more than 20 percent.
The EU and Japan are keen to wrap up the political agreement before a meeting of the G20 group of leading global economies Friday and Saturday, where they can parade their free-trade accord as a riposte to the increasingly protectionist stance of U.S. President Donald Trump.
A political agreement will have major diplomatic significance because it should close negotiations on more than 90 percent of the accord, but it could still take years to finalize the full agreement. Pedro Silva Pereira, the European Parliament’s rapporteur on the deal with Japan, said there was still a “huge gap” on investment protection.
“A political agreement means we have a deal on market access, which is important, but we still don’t have a final text. There are some technical and legal issues that remain to be resolved. And we haven’t come closer on agreeing on an investment protection mechanism,” he said.
Cars for food
The deal will make it easier for companies to trade between both regions by adopting the same standards on products ranging from industrial appliances to food safety.
The EU will scrap its 10 percent tariff on Japanese cars, but the timeframe for scrapping these duties has not been confirmed.
In return, Japan will ditch tariffs and other barriers on EU foodstuffs, medical devices and luxury products like leather and wine. According to the Commission, the agreement should boost EU output by 0.76 percent.
In terms of remaining hurdles, Japan has not confirmed it is ready to scrap its tariffs on cheese, a very sensitive topic in Tokyo, which frets that uncompetitive milk farmers will be driven out of business. Japan’s Agriculture Minister Yuji Yamamoto described the EU’s position on dairy as “harsh.”
EU trainmakers such as France’s Alstom and Germany’s Siemens have complained that Japan’s public procurement is closed to foreign competitors, but diplomats say these differences have now largely been bridged.
An 11th-hour spat concerns a draft joint statement for Thursday’s summit, on which the EU side insisted. The EU on Tuesday circulated a text that included broad political declarations to jointly defend a rules-based world order and the Paris climate agreement, in another clear rebuke to Trump.
Tokyo signaled it preferred a statement solely on the trade deal. Japanese officials also weren’t best pleased about the fact that Brussels linked the trade deal to assurances on democracy or human rights — as if the Japanese government had deficits in these areas.
A possible compromise could be to draft a downscaled text confined to endorsing the political agreement of the trade deal and a collaboration against terrorism, one diplomat suggested.
The EU-Japan trade deal will not include the sticky issue of data flows. European Commission President Jean-Claude Juncker and Abe came to an agreement to leave language on data flows out, but it will add a “review clause” to discuss the topic at a later stage.
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