TOKYO (Reuters) - Japan still has work to do in tearing down non-tariff barriers faced by European Union companies ahead of a decisive review of EU-Japan trade talks next April, the EU trade chief said on Tuesday.
Japan and the EU launched talks on one of the world’s most ambitious trade deals last April despite opposition from European carmakers fearing it would boost competition in their backyard without improving their access to the Japanese market.
To address such concerns, Brussels and Tokyo have agreed on “roadmaps” for Japan’s elimination of such barriers and creating a level playing field for EU firms bidding for lucrative rail contracts. Insufficient progress at the one-year mark will allow EU leaders to pull the plug on the talks.
“On non-tariff measures, on a number of issues solutions have been found. On others, there is only progress on process but not the content, so there is still some work to do before the one-year deadline,” EU Trade Commissioner Karel De Gucht told Reuters on the sidelines of a meeting of EU and Japanese leaders in Tokyo.
“On railways, I have to admit, that there are still a lot of things to be done.”
De Gucht said, however, that after three rounds of negotiations he believed Japan was serious about opening up.
“Opening its market is a historic step for Japan,” De Gucht said.
“Obviously there is still a lot to be done. Progress is mixed but I believe there is a genuine will and resolve to open their market and make this agreement work.”
Japanese Prime Minister Shinzo Abe has made free trade deals a part of his economic revival plan combining radical monetary and fiscal stimulus and pro-growth policies.
His decision to join the proposed Trans-Pacific Partnership that would link Asia, the United States and Australia with several Southeast Asian and South American nations is seen as another step to opening Japan’s economy to unlock long-stalled growth.
At stake at the Japan-EU talks is an estimated boost of nearly 1 percent to each economy’s output and the talks are expected to take around three years, though the next few months will be decisive for their fate.
“Now it’s time to enter the real substance of negotiations on all chapters of the future agreement,” European Commission President Jose Manuel Barroso told reporters after he and European Council President Herman van Rompuy met Abe.
“We agreed that by spring 2014, we should be well advanced so as to demonstrate that such an ambitious agreement is possible and that commitments already made are being implemented.”
For Japan, the main prize is the elimination of import duties for its cars and electronics. Brussels, on the other hand, is pushing for changes in Japanese rules and standards on a wide range of products from medical instruments to imported cars that hamper market access despite low or zero tariffs on many EU goods.
The Europeans particularly hope for more business in such lucrative Japanese markets as processed food and rail and public transportation equipment.
Japan, the world’s third-largest economy, is the EU’s sixth-largest export market, buying 55 billion euros ($74.4 billion) worth of European goods in 2012. For Japan, the EU ranks as its third-biggest market with shipments of 64 billion euros in 2012.
The next round of negotiations is due to take place in Brussels in January.
($1 = 0.7394 euros)
Additional reporting by Robin Emmott in Brussels and Stanley White in Tokyo; Editing by Jacqueline Wong and Richard Borsuk