Bloomberg News

EU Regulators Seek Green Light for Japan Free-Trade Talks

July 18, 2012

European Union regulators asked EU nations for approval to start talks with Japan on a free-trade agreement, seeking to expand economic ties with Asia after an accord with South Korea.

The European Commission, the EU’s regulatory arm, 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 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 today 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.”

The EU is sidestepping stalled World Trade Organization efforts to open markets by seeking commerce pacts 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 free-trade negotiations with Canada and considering seeking a similar deal with the U.S.

Extra Jobs

De Gucht said Europe, battling the third year of the euro- area debt crisis, can’t afford to forego the chance for a trade pact with Japan. He said a “huge number” of European industries including pharmaceuticals, chemicals, food and drink, and express delivery supports the initiative and a deal could create 400,000 extra jobs in the EU.

“We need these jobs,” De Gucht said. “Overlooking Japan would be a serious mistake in our trade strategy.”

EU governments may assess the commission proposal in the coming months and any talks with Japan could last for years. Some EU governments and industries are sensitive about deepening commercial ties with Asia.

The accord with Korea was opposed by European carmakers that are also concerned about the stiffer competition from a possible free-trade pact with Japan. De Gucht said the EU would target the removal of car-market regulatory obstacles in Japan to ensure a level playing field.

“Europe will not reduce any tariffs before Japan delivers concrete results on regulatory barriers, and this includes the car sector,” he said. “We will walk to the negotiation table with a very strong starting position.”

De Gucht also pledged to cut off talks with Japan after 12 months should the government fail to follow a “roadmap” already outlined for dismantling non-tariff barriers.

“If the implementation has not been satisfactory, I will stop the negotiations,” De Gucht said. “I don’t think we can be any clearer than that in our ambitions.”

To contact the reporter on this story: Jonathan Stearns in Brussels at jstearns2@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net


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