The free trade negotiations between the EU and Japan are closing in and many commentators actually believe a an agreement is within reach. But there are some remaining very sensitive issues. Now, negotiators must not lose momentum and look at all possibilities to reach an agreement. European commissioners Cecilia Malmström and Phil Hogan are travelling to Tokyo in order to put some more political capital in the talks. Their message must be clear: This is the time for both sides to compromise. In times when some say that no deal is better than a bad deal, I have to emphasise that we should not let a perfect deal stand in the way for a good deal with our Japanese friends.
For years the free trade talks between EU and Japan hardly progressed at all. But the withdrawal of the United States from the Trans-Pacific Partnership, TPP and the Trump administration’s resentment of the multilateral trading system have highlighted the cost of protectionism. Many previously sensitive issues such as intellectual property, market access and non-tariff barriers in the automotive sector have in fact been solved in the talks. The remaining issues mostly concern tariffs and quotas in the dairy sector and European access to the Japanese railway market.
There are too many trade negotiations that have broken down in the last minute. The failure in 2008 of WTO members to conclude the Doha round is perhaps the prime example. The failure has resulted in very few cuts of tariffs between the WTO members and has led to the continuation of unnecessary support for farmers in developed countries. With a sense of compromise and urgency, this would not have to be yet an example in the rows of failures that result in lost opportunities for growth.
The truth is that many sectors stand to gain from a swift conclusion from an FTA, high-technology companies in need of strong IP protection, the food and drink sector, and large parts of the transportation sector are just examples. But the importance of an agreement is equally political for Europe. With negotiations ongoing with Mercosur, Mexico, Indonesia and others such as Chile, Australia and New Zealand about to start, a swift agreement would be proof that Europe is open for business.
While I fully despise agricultural protectionism, the EU must not let talks fail simply because of Japanese quotas on cheese. The opportunity cost is simply too high. With stalled plurilateral negotiations on services and environmental goods, little hope for the WTO ministerial conference in Buenos Aires this autumn, this is perhaps the biggest opportunity for Europe show its commitment to free, open and rules-based trade. It is an opportunity that must definitely not be missed.