LONDON: Bilateral trade in services has reached EUR41 billion, with EU exports of financial services to Japan having surged, rising from EUR2.8 billion in 2012 to EUR5.9 billion in 2014, according Rajiv Biswas, Asia Pacific Chief Economist, HIS.
“The EU-Japan bilateral economic relationship is one of the EU’s most important economic partnerships with other nations, with total bilateral trade in goods and services having reached EUR149 billion in 2014.
“The bilateral EU-Japan Summit in Tokyo will assess the progress in negotiations between the EU and Japan with the intent of concluding an early deal.From the EU perspective, Japan is the second most important market for EU exports to Asia after China, and reducing non-tariff barriers for EU exports to Japan is an important objective of the FTA. An important EU objective is to gain greater access for EU companies to Japanese public sector procurement, which is a large market opportunity for EU firms in many sectors. Japan is seeking reductions in EU tariff barriers for key Japanese manufacturing exports, including autos and electronics.
“Although Japan is a fast-growing market for EU exports of financial services, the broader backdrop is of relatively stagnant levels of trade in goods, and the aspiration of the FTA is to boost bilateral trade significantly through the new FTA.
“Japan is also negotiating a major regional trade liberalisation deal through the Trans-Pacific Partnership (TPP) negotiations among 12 Asia-Pacific nations including the US, which is a top political priority for both Japanese Prime Minister Abe and US President Obama. With signals that the US and Japan are close to agreement within the TPP negotiating process, Japan may be on the threshold of two major FTAs which would significantly enhance the market access of Japanese multinationals to the EU and US.
“This would deliver a significant boost to Japanese GDP growth over the medium-term. With the Japanese potential economic growth rate constrained by the impact of ageing demographics due to Japan’s declining population as well as the consequences of very high government debt levels, Japan’s trade liberalisation initiatives offer one of the best hopes for Japan to structurally lift its medium to long-term GDP growth rate.”
“Bilateral FTA negotiations are at the forefront of discussions at the EU-Japan Summit, and if an early FTA deal can be concluded between the EU and Japan later this year, this would be an important step in Japan’s economic reform agenda, and would help to boost Japan’s potential growth rate over the medium to long term.”