The EU and Japan were due Thursday to formally agree the broad outlines of a landmark trade deal that will now enter a more detailed phase of negotiation holding major pitfalls.
Few details are known on the specifics of the deal, but here are some of the key driving forces behind what could end up being one of the biggest trade accords in history.
The EU wants access to one of the world’s richest markets. Japan is the world’s fourth largest economy. With a population of about 127 million, its economy is about one third larger than Germany’s, the biggest in Europe.
But Japan is only Europe’s seventh biggest export market, after the United States, China and Switzerland and others.
Japan meanwhile, after a long era of a moribund growth, is seeking to jump start its auto exports to Europe, home to many of the world’s richest consumers.
Japan is also hoping to seize an opportunity after the failure of the 12-nation Trans-Pacific Partnership (TPP), torpedoed in January by US President Donald Trump.
Crucial for Europe is greater access to Japan’s highly protected dairy market. The EU’s dairy farmers are caught in a deep crisis, caused by super-low demand and excessive supply, and their gripes have contributed to increasing opposition to globalisation in Europe.
European negotiators have insisted that Japan lower import duties on a wide range of agricultural goods, with EU officials claiming that about 200 protected products would now enjoy unfettered access to Japan.
According to negotiators, the pact would eliminate a 10 percent duty that the EU imposes on Japanese car imports, while removing obstacles that European automakers face in Japan.
To help European carmakers absorb the shock, it is expected that the zero tariff regime will be implemented gradually, most likely over seven years.
Officials say Japan has in return accepted to align with EU regulation, which would improve access to Japan’s market for European automakers.
The two sides are still very far apart on investment courts, a controversial measure designed to resolve disputes.
International trade deals have until now always been ruled by so-called investment courts, privately run panels that hear complaints and rule on solutions.
This system has come under furious opposition in Europe and the EU is trying — so far unsuccessfully — to persuade partners to adopt a new system staffed by public officials.
Japan insists on sticking to the old system, which is a deal-breaker for the Europeans.
The EU hopes to have a full agreement by the end of the autumn but even then the deal would face a very complex ratification process.
Brussels is afraid that the agreement with Japan will suffer a similar fate to an EU-Canada accord, which has been criticised by NGOs and was nearly blocked by parliament in the Belgian French-speaking region of Wallonia.
Each of the EU’s 37 national or regional entities, as well as the European parliament, will have a chance to approve or reject major aspects of the deal, making ratification a long and potentially nerve-wracking process.
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