OPP Meeting Summary: EP INTA Committee – Presentation by Cecilia Malmström, Commissioner for Trade, of the agreement in principle between the EU and Japan on the main elements of an Economic Partnership Agreement (11 July 2017)

A summary of the Commissioner’s presentation is now available.

EP INTA Committee – 11 July 2017
21. Presentation by Cecilia Malmström, Commissioner for Trade, of the agreement in principle between the EU and Japan on the main elements of an Economic Partnership Agreement
– View an overview of all press press releases, statements, speeches, factsheets, infographics, draft texts of chapters, and other documents published on the EU-Japan Economic Partnership Agreement.

Commissioner for Trade, Cecilia Malmström made the following remarks

  • immediately after the announcement of the deal, detailed texts were published online to fully respect the commitment to transparency;
  • the agreement was a major achievement, it had been long and difficult, but now that the global and strategic landscape had changed, both sides had used the opportunity to jointly send a strong message against protectionism;
  • the “excellent” agreement not only allowed for economic gains but also brought the EU and Japan closer together to promote international standards;
  • she presented some highlights of the agreement:
    • the agreement substantially liberalised trade. From the Japan side, it would liberalise 91% of its imports from the EU at entry into force, and at the end of the staging period, 99% of the EU imports would be liberalised. The remaining imports would be partly liberalised through quotas and tariff reductions in agriculture. Wine, which wass the EU’s second biggest export to Japan, would be liberalised at entry into force and Japan’s legislation on key additives to wine would be streamlined. Processed agricultural products (such as pasta, chocolate, confectionery) would be liberalised in the transition. There would be a considerable improvement on market access for beef and pigmeat with safeguards that would leave vast room for the ample majority of EU exports. Similarly, the agreement foresaw full liberalisation for hard cheese, and tariff-rate quotas would grant duty-free access to fresh and soft cheeses. The tariff-rate quote would cover the EU’s exports fully and would grow over time considering that Japan’s cheese consumption is increasing. All tariffs on wood products would be eliminated within staging. All industrial products would be fully liberalised, with different transition periods for all sectors (leather, shoes, chemicals, plastics, cosmetics, textiles). There was a transition period of seven years for the automotive sector;
    • regarding procurement, Japan would remove its operational safety clause on railways with a transition period of one year after entry into force. Japan also accepted the commitment of 48 core cities on a non-discriminatory regime. The EU agreed to reciprocate with a bilateral agreement;
    • regarding non-tariff barriers, the EU and Japan would strengthen their commitment to international standards as the best basis for an ever closer cooperation. The EU has a list of the remaining non-tariff barriers that would be eliminated step by step, also containing  safeguards for the automotive sector and a snap-back clause, allowing to re-introduce tariffs in case Japan re-installs or removes MTMs;
    • regarding services and investment, there was a strong commitment in line with the recent FTAs;
    • regarding dispute resolution, there was no agreement yet. The EU insisted that there was no way back to the ISDS, but more discussion was needed in the autumn;
    • regarding GIs, there was strong commitment, 205 GIs would be protected;
    • regarding trade and sustainable development, it included all the elements, such as committing to international agreements on labour, environment, and other fundamental ILO conventions, a dedicated institutional set-up mechanism for civil-society, and a tailor-made system for the implementation of the agreement in case of disputes, including recourse to a panel of experts;
    • regarding SMEs, this was the first time there was a dedicated chapter on them in an FTA. The objective was to enable and help SMEs to benefit from the agreement;
  • it was not the end of the process. Negotiations would resume as soon as possible after the summer, so an agreement could be finalised before the end of the year.

Interventions by the EP INTA rapporteurs for the EU-Japan negotiations followed

Standing rapporteur Pedro Silva Pereira (S&D, PT)

  • the EP would be vigilant until the very end of the process. It wanted a comprehensive deal with high standards;
  • regarding transparency, the EP recognised the fact that the Commission had published 18 draft chapters, but there was no authorisation from the Council yet as to the publication of the negotiating mandate [Editor’s note: This will be discussed in the Trade Policy Committee (Full members) on Friday, 14 July.]. This was a “very serious political mistake”  and there was no reason why the mandate should not be made public at this stage;
  • regarding investment, no agreement was reached. It was clear that there was no going back to the private arbitration system, but which alternatives did the Commissioner see;
  • regarding the sustainable development chapter, it had to be strong and ambitious, particularly with regards to the ILO conventions. What could be expected from Japan in this aspect;
  • regarding regulatory cooperation, there was no agreement yet on this chapter. Where were the difficulties;
  • he was grateful for the constructive dialogue he had had with the negotiating team.

Franck Proust (EPP, FR) spoke instead of Jarosław Wałęsa (EPP, PL)

  • regarding tariffs, Japanese cars would have a customs duties reduction over 7 years. Was this the same for all vehicles, or was there a difference with electric cars;
  • regarding standards and non-tariff barriers, how would it be ensured that there would not be new standards once the agreement was agreed, especially in the aerospace and the railway sector;
  • how would it be stopped that Japanese exporters would be favoured, as had happened with the CETA.

Syed Kamall (ECR, UK)

  • he wanted to know the progress that had been made in the investor court system;
  • what were the main points of disagreement on regulatory cooperation.

Marietje Schaake (ALDE, NL)

  • she welcomed the insistence on maintaining a reformed investment protection system through ICS;
  • she understood that more time was necessary for the agreement on data flows, but she wondered what to expect;
  • she wanted to know what the progress looked like going forward, what the next steps were and when implementation and ratification were happening.

Klaus Buchner (Greens/EFA, DE)

  • there had not been any information on the technical discussions, which were important to him. Would information be provided on this;
  • was regulatory cooperation voluntary like in CETA, or was it mandatory;
  • regarding radioactivity in food stuffs, the Japanese had high limits because of Fukushima. Would these high limits for Japan also be introduced in the EU;
  • how would the issue of banned items such as whale meat be treated.

Helmut Scholz (GUE/NGL, DE)

  • was this political agreement only a show-effect before the G20 summit, and what still had to be negotiated in reality;
  • the EP should not ratify any trade agreement in the future without the publication of the trade mandate;
  • concerning regulatory cooperation, he wanted to know what to expect concretely;
  • regarding digital trade, he wanted to know which concrete regulations on data flows could be expected;
  • regarding public procurement, what could be expected regarding this in the agreement.

Tiziana Beghin (EFDD, IT)

  • very often the devil was in the details, and there were a lot of areas lacking clarity still;
  • it was unknown which services were included in the regulatory cooperation on services and which liberalisation approach would be adopted;
  • it was also unclear which guarantees existed for personal data;
  • what would the investment protection look like;
  • whales and forests required further clarification.

Commissioner for Trade, Cecilia Malmström responded to the first round of questions

  • regarding the mandate, she fully agreed that this should be published. Not enough member states wanted to publish this, but this should be a regular thing. Mandates were very technical, and there was no political ideology, so it should not harm to publish them;
  • investment was not solved. Japan was in favour of the old system ISDS, but this was not an option for the EU;
  • sustainable development was a strong chapter. Japan had still had not ratified two agreements: for one there was a timeline, but for the other concerning forced labour there was no real timeline. However, Japan did have national legislation outlawing forced labour;
  • there were no fundamental political differences in regulatory cooperation, but it was the first time Japan had such a chapter in an FTA, so more time was needed;
  • regarding the tariff lines for cars, all cars, also electric cars, were included. She thought the European car industry could accept this, because in seven years Japan would align with international standards for cars. She also repeated that there was a safeguard and snap-back clause;
  • regarding data flows, Commissioner for Justice and Consumer Protection Vera Jourova was working on this and the agreement on adequacy was about to be signed;
  • the regulatory cooperation would be voluntary;
  • whale meat would still be banned in Europe afterwards, neither did the legislation on illegal logging change;
  • regarding radioactivity in the food, the Japanese standards were higher than normal due to Fukushima and it was an ongoing procedure that was happening in parallel to the negotiations but a scientific approach would be taken;
  • on public procurement, the IPI instrument was stuck in Council, but there could be some movement after the summer. Public procurement access was achieved to 48 cities and the same was reciprocated at sub-national level;
  • this agreement was not “a show effect”, and a lot had been achieved, but on investment, data, some technical aspects, and regulatory cooperation there was still work to be done;
  • they wanted to finalise the agreement in the autumn, before the end of the year, so it could go to the Council and the Parliament, and she wanted to finish it within the current mandate of the EP;
  • there was also full agreement to not regulate anything on public services on both the Japanese and the EU side.

Interventions by other members followed

Anne-Marie Mineur (GUE/NGL, NL)

  • an offer had been made by the Japanese on investment and services, but why had this information not been made public or accessible to the members of the public;
  • why was blue-fin tuna treated in a different way;
  • what would be the expected growth rate of JEFTA, different studies came to different conclusions.

Maria Arena (S&D, BE)

  • would be country-by-country and sector-by-sector impact assessment studies be provided;
  • what were the chances of achieving agreement, and would the Commission drop the investment part so national parliament ratification was not necessary;
  • was it correct that the liberalisation for food stuffs took longer than for cars;
  • in the past, the EU had said it was open for a sanctions approach in public procurement, but was this still the current approach.

Santiago Fisas Ayxelà (EPP, ES)

  • he wanted to know more about the conditions for agricultural products in the agreement, such as which type of products were favoured, and more information on the geographical indicators.

Yannick Jadot (Greens/EFA, FR)

  • transparency was a whole process, it was not just about published pages, working methods had to change;
  • the Commission did away with all controls on food for Fukushima, how could it be credible if it “put business before health.”

Joachim Schuster (S&D, DE)

  • he was not entirely clear on the character of this agreement, so what would the consequence be if the technical issues were not agreeable that were still to come. A lot of issues had been decided already but what would happen if agreement on the other parts could not be reached.

Jude Kirton-Darling (S&D, UK)

  • how much were the Commission and the member states willing to sacrifice the advances made to get an agreement on investment and could the investment part be ultimately left out of the agreement if the negotiations were dead-locked;
  • if there was no Brexit deal, would it be right that Japanese cars imported to the EU would have better treatment than Japanese cars produced in the UK (she referred to the Nissan plant in Sunderland).

Karoline Graswander-Hainz (S&D, AT)

  • was there going to be a sanction mechanism in the sustainability chapter. In paragrapah 160 of the Singapore ruling, there was an issue on environmental standards, and would the same result be possible for Japan;
  • there was no agreement in Council on certain issues, and she wanted to know what exactly the problems were;
  • she also wanted to know the level of data protection;
  • how could it be ensured that there would be no blockades like what happened with the CETA agreement.

William (The Earl of) Dartmouth (EFDD, UK)

  • his understanding was that there was an agreement in principle. How long would it take for the deal to be approved and actually be finalised. Was it the case that this deal had to be ratified individually by every member state.

DG TRADE’s chief negotiator for EU-Japan Mauro Petriccione responded to the second round of questions

  • the Commission would publish its position on investment in this agreement shortly. At this stage they thought it was a good idea to take stock. A text would be published, which would give an idea of where the EU was on investment;
  • the EU and Japan would continue the negotiations on the outstanding issues. As to whether the Council would sacrifice everything for the investment protection, the same question could be asked from Japan, whether they would be willing to sacrifice everything for sticking with the old dispute settlement system;
  • on regulatory cooperation, it was an entirely voluntary mechanism, both in the choice to cooperate and the results of cooperation. Japan was extremely interested in this cooperation for a variety of reasons, they were “looking for friends in the world and allies that had a similar attitude to regulate economic activity”. It was a very good opportunity to cooperate in regulation with a country that shared many of the similar standards as the EU. The proposal was not controversial for Japan, but it was a novelty, which explained the long duration. This was very different to investment;
  • the biggest result regarding non-tariff measures was Japan’s full alignment with European standards in the automotive sector. It had been a strategic choice by Japan. DG GROW has reported excellent cooperation with Japan on these standards. The rate of replacement of these standards would be about 10% a year, so within 10 years there would be an entirely new set of standards which had been developed jointly between the EU and Japan;
  • there was an interesting discussion on food safety. Japan has had similar food scares as the EU in the past. The standards were not the same, but there were similar concerns. They wanted to improve the cooperation between the food safety authorities;
  • regarding data, the agreement would only contain a review clause three years after it had entered into force. Japan and the EU would issue adequacy decisions. On that basis, there would be no trade problems concerning data flows with Japan. The broader issue of data flows was still an object of debate within the Commission;
  • regarding the question on the IPI with this agreement, it would not apply to Japan. The Japanese looked to the future, and for them it was important for them to secure sufficient reciprocal openness, which had happened;
  • regarding services and investment, there was a negative list, which he found perfectly adequate. The Commission did not usually publish market access results before the end of the negotiations, particularly in services there was still a technical verification in services;
  • as regards public services, the EU had not and would not change their approach. The technical expression was complicated, but the EU did not have any hesitation to state in a legally binding manner that it did not compromise the supply of public services in Europe. Japan thought the same;
  • the impact assessments were in the past, when the agreement was finished there would be another assessment and then there could be a discussion on that;
  • regarding the liberalisation of agri-food products, 15 years was the exception, most of them were 10 years and less. Cars had a shorter period since Japan had done a lot of work on that, and the EU had to do virtually none;
  • regarding sanctions in sustainable development, the EU’s mandate was not to have sanctions. It was up for debate in the Council and Parliament;
  • regarding Fukushima, the Commission would take a decision based on a scientific assessment. This had been going on for a while, before they could foresee that there was an agreement in principle. The EU had adopted the stricter Japanese standards which Japan had lifted in the mean time and Japan asked whether the EU could revert back to their old standards;
  • regarding the procedure, the EU wanted to finish by the end of the year, get the agreement in the Council in the autumn 2018, and in the Parliament in early 2019;
  • he asked the members to give him a call if there was anything else they wanted to know, he was happy to take them through the details.

Source: One Policy Place

The simultaneous interpretation of debates provided by the European Parliament serves only to facilitate communication amongst the participants in the meeting. It does not constitute an authentic record of proceedings. One Policy Place uses these translations so this text is only a guide and should not be relied on as an official account of the meeting. Only the original speech or the revised written translation of that speech is authentic.

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