March 2011
Japan is a like-minded global partner for Europe, with a shared commitment to plural democracy, freedom of speech, the rule of law and other fundamental values and principles. Japan and the European Union respectively face challenges in common such as coping with aging populations, achieving a low-carbon society, ensuring energy security, etc. Japan and the EU deploy frigates and reconnaissance aircraft to the area off the coast of Somalia to protect busy shipping lanes between Europe and Asia from violent pirate attacks.
Japan and the EU are stable trading and investment partners for each other and together promote, for example, multilateral Doha Development Round trade negotiations of the WTO and global agreement towards combating climate change. However there remains a vast area of untapped potential between Japan and the EU. A good example is innovation which is usually relevant to the level of higher education and R&D. Innovation is also a seed to invigorate our societies and economies on a sustainable path. The Japan-EU Science and Technology Agreement is the latest addition to Japan-EU cooperation.
Our leaders have been working to deepen and widen our area of cooperation and at last year’s Summit they agreed to establish a Joint High Level Group “to identify options for the comprehensive strengthening of all aspects of Japan-EU relations and defining the framework for implementing it...” Japan believes that an Economic Partnership Agreement (EPA) is a beneficial choice to both sides for accelerating more comprehensive economic exchanges and interactive cooperation in the areas of trade, investment, protection of intellectual property rights and government procurement to name but a few. Mr. Naoto KAN, Prime Minister of Japan, is now prioritizing the reform of domestic non-tariff measures.
With an Economic Partnership Agreement, Japan expects the EU to lower tariff rates. Generally speaking, manufactured products from Japan to the EU are subject to tariffs which are as high as 10% for automobiles and as high as 14% for some electronics while similar European products are exported to the Japanese market tariff-free. If quality Japanese products are available at lower prices, it will of course be beneficial for consumers in the EU.
Today there are more than 3,300 Japanese companies operating in the EU creating some 400,000 employment opportunities. Foreign direct investment from Japan into the EU amounts to 135 billion euro on a stock basis in 2009. There are also some recent successful examples of European companies doing business in the Japanese market. Skymark, a Japanese airline, concluded a contract in the middle of February with Airbus to purchase six A-380 aircraft, the company’s largest model. In addition, A&F Aviation, All Nippon Airways’ affiliate, has concluded an initial deal to lease ten Airbus A-320 aircraft. The German manufacturer, Knorr-Bremse, has concluded a contract with a major railway company to supply brake components to Shin-kansen, the Japanese high-speed train. Japanese consumers appreciate high quality products from Europe and the Japanese market is a gateway to the clients from other promising and emerging markets of Asia.
Japan recently purchased more than 20% of the initial issuance of European Financial Stability Facility (EFSF) bond. The EFSF floated its bond to the amount of 5 billion euro on 25th January. Japan is contributing to Europe’s financial stability, thus promoting a stable financial system which leads to sustainable growth in the world economy.
Japan and the EU are indispensable global partners in today’s world. We need to cooperate with each other closely and an Economic Partnership Agreement is the logical direction for both of us.
This article was originally published in The Parliament Magazine (3rd March 2011).