The European Union would like to wrap up a free trade agreement with Japan before the end of this year. EU trade chief Cecilia Malmström was speaking with Japan’s Foreign Minister Taro Kono by telephone on Friday (17 November) and both parties resolved the remaining technical issues, determined to finalize the trade deal by the end of 2017 following four years of talks. The EU and Japan agreed in summer on the broad bullet points of a trade deal ahead of the G20 summit in Hamburg but specifics around investment protection and public procurement are still outstanding.
Ms. Malmström said that Brussels and Tokyo could continue their direct communication “where necessary” in order to attempt to hit the end-of-year deadline but admitted that the investment protection piece is still an issue. While Tokyo favors the system of arbitration, Brussels prefers the investment court system. Both sides are considering dividing the trade deal into two parts, one of which would exclusively deal with EU-only matters and the other with mixed competences. Investment would sit with the latter.
Trade analysts are, however, of the opinion that the EU could shelve this controversial piece and protect it from the drawn-out member state voting system. Doubts around the involvement of the member states in the voting process were raised last year when the Belgian region of Wallonia temporarily blocked the deal with Canada (CETA).
EU Commission President Jean-Claude Juncker and the President of the European Council Donald Tusk said in July that the Japan trade deal “goes far beyond our shores” and insisted that the trade pact would be the most significant bilateral trade deal designed by the EU. The deal is going to strip tariffs worth around a billion euro including those on Japanese cars and mechanical parts while European farmers would see a greater access to the Japanese market.