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The EU is pushing ahead with the negotiations for a Free Trade Agreement (FTA) with Japan and Canada. The aim is to reach a comprehensive agreement in goods, services and investment eliminating tariffs, non-tariff barriers and covering other trade-related issues, such as public procurement, regulatory issues, competition, and sustainable development.

EU-Japan round of talks

The first round of talks was held in Brussels (15-19 April 2013) and was regarded as a good start for the negotiations. The next round of talks will be from 24 June to 3 July in Tokyo, with a further round expected in October 2013.

Japan is the EU's seventh largest trading partner globally and the EU’s second biggest trading partner in Asia after China. Conversely, the European Union is Japan’s third largest trading partner, after China and the United States. Together the European Union and Japan account for more than one third of world GDP.

An agreement between the two economic giants is expected to boost Europe’s economy by 0.6 to 0.8 % of its GDP and will result in growth and the creation of 400.000 jobs. It is expected that EU exports to Japan could increase by 32.7%, while Japanese exports to the EU would increase by 23.5%.

Reference: MEMO/13/572 European Commission MEMO Brussels, 17 June 2013

Negotiations’ subject

The negotiations with Japan will address a number of EU concerns, including non-tariff barriers and the further opening of the Japanese public procurement market. Both sides aim at concluding an agreement covering the progressive and reciprocal liberalisation of trade in goods, services and investment, as well as rules on trade-related issues.

The negotiations will be based on the outcome of a joint scoping exercise, which the EU and Japan completed in May 2012. In the context of this exercise, both parties demonstrated their willingness and capacity to commit to an ambitious trade liberalisation agenda. The Commission has also agreed with Japan on specific 'roadmaps' for the removal, in the context of the negotiations, of non-tariff barriers as well as on the opening up of public procurement for Japan's railways and urban transport market.

Given the importance that the elimination of non-tariff barriers has for achieving a level playing field for European businesses on the Japanese market, the negotiating directives adopted by the Council foresee a parallelism between the elimination of EU duties and of non-tariff barriers in Japan. They also authorise the suspension of the negotiations after one year, if Japan does not live up to its commitments on removing non-tariff barriers. In order to protect sensitive European sectors, there is a safeguard clause in the agreement.

Progressive talks

At the EU-Japan Summit of May 2011, the EU and Japan decided to start preparations for both an FTA and a political framework agreement and stated that on the basis of a successful scoping exercise, the Commission would seek the necessary authorisation from the Council for negotiations.

After one year of intensive discussions, in May 2012, the Commission has agreed with Japan on a very ambitious agenda for the future negotiations covering all EU market access priorities. On 18 July 2012 the European Commission asked the EU Member States for their agreement on opening negotiations for a Free Trade Agreement with Japan. On 29 November 2012 the Council decided to give the Commission 'the green light' to start trade negotiations with Japan.

EU-Japan Trade relations

Japan is the EU’s second biggest trading partner in Asia, after China. In 2011 EU exports had reached a value of €49 billion, mainly in the sectors of machinery and transport equipment, chemical products and agricultural products. In 2011 EU imports from Japan accounted for €67.5 billion, with mostly machinery and transport equipment and chemical products. In 2011, EU imports and exports of commercial services from and to Japan were €15.9 billion and €21.8 billion. Japan is a major investor in the EU. In 2011 the EU inward FDI stock had reached €144.2 billion. Japan's inward FDI has increased markedly since the mid-1990s, but remains very low in comparison with other OECD countries (EU investments have been worth €85.8 billion in 2011).

For further information see:

= EU trade relations with Japan at:

http://ec.europa.eu/trade/creating-opportunities/bilateral-relations/countries/japan/;

= Joint statement by the President of the European Commission, José Manuel Barroso, the President of the European Council, Herman Van Rompuy, and the Prime Minister of Japan, Shinzo Abe, 25 March 2013, in IP/13/276;

= Impact assessment EU-Japan FTA, July 2012;

= http://trade.ec.europa.eu/doclib/docs/2012/july/tradoc_149809.pdf;

= MEMO/13/573: EU trade relations with Japan, and

= http://europa.eu/rapid/press-release_MEMO-13-572_en.htm?locale=en  

EU-Canada: Free Trade Agreement ahead

The EU and Canada are currently negotiating the Comprehensive Economic and Trade Agreement (CETA) in order to take their trade and investment relationship to a new level. This EU-Canada FTA will cover the key issues relevant to a modern trade and investment environment, from ambitious new market access opportunities to clear rules for European and Canadian businesses and investors. Negotiations were launched in May 2009 and are now in their final phase.

The CETA negotiations would presumably cover the following items:

• access to each other's markets, for goods, services, investment and for public procurement contracts;
• technical standards and regulations, rules on health and hygiene standards;
• investment protection;
• the rules that frame trade, such as intellectual property rights and competition;
• sustainable development, making sure that growth in trade does not come at the expense of the environment or social and labour rights.

Special EU-Canada Joint Study (October 2008) predicted annual income gains of approximately €11.6 billion for the EU and €8.2 billion for Canada thanks to an agreement. Half of the total expected GDP gains for the EU are related to trade in services, a quarter to the removal of tariffs and the remaining quarter from dismantling non-tariff barriers. The benefits from the Agreement in this area of non-tariff barriers are estimated to result in a €2.9 billion gain for the EU and €1.7 billion for Canada. 

Reference: MEMO/13/573, European Commission, Brussels, 17 June 2013

EU-Canada: current trade flows

In 2012 Canada was the EU's 12^th most important trading partner, accounting for 1.8% of the EU's total external trade. Based on 2011 figures, the EU was Canada's second most important trading partner, after the US, representing 10.4% of Canada's total external trade.

The value of bilateral trade in goods between the EU and Canada was €61.8 billion in 2012. Machinery, transport equipment and chemicals dominate the EU's exports of goods to Canada, and also constitute an important part of the EU's imports of goods from Canada.

Trade in services, e.g. financial services and insurances, is an important area of the EU-Canada trade relationship as well as the investment relationship. In 2011, the EU’s investment stock in Canada was around €220 billion while Canadian investment in the EU amounted to almost €140 billion.

For further information see:

= EU trade relations with Canada at:

http://ec.europa.eu/trade/policy/countries-and-regions/countries/canada/

= Factsheet: FTA negotiations step by step

= http://europa.eu/rapid/press-release_MEMO-13-573_en.htm?locale=en