The European Parliament’s Trade Committee gave its recommendation to approve the EU’s landmark trade agreement with Japan on Monday.
The Economic Partnership Agreement between the EU and Japan will eventually remove almost all tariffs on goods. It opens up services, including e-commerce, maritime transport, postal services, energy and telecommunications. It also creates common rules for bilateral trade, and common standards for the two trading blocs.
The EU-Japan Economic Partnership Agreement, signed on 17 July 2018, creates a trade zone of 600 million people, and covers a third of global GDP and about 40 percent of global trade. It will eventually remove almost all customs duties worth roughly €1 billion annually on European products and services exported to Japan.
In addition to the trade deal, the EU and Japan also signed a Strategic Partnership Agreement, which extends cooperation to areas such as energy, education, research and development, development, and the fight against climate change and terrorism. The European Parliament is required to give its consent to this agreement too.
Timely signal for fair, rules-based trade
Trade Committee MEPs emphasised that the agreement “represents a timely signal in support of open, fair, values-based and rules-based trade, while promoting high standards, at a time of serious protectionist challenges to the international order”.
The committee commented positively on the ambitious level to which tariffs are being liberalised in parallel with safeguarding sensitive sectors, for example European car manufacturing, where EU tariffs get phased out in seven years.
It also commended Japan for opening up the procurement markets, including in 54 large cities and in the railway equipment sector, allowing EU suppliers to compete on this market. Another sector that trade MEPs estimate would benefit most from the deal is agriculture and the food industry, especially wine, pork, and cheese producers.
The committee also welcomes the high level of environmental and labour protection enshrined in the deal, the commitment to the Paris Agreement to combat climate change, and encourages both parties to combat illegal logging.
For details on the most important achievements of the deal, read the explanatory memorandum of the draft recommendation.
Rules on labour and environment
Trade Committee MEPs nevertheless stressed that Japan must ratify all relevant labour codes set by the International Labour Organisation. The two remaining codes which have not yet been ratified are on discrimination and on the abolition of forced labour. They also urge the European Commission to look at how to enforce the agreed environmental and labour standards better at an upcoming review of the sustainable development chapter of the agreement.
SMEs to benefit quickly from the agreement
The committee also urges the Commission to set up contact points for small and medium sized enterprises (SMEs), which figure for the first time in a dedicated chapter in an EU trade deal, so that they can quickly benefit from the agreement. 78 percent of EU companies exporting to Japan are SMEs.
“Today’s positive vote on the agreement sends a strong signal for fair trade based on rules and values. Our resolution calls on both parties to deliver on their commitments and make the most of the progressive potential of the agreement, ensuring compliance with labour and environmental rules and contributing to the Sustainable Development Goals,” said Pedro Silva Pereira (S&D, PT), the rapporteur in charge of the topic.
The European Parliament, which has to give its consent before the deal can enter into force, is expected to vote its consent to the agreement at its December plenary session. If the deal is approved in Parliament, it can enter into force as soon as the Japanese Diet ratifies it.
Negotiations for a separate investment protection agreement with Japan to set up a mechanism to solve disputes, to ensure equal and fair treatment of EU foreign direct investment in Japan and vice versa, are still ongoing.