As Japanese Prime Minister Shinzō Abe visits Brussels Tuesday, the European Union faces intensifying pressure to deliver on a promised pivot to Asia by sealing a new trade accord and strategic political partnership with Japan before year’s end.
Since the election of U.S. President Donald Trump, European leaders have rushed to style themselves as the new vanguard of global free trade and pledged to fill the vacuum created by an increasingly protectionist United States.
Zeroing in on fast-growing markets, the Europeans argue that Trump’s withdrawal from a landmark 12-nation trade accord in the Asia-Pacific region creates an economic opportunity and geopolitical imperative to build a bridgehead there. While European Commissioner for Trade Cecilia Malmström has cast Brussels as the heavyweight alternative to Washington for partners ranging from Mexico to Indonesia, Asian governments are looking to Europe for stability and leadership.
But the EU’s protracted battle to secure a trade deal with Japan, a longtime ally and Asia’s most mature democracy, lays bare the challenges and frustrations of trying to become a bigger player in the East.
The EU is hardly a stranger to Asian deals, having negotiated major accords with South Korea, Singapore and Vietnam. And in Brussels, senior officials profess optimism about clinching the agreement with Tokyo, which would be their biggest trade deal. Buoyed by a recent pact with Canada, officials are hoping to use Abe’s visit to build momentum.
Support is growing for a Japan accord among German automobile manufacturers, one of the most powerful groups in European industry.
“Europe remains the champion of open, rules-based trade, not least due to signs of protectionism emerging elsewhere,” European Council President Donald Tusk declared after the most recent EU summit. “Trade is central to our economic success,” Tusk added. “And so we will swiftly advance ongoing negotiations — such as with Japan.”
As in the case of Canada, the EU is simultaneously negotiating a Strategic Partnership Agreement with Japan that would enhance cooperation on a wide array of geopolitical issues, including security, nuclear nonproliferation, rule of law and human rights.
Still, achieving a free-trade pact with Japan would be the most concrete symbol of the EU’s pivot to Asia and its ability to lead as the U.S. retreats. But failing to complete the Japan deal would send an equally powerful negative signal, and the road so far has not been easy.
Negotiations between Tokyo and Brussels have dragged in seeming slow-motion since their formal start in 2013, and have effectively stalled at several junctures, including last year when a dispute over opening Japan’s agricultural market led officials to scrap the annual EU-Japan summit. In addition to Tokyo’s highly defensive position on farming, the talks have also stumbled over disagreements about data transfers and public procurement contracts in the railway industry.
Not getting any easier
Trump’s election and his refusal this weekend to support the G20’s traditional anti-protectionist pledge has not made negotiating any of these thorny deal-breakers any easier. Fraser Cameron, director of the EU-Asia Centre, a Brussels-based think tank, said that the new political context had not eliminated the many areas of disagreement, technical complications and, in some cases, contradictory political goals that have bedeviled the talks.
“My own view is that, although there is a new world trade situation with Trump, there are still many uncertainties,” Cameron said. “Japan says it is serious about concluding a free-trade agreement this year, but then we have heard that every year for some time. They now say they have to wait for reform of the dairy sector in coming weeks.”
Despite such skepticism, Kazuo Kodama, the Japanese ambassador to the EU, repeated the assertion that a deal would be struck by the year-end. “Our leaders are serious,” he said in a speech in Brussels Wednesday ahead of Abe’s trip to Europe, which also includes stops in France, Italy and at CeBIT, a high-tech trade expo in Germany.
“Both sides, I think, are more than ever committed to conclude the agreement this year, definitely at least in principle,” Kodama said.
While Japan is the biggest prize in the EU’s courtship of the Asia-Pacific region, Malmström is also targeting a host of smaller deals, including ongoing negotiations with Indonesia and the Philippines. Taken together, the EU and Asia account for more than 60 percent of world GDP and more than 60 percent of world trade.
But while the incentives are great, so are the obstacles, including a broad range of frustrating problems for Brussels. The future of a trade agreement with Manila is shadowed by human rights concerns over President Rodrigo Duterte’s brutal drug war. Talks with Southeast Asian countries must tackle the vexing issue of palm oil, which Western environmentalists argue causes devastating deforestation.
The EU’s trade ambitions toward China are more limited, and Brussels is largely tied down in disputes over investors’ rights and anti-dumping duties.
The American factor
Japan’s ability to strike a deal with the EU is complicated still further by Tokyo’s special relationship with the U.S., its indispensable military ally in regional power struggles with China and North Korea.
Abe was the first major player on the world stage to cozy up to Trump as president-elect — visiting him in Trump Tower last November and Japan seems wary of taking any steps that might provoke Washington. A trade deal with the EU potentially creates headaches for Japanese negotiators, as they would probably have to at least match concessions offered to Europe in any bilateral deal with the U.S.
Yet, despite these complications and stumbling blocks, there are glimmers of some concrete progress between the EU and Japan.
European Commissioner for Justice Věra Jourová is set to announce Monday the start of talks for a data transfer deal together with Japan’s Economy Minister Hiroshige Sekō. The deal “will complement the future EU-Japan free-trade agreement,” Jourová said.
Yorizumi Watanabe, professor of international political economy at Keio University and a former Japanese trade negotiator, said there was a growing sense that Tokyo could not protect its sacrosanct farmers forever.
“Through the Trans-Pacific Partnership debate in Japan, there has a kind of emerging consensus grown within the Japanese society that we need a reform on agriculture,” he said.
Boosting the chances of a deal even further, support is growing for a Japan accord among German automobile manufacturers, one of the most powerful and influential groups in European industry.
“Look at the many high-level meetings Abe is having with Merkel,” Watanabe said. “They meet this month at the CeBIT in Hanover, then in May for the G7 leaders meeting in Sicily and in July for the G20 in Hamburg. By July, I would expect Abe’s agriculture reforms to be completed. That could be the defining moment to move forward on the trade deal.”