Article - Free Trade Agreements

EU-Japan Free Trade Agreement

Introduction

Port of Tokyo as image for EU-Japan FTA

© iStock.com/fotoVoyager

Japan is one of Germany’s most important trading partners in Asia. And Germany is Japan’s most important partnering country in Europe. Since 2009, the volume of trade has grown steadily, reaching approximately €42.4 billion in 2017. Japan and the EU are linked not only by close partnership within the G7, but also by our strong economic relations which are underpinned by shared values.

The EU-Japan free trade agreement entered into force on 1 February 2019 and aims to strengthen economic and political relations between these two important trading areas and to give the EU a stronger role in the wider Asian region.

The EU-Japan FTA also strengthens free trade as a whole and sends a strong message against protectionism. The Federal Government is supportive of the EU's ambitions to use modern and ambitious free trade agreements in order to shape global trade policy and to put in place high standards, including for sustainable trade.

A modern agreement that puts in place high standards

Negotiations for an FTA with Japan were officially launched on 25 March 2013. As trade policy falls within the remit of the EU, the European Commission is responsible for leading the negotiations and representing the interests of the EU and its Member States. Overall, 19 round of talks were held with Japan, the last of which took place from 12 to 30 June 2017. A political agreement ‘in principle’ was struck at the 24th EU-Japan Summit that took place on 6 July 2017. On 8 December 2017, it was announced that the negotiations had finally been concluded. On 22 May 2018, the EU Council approved the outcome of the trade talks in principle, and EU Commission President Jean-Claude Juncker and EU Council President Donald Tusk signed the Economic Partnership Agreement between the European Union and Japan with Japan’s Prime Minister Shinzo Abe on 17 July 2018. On 20 December 2018, the EU Council approved the agreement, following approval by a large majority in the European Parliament on 12 December 2018. The trade agreement entered into force on 1 February 2019.

The Japanese side had repeatedly stated that it had a keen interest in swiftly wrapping up the talks; not least as the US has stepped back from the project of a Trans-Pacific Strategic Economic Partnership (TPP). The key issue for the EU and for Germany, however, is that it proved possible to agree on a free trade agreement which, overall, is ambitious across its entire scope and abides by similarly high standards to those agreed with Canada in CETA (in German). The conclusion of the talks has resulted in a modern agreement between the EU and Japan which provides for markets that are more open to European companies and stipulates high standards protecting the interests of consumers, the environment, and workers.

Key points in the agreement

The agreement removes a large proportion of the tariffs and a number of long-standing regulatory impediments. With its 127 million consumers, the Japanese market will be opened up to major agricultural products from the EU (e.g. wine, cheese, beef and pork), and the EU will have better export prospects in many other sectors too.

Decisive results were achieved in the field of non-tariff trade barriers, particularly in the automotive sector (large degree of recognition of UNECE standards, inclusion of commercial vehicles). It was also important to establish mechanisms that will prove effective in preventing or penalising the establishment of new non-tariff trade barriers (the “snap back clause”).

Also, the agreement also takes account of the defensive interests of the European side, e.g. via appropriate transitional periods for tariff cuts (example: linear reduction in tariffs on cars over a seven-year period).

Finally, for the first time the agreement contains a commitment to the Paris climate agreement.

Important results on services and public-sector contracts

Good results were also achieved on services: the rules on postal, courier and telecommunications services will contribute towards an improved environment for European service providers in Japan. Audiovisual services remain excluded. The protection of public services and cultural diversity remains guaranteed.

In the field of public procurement, the German government called for a large degree of market liberalisation. Important results have been achieved in this area. For example, Japan will abolish a far-reaching exemption from transparent procurement in the railway sector (the “operational safety clause”) a year after the entry into force of the agreement or two years following political agreement. This was a core German demand. Also, Japan is granting market access to procurement procedures relating to universities, hospitals and “core cities”. The latter refers to 48 cities with populations of around 300,000, amounting to around 15% of the Japanese population.

Negotiations on investment protection ongoing

Where investment protection (in German) is concerned, the German government is supportive of EU efforts to put in place a modern system modelled on CETA. This would involve a careful definition of the standards of protection that apply to investments, uphold governments’ right to regulate, and see a transparent investment court be established. This court would use publicly appointed judges and have an appellate mechanism. Some significant progress was achieved in the negotiations on the definition of standards of protection and on the provisions that are to maintain the right to regulate. As far as investor-state dispute settlement is concerned, however, agreement has yet to be reached. For this reason, the negotiations with Japan on a separate agreement on investment standards and the resolution of investment disputes are continuing.

Federal Ministry for Economic Affairs and Energy pushed for transparency

In discussions with the European Commission and the other Member States, the Economic Affairs Ministry called for greater transparency around the negotiations. The negotiating mandate was published by the European Commission on 14 September 2017, when all of the Member States agreed that their concerns had been addressed.

The European Commission provided regular updates on its negotiations with Japan. To access this information, please click here. Furthermore, the European Commission regularly consults with the European Parliament and civil society. For additional information on the issue of transparency, please go to our FAQ section.

Frequently asked questions about the EU-Japan Free Trade Agreement

What was done to ensure that the public received sufficient amounts of information about the negotiations led by the European Commission on the EU-Japan FTA?

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What does the EU-Japan FTA mean for the reduction of tariffs and non-tariff trade barriers between the EU and Japan?

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Does the EU-Japan FTA pose a threat to European standards applying to products?

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Essential points in the negotiations

Within the core economic part of the negotiations, the EU pressed for the elimination of non-tariff barriers to trade, better access to the agricultural and services markets, and for greater access to Japanese public-sector contracts.

Decisive results were achieved in the field of non-tariff trade barriers, particularly in the automotive sector (large degree of recognition of UNECE standards, inclusion of commercial vehicles). It was also important to establish mechanisms that will prove effective in preventing or penalising the establishment of new non-tariff trade barriers (the “snap back clause”).

Finally, the agreement also takes account of the defensive interests of the European side, e.g. via appropriate transitional periods for tariff cuts (example: linear reduction in tariffs on cars over a seven-year period).

Important results on services and public-sector contracts

Good results were also achieved on services: The rules on postal, courier and telecommunications services will contribute towards a good environment for European service providers in Japan. Audiovisual services remain excluded. The protection of public services and cultural diversity remains guaranteed.

In the field of public procurement, the German government called for a large degree of market liberalisation. Important results have been achieved in this area. For example, Japan will abolish a far-reaching exemption from transparent procurement in the railway sector (the “operational safety clause”) a year after the entry into force of the agreement or two years following political agreement. This was a core German demand. Also, Japan is granting market access to procurement procedures relating to universities, hospitals and “core cities”. The latter refers to 48 cities with populations of around 300,000, amounting to around 15% of the Japanese population.

Negotiations on investment protection ongoing

Where investment protection is concerned, the German government is supportive of EU efforts to put in place a modern system modelled on CETA. This would involve a careful definition of the standards of protection that apply to investments, uphold governments’ right to regulate, and see a transparent investment court be established. This court would use publicly appointed judges and have an appellate mechanism. Some significant progress was achieved in the negotiations on the definition of standards of protection and on the provisions that are to maintain the right to regulate. As far as investor-state dispute settlement is concerned, however, agreement has yet to be reached. The negotiations on this are continuing.

Federal Ministry for Economic Affairs and Energy pushing for transparency

In her dealings with the European Commission and other Member States, Federal Economic Affairs Minister Brigitte Zypries has been an advocate for greater transparency around the negotiations. The negotiating mandate (PDF: 111 KB) was published by the European Commission on 14 September 2017, when all of the Member States agreed that their concerns had been addressed.

The European Commission provided regular updates on its negotiations with Japan. To access this information, please click here (in German). Furthermore, the European Commission regularly consults with the European Parliament and civil society. For additional information on the issue of transparency, please go to our FAQ section.

Pressemitteilungen

  • 01/02/2019 - Press release - Free Trade Agreements

    Minister Altmaier: Free trade agreement between EU and Japan sends a clear signal against protectionism

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  • 30/10/2018 - Press release - International Cooperation

    Minister Altmaier travelling to Japan and to Jakarta for the Asia-Pacific Conference

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Further information

  • Article - Trade Policy

    Article: Fostering international trade and reducing barriers

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  • Article - Free Trade Agreements

    Article: Ongoing negotiations on free trade agreements

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