Japan-EU EPA Negotiation:Lessons from EU-South Korea FTA

EU Institute in Japan, KansaiGraduate School of Economics, Kobe University

Dr. Prof. YOSHII Masahiko

Project Funded by the European Union

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Extra-EU28 export by partner (all products)

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

European non-EU-28 countries 21.3 22.6 23.7 24.6 25.7 27.2 28.1 25.7 26.2 28.0 26.8 28.1 25.3

European Free Trade Association 11.7 11.8 11.5 11.8 11.4 11.4 11.3 11.8 11.5 12.3 11.1 12.8 11.4

Russia 3.9 4.3 4.9 5.4 6.3 7.2 8.0 6.0 6.4 7.0 7.3 6.9 6.1

Africa 8.0 8.2 8.2 8.3 8.1 8.4 9.2 10.0 9.4 8.9 9.0 8.9 9.1

America 37.3 34.9 33.2 32.1 31.7 29.5 27.6 26.9 26.8 25.7 26.4 25.4 26.8

United States 28.0 26.4 24.9 23.9 23.2 21.0 18.9 18.6 17.9 17.0 17.4 16.7 18.3

Asia 29.5 30.3 30.8 30.2 30.1 30.1 30.2 32.7 33.3 33.1 33.1 33.0 34.6

China (except Hong Kong) 4.0 4.8 5.1 4.9 5.5 5.8 6.0 7.5 8.4 8.8 8.6 8.5 9.7

Japan 4.9 4.8 4.6 4.2 3.9 3.5 3.2 3.3 3.3 3.2 3.3 3.1 3.1

South Korea 2.0 1.9 1.9 1.9 2.0 2.0 1.9 2.0 2.1 2.1 2.2 2.3 2.5

Oceania and southern polar regions 2.4 2.6 2.6 2.5 2.3 2.4 2.5 2.4 2.4 2.4 2.4 2.2 2.2

Extra-EU28 import by partner (all products)

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

European non-EU-28 countries 23.0 24.1 24.8 25.8 26.5 26.2 27.8 26.6 26.0 27.4 28.3 28.5 27.1

European Free Trade Association 12.0 12.1 11.7 11.5 11.3 10.9 11.5 12.4 11.0 11.1 11.7 11.2 11.0

Russia 7.0 7.6 8.3 9.6 10.5 10.2 11.4 9.7 10.6 11.6 12.0 12.3 10.8

Africa 8.8 8.9 8.5 9.4 9.4 9.0 10.2 9.1 8.9 8.8 10.4 10.0 9.3

America 27.4 24.7 23.4 21.2 20.4 20.4 19.7 20.3 19.4 19.6 19.5 19.4 19.8

United States 19.5 16.9 15.5 13.4 12.5 12.3 11.5 12.6 11.3 11.1 11.5 11.6 12.2

Asia 38.6 40.1 41.3 41.2 41.1 41.7 40.0 41.5 43.3 42.3 39.9 40.3 42.0

China (except Hong Kong) 9.6 11.4 12.6 13.6 14.3 16.2 15.7 17.4 18.5 17.1 16.3 16.6 18.0

Japan 7.9 7.8 7.3 6.3 5.7 5.5 4.8 4.7 4.4 4.1 3.6 3.4 3.2

South Korea 2.6 2.8 3.0 2.9 3.0 2.9 2.5 2.6 2.6 2.1 2.1 2.1 2.3

Oceania and southern polar regions 1.4 1.4 1.3 1.3 1.3 1.3 1.2 1.1 1.1 1.2 1.1 0.9 0.8

Source: Eurostat

Japan-EU EPAThe Japan-EU EPA will promote trade and

investment of both sides through eliminating tariffs and improving trade and investment rules. It will contribute to boosting economic growth, creating employment and strengthening business competitiveness both in Japan and the EU. It will also promote inroads into the European market by Japanese companies.

(MOFA, Japan)

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What are negotiated?Japan’s main areas of interest

Elimination of high tariffs on industrial products (e.g. passenger cars:10%, electronic devices :14% at the highest)

Regulatory issues facing Japanese companies in Europe should also be proactively addressed in the negotiations.

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The EU’s main areas of interestNon-Tariff Measures (NTMs) on automobiles,

chemicals, electronic devices, food safety, processed food, medical devices, and pharmaceuticals, among others.

Government procurement (e.g. railways).Elimination of tariffs on the main export products to

Japan. (MOFA, Japan)

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Impact of Japan-EU EPA

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(MOFA, Japan)

Impact of Japan-EU EPA

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European Commission, Commission Staff Working Document: Impact Assessment Report on EU-Japan Trade Relations, 2012, p.37.

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ibid., p.40.

The preferred scenario of the EU is that of an ambitious FTA.

The EU preference for a comprehensive FTA is heavily dependent on Japan’s willingness to tackle in negotiations.the key areas of concern to the EU = non-tariff

measures, government procurement, services and investment and tariffs

Japan’s primary objectives can be fulfilled to a much greater extent via tariff reductions

ibid., p.56.

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EU-Korea FTA (entered into force in July 2011)

eliminates duties for industrial and agricultural goods in a progressive, step-by-step approach. On 1 July 2016, import duties will be eliminated on all products except for a limited number of agricultural products.

addresses non-tariff barriers to trade with specific focus on the automotive, pharmaceuticals, medical devices and electronics sectors.

creates new opportunities for market access in services and investments, and includes provisions in areas such as competition policy, government procurement, intellectual property rights, transparency in regulation and sustainable development.

http://ec.europa.eu/trade/policy/countries-and-regions/countries/south-korea/

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Impact of EU-South Korea FTA(As of 1 July, 2014)

EU exports to South Korea of goods increased by 35% from 30.6 billion EUR to 41.5 billion EUR.

EU imports from South Korea totaled 37.9 billion EUR and thus remained almost at the same level as in the year before the FTA entered into force.

the EU’s trade deficit with South Korea turned into a trade surplus of 3.6 billion EUR.

http://ec.europa.eu/trade/policy/countries-and-regions/countries/south-korea/

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EU imports of automobiles and their parts from Korea

automobiles

(numbers)

parts (th

ousa

nd

kilos)

auto parts

JETRO, Impacts of EU-South Korea FTA and its challenges (in Japanese), p.5, June 2015.

FTA implementation WGs were held, with successful results (Motor Vehicles and Parts; Pharmaceuticals and Medical Devices; Chemicals; Customs; Trade in Goods; Outward processing Zones; IP Dialogue; Government Procurement; Sanitary and Phyotosanitary Measures; Cultural Cooperation; Geographical Indications; Trade and Sustainable Development; Trade Remedy Cooperation; Trade in Services; Mutual Recognition Agreements; Trade Committee)

European Commission, “Report from the Commission to the European Parliament and the Council: Annual Report on the Implementation of the EU-Korea Free Trade Agreement,” 26/03/2015.

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Civil SocietyChapter 13 Trade and Sustainable Development

13-12-4: Each Party shall establish a Domestic Advisory Group(s) on sustainable development

13-12-5: The Domestic Advisory Group(s) comprise(s) independent representative organisations of civil society in a balanced representation of environment, labour and business organisations as well as other relevant stakeholders.

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13.13.1 (Civil society dialogue mechanism): Members of Domestic Advisory Group(s) of each Party will meet at a Civil Society Forum in order to conduct a dialogue encompassing sustainable development aspects of trade relations between the Parties. The Civil Society Forum will meet once a year unless otherwise agreed by the Parties.

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The Committee on Trade and Sustainable Development (CTSD)

Regarding Chapter 13, the Committee on Trade and Sustainable Development was held on 8 December 2014, with successful results.The environment segment: emissions trading systems,

green growth and the circular economy, wildlife traffickingThe labour segment: ILO fundamental principles and

rights at workalso discussed the launch of the negotiations on an

Agreement on Environmental Goods; Cooperate Social Responsibility (CSR); and cooperation on Environmental Mark of Korea and Eco-Label of the EU

ibid., pp.9-10.

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Thank you for your attention!yoshii@econ.kobe-u.ac.jp