The Japan-EU Free Trade Agreement (JEFTA)
Why we are concerned about JEFTA
Too much power to multinational companies
JEFTA would give unprecedented powers to multinational companies from both the EU and Japan. This includes enabling corporations to 'cooperate' with governments when they make new social or environmental laws or regulations. Multinational corporations would have the right to express their 'concerns' about new regulations prior to those regulations being approved (even when they are in the early planning stage) with the aim to prevent governments from adopting new social or environmental laws if those laws could reduce the multinational companies’ profits. In JEFTA, this is called ‘regulatory cooperation’ and it would dramatically increase multinationals power to influence governments and generate laws that prioritise profits over people and the planet.
Allowing multinationals to sue governments when they don’t make enough profits
In the recent free trade agreements TTIP and CETA, a controversial Investor-State Dispute Settlement (ISDS) mechanism was proposed, which would have enabled multinational companies to sue governments in special courts whenever their investments do not gain as much profit as they expected because governments implemented new laws or regulations, such as those to protect the environment or human health. This was so controversial in the EU that the European Commission has been forced to remove it from the Japan-EU Free Trade agreement. Instead they are now proposing to have a completely separate agreement on investment with Japan that is likely to be very similar to ISDS. Whether it is in the same agreement or a separate one, putting multinationals profits above governments’ ability to regulate is still a huge problem.
Destabilising the global economy through financial deregulation
In 2008, lack of regulation of multinational companies in the financial sector caused the largest economic and social crisis in Europe and Japan since the Great Depression. Under JEFTA, multinational corporations would gain the right to ‘cooperate’ with governments to reduce regulation over the finance sector through ‘regulatory cooperation’. They are also likely to gain the right to sue governments if greater financial regulation leads to reduced profits from their investments. This would put immense pressure on governments to reduce regulation of the finance sector, as the only financial services not covered by JEFTA are those supplied in the exercise of governmental authority, eg. central banks. This is likely to have a destabilising effect on the global economy at a time when we still haven’t recovered from the last crisis.
Public services put at risk of further liberalisation and privatisation
JEFTA includes many of the controversial elements that were proposed in CETA, the EU-Canada free trade agreement, that threaten public services. These include the Investor-State Dispute Settlement mechanism, the liberalisation of public services and extensive regulatory cooperation. Therefore, there are serious concerns that JEFTA could restrict governments’ ability to expand public services in the future.
Europeans could lose their data privacy
The European Union has adopted strong laws about the privacy of its citizens’ data. Japanese companies, however, would like access to that data. The European Commission knows that this is controversial because European citizens want to safeguard their data. So the Commission has proposed to deal with the digital trade chapter of the agreement separately, like the controversial investment element. That way, it will be easier to get JEFTA adopted, and the separate chapter can simply be added at a later time.
The Japanese could face further industrialisation of farming
Under JEFTA, it is likely that agricultural products from Europe will flood the Japanese market. While Japanese consumers might initially be happy about the cheaper prices of European products in the supermarkets, they are also likely to face longer term problems. Currently, Japan has a closed high-price market from farm to shop to kitchen. Japanese farmers will face a lot of pressure to move towards more industrialised farming methods in order to compete with European imports. Just like in Europe, this will make life more difficult for smaller farmers and rural communities, as well making it harder to preserve the landscape and culture in the Japanese countryside.
Pressure to reduce labour rights
Increased competition with Japanese imports in sectors such as car manufacturing is likely to put pressure on European companies to reduce labour conditions. In Japan, workers face harsher labour conditions than in Europe including more unpaid overtime, less annual leave and even a growing phenomenon known as ‘karoshi’ which means death caused by overwork or job-related exhaustion. Following the EU’s free trade agreement with Korea which brought cheaper cars into the EU, European workers in that sector experienced downward pressure on their jobs and wages. The same problem is expected from JEFTA.
Wasted opportunity to improve labour standards, environmental sustainability and animal rights
When trading between countries with very different environmental and labour standards, trade agreements can play a role in either improving or reducing these standards by insisting that products and services that are traded comply with international or higher standards through enforcement mechanisms and penalties. In JEFTA, however, there are no real attempts to improve current practices. This represents a wasted opportunity to deal with issues such as poor labour standards, unmet climate commitments, trade in illegal timber, overfishing and whaling.
Lack of transparency and democracy
Like other recent trade agreements, JEFTA has been negotiated in secret by European Commission officials. Despite public pressure, the European Commission only published a few of the draft chapters of JEFTA on its website before going ahead and signing the agreement with Japan. This level of transparency did not allow for adequate public debate and was even lower than for the controversial TTIP agreement.
The JEFTA text
The European Commission has published links to all the chapters of JEFTA on this website (note that it is officially called the 'EU-Japan Economic Partnership Agreement' and each chapter is listed separately).
So far, there is no consolidated text available.
Earlier versions of parts of the JEFTA text were leaked and are available online via Greenpeace.
Analysis of JEFTA
GUE/NGL has published an in-depth report titled Making Sense of JEFTA which analyses the available chapters of the draft Japan-EU Free Trade Agreement.
Additional analysis of JEFTA by experts on trade policy from both Europe and Japan is provided in this video of the Japan-EU Free Trade Agreement: Risks and Alternatives event, which was held in the European Parliament on November 6, 2017.
The policy process
The Japan-EU Free Trade Agreement has been negotiated oer several years and signed by the European Commission and the Prime Minister of Japan in December 2017.
It is currently undergoing 'legal scrubbing', which is expected to be completed by the end of February 2018.
It is expected that the next steps will be:
- The College of Commissioners will decide on the submission of the agreement to the European Council by the end of April 2018.
- The Commission is likely to propose that this agreement is an exclusive EU competence, meaning that no ratification by Member State parliaments would be required.
- It is likely that the European Council will decide to sign the agreement in June or July 2018.
- The European Parliament would then receive the agreement for consent to ratification in July or September 2018.
Therefore JEFTA could enter into force by January 2019.
Media & campaign resources
What you can do about it
Join citizens’ movements, trade unions, leftist political parties, NGOs, academics and activists in opposing this agreement and its negative impacts on the people of the EU and Japan.