EU Trade Commissioner Cecilia Malmström
Not content with having to handle the controversial TTIP and CETA trade negotiations which are facing controversy and opposition from trade unions and environmental groups across the EU, EU Trade Commissioner Cecilia Malmström, announced negotiations are to begin with Japan. Japan is seeking to get an agreement later this year – but that seems unlikely.
Below we produce the edited highlights of her speech was was heavy on the benefits to the automotive sector, finance and lowering tariffs. There was no mention of employment rights, ILO standards etc.
Coming at a time when the USA is in negotiations with 12 Pacific Rim countries on their TPP deal another front has been opened in the fight for decent global employment rights.
This confirms the Campaign For Trade Union Freedom long held view that the new generation of trade agreements are about spreading neo-liberal policies globally whether citizens vote for them or not. – Tony Burke, Chair, Campaign For Trade Union Freedom.
In a speech in Tokyo this week Ms. Malmström to her audience : “This deal has enormous potential for both sides. Japan and the European Union are both facing serious economic challenges.
We want to put our people to work today and we want to secure the prosperity of our societies for the coming decades. To do both of those things, we need more growth. We are both now using the widest possible range of tools to try deliver that growth.
Here in Japan, Prime Minister Abe’s three arrows are aimed precisely at a more prosperous future. In the European Union, we are also innovating in fiscal policy, monetary policy and structural reform to produce the results that our people need. And we have the added challenge of coordinating 28 different archers, I might add!
For both sides, this trade agreement can be part of that process of economic renewal. More open trade will boost demand for our exports on both sides, whether for our excellent cars and machinery, or for cosmetics, financial services or food. And the scale of that effect will be huge because the European Union and Japan are respectively the largest and the fourth largest economies in the world. We are combining a great deal of demand, so this deal would give a significant boost to both our economies. More open trade can also help make us more competitive. It will lower prices and widen choice for consumers, and for companies like yours. In a world of global value chains, you need access to the best imported parts, components or vital services if you want to support jobs here in Japan. The same is true for European firms.
Finally, more open trade between Europe and Japan will also drive our investment relationship – investment that both sides need. We know all of this can work because the EU and Japan already have a deep and solid economic relationship between us. Japan accounts for over 3% of all EU trade and is our second largest Asian trading partner. The EU makes up 10% of Japan’s trade and is its third most important trading partner overall.
Our trade is also relatively balanced. While in the past the EU had a significant trade deficit with Japan that has fallen dramatically to slightly over € 1 billion last year. And we have a close investment relationship. Japan is a major investor in the EU, and innovative Japanese companies have not only created jobs in Europe, but become an integral part of our economic environment.
Nonetheless there is real untapped potential for closer ties. The fact that Europeans have not invested as much in Japan as we have elsewhere underscores that potential. In short there is a huge amount to be gained from an agreement like this.
Japan is also arguing for a quick result, in fact for a deal by the end of this year. Again, we in Europe share the enthusiasm that such an objective would represent.
However, we also believe that if this deal is worth doing, it’s worth doing right. We have to be ambitious on the substance as well as on the timing.
We need an agreement that works. An agreement that helps us put our economies on the path to prosperity.
If we can create a good product quickly, we should do it and spare no effort. If it takes a bit longer to create that good product, we should take that time.
This is also something that I have discussed with several ministers during my days here in Tokyo, and I will continue those talks this afternoon.
What does that mean in practice? Four things.
First, tariffs. These are mostly low. But they are high on food, drink and agricultural products. And that means big opportunities. So we should be aiming to get rid of tariffs on both sides, including on food and agriculture as well as cars. Of course, we must respect each other’s core sensitivities. But we in Europe can’t accept a deal that’s inferior to what we have negotiated with countries like Canada and Korea.
Second, an ambitious deal also needs to cover the climate for investment. We need strong tools to boost investment flows in both directions. And to bring the relationship more into balance.
Third, an ambitious agreement means tackling public procurement. We already have a good beginning. Because we’ve already reached an agreement on non-discriminatory and transparent access to procurement by Japan’s major railway companies.
That deal will allow European companies to compete better for business in Japan. It will also allow Japan’s train operators have access to excellent technologies at the best prices. And that means the passengers will ultimately be the winners.
This is exactly the kind of benefit that will come from showing similar ambition all across public tenders, whether at the level of cities and towns or central government. Open public procurement markets are of benefit to all. That’s why we in Europe already have one of the most open systems in the world.
Finally, and perhaps most importantly, we need an agreement that makes European and Japanese regulation more compatible. I have heard many examples and stories from industry of very similar, but slightly different legislation. Such differences can be especially difficult for small companies, if you have to conduct almost identical testing twice, for example.
Making regulation more compatible is essential if we want to see real gains from trade. Regulatory cooperation is the future of trade policy, which is where the EU and Japan both need to be.
Let me be clear, regulatory cooperation does not mean undermining the rules that protect consumers or the environment. People in Europe and Japan need to be sure that the products they use are safe, effective, and environmentally friendly.
But it does mean trying to remove unnecessary technical differences between our systems, on the basis of international standards, in order to boost growth, and to save time, money and energy.
I was delighted to read in Keidanren’s paper of this March that you strongly support this objective.
And I share your view that we should shift to a higher gear. These negotiations are an excellent opportunity to do that.
We’re already making progress. For instance in the car sector, the EU and Japan recently agreed on common standard for noise for passenger cars. For medical devices, the rules governing the inspection of manufacturing sites are now the same in the EU and Japan. That shows the potential of this work.
There are opportunities for gains like that in many other sectors too, like food, financial services, medicines and chemicals, electrical equipment and telecommunications to name just a few.
Across this whole range of issues, we should tackle existing barriers and also set up a mechanism that will enable us to address future ones.
Ambition here is particularly important because in some cases, the benefits will go beyond our bilateral relationship. Take the car business for example.
The EU and Japan follow international standards set in the United Nations Economic Commission for Europe. As a result our rules are similar, and we can therefore set an example that the rest of the world, particularly developing economies, can follow.
There are still differences that raise the cost of trade between our economies. A good deal will reduce them, and will also help us develop new international standards that can eventually be applied in other markets. That means we can make a contribution to an open global market for our products through this bilateral deal. That would be a major achievement in itself. And it would bring great benefits to our industries”.
