Japan

EU Japan: Dos and don’ts for a successful agreement

 

As EU Japan free trade negotiations reach a decisive stage, MEP Pedro Silva Pereira sets out a European Parliament view on how the last phase of the talks should be conducted and what the final deal should include.

 

The EU’s current top trade priority is concluding the EU Japan free trade agreement negotiations.  Last months’ high-level meetings of Presidents Jean-Claude Juncker and Donald Tusk with Japan’s Prime Minister Shinzo Abe indicate that leaders are ‘all in’ to reach an early political conclusion of the negotiations.

 

At a time when the negotiations are entering their final stages, it is useful to go over the do’s and don’ts for a successful outcome. If it is true that a conclusion of the negotiations depends on concrete political will, it is also true that a future approval depends on wide support, from the ground up, to the agreement.

 

There are economic and strategic reasons for this momentum. On the economic side, the independent Sustainability Impact Assessment of the agreement released in 2016 estimates that a comprehensive and ambitious EU Japan trade agreement would result in similar gains for the EU as the Transatlantic Trade and Investment Partnership. According to the study, the agreement also “adheres to the goal to create ‘smart, sustainable and inclusive growth’, jobs and welfare gains”.

 

The EU Japan trade agreement has potential given its sizeable market for exports, investments and for research and development. Some 55 percent of all export gains to the EU are expected to come from the food, feed and processed food sectors. But other sectors like pharmaceuticals, medical devices, motor vehicles, and transport equipment are also expected to benefit. This should be a highly complementary agreement of reciprocal gains.

 

Strategically, an agreement between two of the largest trading powers in the world would send a strong signal of support to an open and fair rules-based trading order, countering the current protectionist wave.

 

A trade agreement between the EU and Japan makes sense and there is now a window of opportunity to conclude it.

 

This does not mean, however, a lowering of ambition on key issues for the EU: market access, public procurement, services, agriculture and geographical indications.

 

The European Parliament has been following very closely these negotiations from the very beginning, starting with the ‘scoping exercise’, and has a demanding position. The trade negotiations with Japan were the first ones where the European Parliament gave its position before the Council adopted the negotiating directives. Since then, the Parliament has been scrutinising these negotiations through a dedicated monitoring group of the International Trade Committee (INTA) for Japan.

 

European Parliament top priorities

 

I see three issues that the Parliament is particularly attached to: increased transparency, further communication efforts and greater involvement of civil society in the process; a strong and ambitious sustainable development chapter with core labour standards; no old, private Investor-to-State Dispute Settlement (ISDS) in the agreement. The European Parliament will remain vigilant about the next developments in these negotiations.

 

I would like to share, in that sense, some do’s and don’ts for a successful outcome.

 

First, deliver more information and transparency about the ongoing negotiations and ensure greater involvement of the civil society in the process. The publication of the EU Japan negotiating directives by the Council would be a major step forward in this context, as it can avoid speculation about what is and what is not in the Commission’s mandate and help ease concerns. I therefore very much welcome the fact that the EU trade commissioner Cecilia Malmström asked for the negotiating mandate with Japan to be made available for public scrutiny.

 

Second, deliver an ambitious and binding sustainable development chapter. In the opinion of the European Court of Justice on the EU-Singapore trade agreement, the Court concluded that the objective of sustainable development forms an integral part of the EU trade policy. Indeed, trade is more than boosting growth and jobs. This also concerns social, labour rights and the environment.

 

The EU Japan FTA sustainable development chapter should have clear commitments to pursue the ratification of the fundamental International Labour Organisation conventions.  In fact, Japan’s ratification of two remaining core ILO conventions would be very much welcomed.

 

The sustainable development chapter should encourage corporate social responsibility and recognise the role of the multilateral environmental agreements. Notably, it should reconfirm the two sides’ full commitment to the Paris Agreement on climate change in times where others are rolling back and the 2030 Agenda on Sustainable Development.

 

Third, do not include an old, private ISDS in the EU Japan trade agreement. There is no going back to non-transparent, unaccountable and privatised ad hoc ISDS arbitration. The big debate on ISDS, which was based on legitimate concerns, led to the Commission’s proposals for a public Investment Court System, and for a future multilateral investment court.

 

Recently, the European Court of Justice considered in its opinion on the EU-Singapore trade deal that the regime governing dispute settlement between investors and States is a competence shared between the EU its member states. This ruling goes to the heart of the governance of EU trade policy and reopens the debate on the possible future scope of trade agreements. But something is clear: there is no way back to the old, private ISDS in the EU-Japan agreement or in any other trade agreement.

 

In sum, the European Parliament wants an ambitious, balanced and progressive, state-of-the-art trade agreement with Japan that defends the EU’s interests and values, with real benefits to citizens and EU businesses, including small and medium-sized enterprises.

 

The European Parliament would not accept an agreement that would lower EU standards on food safety, health, environment and labour matters or that would not protect public services nor the right to regulate in the public interest. This also goes for ‘new issues’ such as digital trade and data flows which are important for global value chains but must never undermine the EU acquis on data protection. As a consequence, I expect nothing less than the level attained at the EU-Canada trade agreement (CETA) with some elements that go even further.

 

Now that negotiations are reaching a decisive stage, both sides must learn from the past, especially as regards communication efforts and transparency. More importantly, they must ‘do trade the right way’, that is to say, aim high and deliver an agreement with high standards and real benefits for people and businesses.

 

Pedro Silva Pereira MEP (S&D, Portugal) is Rapporteur of the European Parliament’s International Trade Committee for Japan

 

Opinions expressed in columns published by Borderlex are those of their authors only.

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