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

1. Project Funded by the European Union Japan-EU EPA Negotiation:Lessons from EU-South Korea FTA EU Institute in Japan, Kansai Graduate School of Economics, Kobe University Dr. Prof. YOSHII Masahiko

3. Japan-EU EPA • The 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)

4. 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.

5. The EU’s main areas of interest • Non-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)

6. Impact of Japan-EU EPA (MOFA, Japan)

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

8. ibid., p.40.

9. 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.

10. 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/

11. 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/

12. EU imports of automobiles and their parts from Korea parts (thousand kilos) automobiles (numbers) auto parts JETRO, Impacts of EU-South Korea FTA and its challenges (in Japanese), p.5, June 2015.

13. 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.

14. Civil Society • Chapter 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.

15. 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.

16. 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 trafficking • The labour segment: ILO fundamental principles and rights at work • also 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.

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