March 22, 2017 6:30 am JST

Japan, EU leaders eye trade deal framework this year

Parties stand firm on free trade amid tide of protectionism

RIEKO MIKI, Nikkei staff writer

BRUSSELS -- Japan and the European Union plan to forge a framework for an economic partnership this year, seeking to set an example amid the rise of protectionism shown by Britain's departure from the EU and the America-first policy of President Donald Trump.

Japanese Prime Minister Shinzo Abe, European Council President Donald Tusk and European Commission President Jean-Claude Juncker confirmed the year-end target during a meeting at EU headquarters Tuesday.

Japan and Europe must fly the "flag of free trade" high in cooperation with America, Abe said at a press conference.

There were a "few remaining issues" in the negotiations, Juncker said, adding he was very confident that both sides can "pave the way for a swift agreement this year." 

Abe called on the Group of Seven nations to share concerns over the tide of protectionism and inward-looking attitudes. With major elections taking place in Europe this year, the Japanese leader said he supported Europe's "continuing, steady efforts toward integration." He also asked his counterparts to move cautiously so that Japanese businesses will not be hurt by Brexit.

In addition, Abe asked the EU to help ensure the effectiveness of United Nations sanctions against North Korea in response to the nation's nuclear and missile development. Juncker called the country's actions a "major concern" for the EU, and said there was a need to put pressure on Pyongyang.

Top negotiators will meet in April to discuss the economic partnership agreement, said an EU source. Yet the parties still face a wide gulf over tariffs, including on dairy products. The governments may be targeting a general agreement in 2017, but that doesn't mean the end of negotiations is in sight, said a diplomatic source.

Tariffs present the biggest obstacle. Japan wants the EU to lower its 10% duty on passenger cars, as well as the maximum 14% tariff on electronic equipment. The EU wants Japan to open its market further than what was agreed to in the Trans-Pacific Partnership for cheese and other dairy products, as well as agricultural goods such as wheat and pork.

Japan considers itself in no position to make concessions beyond those in the TPP. Should it back down, the U.S. -- unsatisfied with its access to Japan's agricultural market -- could ramp up pressure as well. Tokyo is also attempting industry reforms at home, such as over milk distribution, and calming the backlash from agricultural cooperatives will not be easy.

Tokyo first began economic partnership talks with the EU in April 2013. Such a deal would cover an economic bloc encompassing roughly 35% of global trade by value. The parties had aimed for an agreement in 2016, but stalled tariff negotiations forced the deadline back into this year.

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