Another Europe is possible

Japan-EU free trade agreement poses serious risks

06/07/2017

The in-principle deal reached today on the Japan-EU free trade agreement presents serious threats to employment, industry, labour and environmental standards, public services and democracy.

Japan-EU free trade agreement poses serious risks

The deal announced today at the EU-Japan Summit will render it the biggest FTA that the EU has concluded so far - removing tariffs from 99 per cent of traded goods between Japan and the European Union.

In the final stage of negotiations, Japan also gave up its reservations regarding imports of agri-food products in a trade-off against the EU abolishing its 10 per cent tariff on car imports from Japan after a seven-year transition period.

GUE/NGL Coordinator on the European Parliament's International Trade Committee, Helmut Scholz, comments: “Japanese farmers, but also the already troubled car producers in Italy and France will be among those who are not celebrating the announcement of this deal."

“One of the main goals of the negotiations was to remove non-tariff barriers to market access in Japan”, he explains.

European industry organisations had put together two long lists of regulations and requirements in Japan which should be abolished. Under pressure from the agreement concluded between the EU and Japan’s competitor South Korea, Japan largely surrendered to EU demands, in order to secure equally privileged access to the European market for its car exports and electronic entertainment equipment.

“With reference to what happened in the middle of the nineteenth century, Prime Minister Shinzō Abe has once referred to the series of recent free trade deals by his government with Australia, the EU and many other countries under the TPP as the 'second opening of Japan'. I can only hope that it will not lead to massive economic instability again.”

To make sure that no new regulations are created that could hinder market access, trade and investment, the European Commission proposed a chapter on regulatory cooperation in the Japan-EU free trade agreement (JEFTA) that goes beyond what was agreed in the EU's controversial free trade agreement with Canada (CETA). In the future, a mutually applied 'notice and comment system' shall provide corporations with a right to voice concerns regarding new regulations already in the planning stage. Regulators would be obliged to notify changes already in the early planning stage. Negotiations on this chapter, but also on the institutional components like for instance a JEFTA Council to be created within the agreement are still under negotiation.

“The European Parliament should reject the attempts of the European Commission to install CETA+ provisions in the agreement with Japan on a number of issues they did not get away with in the agreement with Canada due to the high level of public criticism," Scholz continues.

“Also elements of the rejected Anti-Counterfeiting Trade Agreement on intellectual property rights protection on the internet had better not be smuggled into the agreement with Japan,” he warns.

Both the EU and Japan also agreed to open their public procurement markets, yet the question of whether this would also apply to the sub-national levels of government remains to be negotiated. There is concern among service providers and services unions in Europe, as rumours say that the protections for public services achieved by them in CETA have not been replicated in the text of the agreement with Japan.

“As this chapter apparently also remains under negotiation, at this stage I can only warn the Commission against further attempts to commercialise our public services”, stresses Scholz. “Water is simply not a commodity. Any agreement involving large-scale liberalisation of public procurement, and opening up a pathway towards privatisation of public services, will meet fierce opposition from European citizens and municipalities throughout the EU28.”

“Until today, the EU Council has consistently refused to respond to years of public demand from the European Parliament, journalists and citizens to publish the mandate for the negotiations with Japan," criticises Scholz.

“Transparency remains one of our core demands. I had hoped that the days of secret backroom trade negotiations were over, but unfortunately the Commission’s negotiators prove me wrong.”

Scholz points out: “It is unacceptable that proposed texts and agreed components of the deal had to be leaked by Greenpeace. In 13 meetings between the Commission with Members of the European Parliament we heard only lengthy oral summaries of the state of play of the negotiations. The actual text was not shown to us. Only two proposed texts from the EU were published on the Commission’s website; one on regulatory cooperation and one on SMEs. This means falling way behind the transparency standard established under public pressure in the TTIP negotiations.”

"That old fashioned and wrong approach of 'a policy behind the curtain' will only increase fears that the deal will water down social, environmental and employment standards,” he warns.

Scholz issues a clear demand: “Now we want to see the text of the agreement, including the text of the many parts which are still under negotiation. We want the public to be able to judge whether the JEFTA agreement is also likely to have far reaching impacts on agriculture and development in rural areas, environment, services and the automotive sector. We want answers as to what enforceable mechanism within the regulatory cooperation section is foreseen to guarantee that on both sides high standards will be maintained regarding labour rights, environmental sustainability and private data protection.”

The issue of giving investors the right to sue a government, whether it is under the old Investor-State Dispute Settlement (ISDS) mechanism format or the more recent model of an 'Investment Court System' is apparently also still under negotiation.

"From what I heard, the Commission pushed for the Investment Court System. This mechanism was heavily criticised across Europe when it was introduced into the agreements with Canada and Vietnam. Japan had resisted adopting a new system that they did not take part in designing, and was preferring the even worse ISDS structure of investment protection, presumably under the influence of the United States, as they seem to be still hoping for a bilateral trade deal with the US after its withdrawal from the TPP agreement.”

“Today's declaration of an 'agreement in principal' is a political stunt. It is a PR exercise. The truth is that the negotiations continue,” Scholz points out.

"As the agreement is being negotiated under a massive lack of transparency, it is now the task of citizens in the 28 EU member states as well as in Japan to call for access to information on the results of the negotiations, the decision making process for the deal and control over the implementation. In Japan, until now even the Diet (Japan's national assembly) is not included in the process at all.”

“Once again, the Commission is intentionally ignoring the legitimate concerns raised in debates among the public and in parliaments at EU and member-state levels in the context of TTIP, CETA, Mercosur and other trade deals.

“When will the Commission finally understand that fair trade is not only about setting figures for exchanging goods and services? Fair regulation of trade requires the inclusion of all those who are affected by trade agreements in production and consumption in shaping the national economies in a time of globalised markets and global value chains,” Scholz concludes.

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