Japan, EU press ahead on
free trade pact to counter U.S. protectionism
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[June 28, 2017]
By Kaori Kaneko and Stanley White
TOKYO (Reuters) - Japanese and European
Union negotiators meeting in Tokyo aim to reach a free trade deal that
would stand against a protectionist tide threatening the global economy,
and make the United States think twice over pursuing inward-looking
Japan and the EU have been negotiating since 2013, but talks have
intensified since last week, with almost daily meetings to overcome key
hurdles, including tariffs on Japanese automobiles and car parts and
European wine, cheese, pasta and other foods.
A Japan-EU deal could leave U.S. firms at a disadvantage, especially
after President Donald Trump's withdrawal of the United States from the
Trans-Pacific Partnership, or TPP, earlier this year.
"There is an atmosphere among negotiators that Japan and the EU need to
stop protectionism that is prevailing in the world," said a source
familiar with the issue who declined to be identified because talks are
"The momentum is building for Japan and the EU to take leadership in
promoting and executing free trade."
In a sign of optimism, EU trade chief Cecilia Malmstrom said on Monday
she could sign a provisional deal with Japan as early as next week.
An agreement between the EU and Japan would "send a strong message to
the United States that free trade is important and that you shouldn't be
too inward looking," said another source, who declined to be named while
negotiations were underway.
Trump favors bilateral trade deals over multilateral accords and his
decision to walk away the TPP, left the other 11 members of the Pacific
Rim trading bloc, including Japan, in limbo.
Although, together Japan and the EU account for about a third of global
GDP, their trade relationship has a lot of room to grow - EU forecasts
reckon by as much as a third.
Their bilateral trade totaled $144 billion last year, whereas
Japan-China trade was $262 billion and Japan-US trade was $192 billion.
After unsuccessful attempts to conclude a deal with Tokyo the past two
years, there is a sense in the EU camp that people will start to lose
faith if they cannot wrap it up this year, an EU official familiar with
the talks said.
[to top of second column]
EU chief negotiator and Director General of the Directorate General
for Trade Raffaele Mauro Petriccione (L) meets with Japan's chief
negotiator Yoichi Suzuki, Representative of the Government of Japan
for Free Trade and Economic Partnership Agreements Negotiations, at
their Japan-EU Economic Partnership Agreement meeting at Foreign
Ministry in Tokyo, Japan June 27, 2017. REUTERS/Issei Kato
Japan wants to phase out the EU's 10 percent tariff on Japanese passenger cars
over the next five to 10 years and scrap a 4 percent tariff on many car parts.
The Europeans, meanwhile, would like Japan to reduce its 15 percent tariff on
wine and up to 30 percent on cheese.
For now, the Japanese side is digging in on dairy.
"Our number of dairy farmers is in decline, but we have a plan to strengthen our
dairy industry, so I would like to ask for understanding," Agriculture Minister
Yuji Yamamoto told reporters on Tuesday. "I don't think there is room to
compromise any further."
An agreement would put American companies at a disadvantage in Japan because
they compete against European businesses in many of the same markets, said
Junichi Sugawara, senior research officer at Mizuho Research Institute.
It could even be used by Tokyo to convince Washington to rejoin the TPP, he
"The U.S. side is likely to come at Japan with strong requests for better market
access, but Japan can use a deal with the EU as leverage to lure the United
States back to TPP," he said.
($1 = 112.1400 yen)
(Additional reporting by Philip Blenkinsop in Brussels; Editing by Malcolm
Foster & Simon Cameron-Moore)
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