Trade and Economic Relations with Japan : Assessing the Hurdles to the FTA

26-06-2012

Japan's recent economic performance is generally described as unattractive, particularly when compared to its growth twenty years ago. Yet perhaps the glass is half-full rather than half-empty: the Japanese economy still ranks third in the world after the US and China, living standards are high, and the country has recovered well from the 2011 earthquake, given the scale of the disaster. Yet Japan faces tremendous challenges, including economic stagnation, a high fiscal deficit and an ageing population. The 2011 catastrophe undermined the revitalisation programme that had been launched, although it also created a sense of urgency to move forward with reforms. Opening the country to competition from the outside is integral to its rebirth strategy, and the free trade agreement (FTA) with the EU would contribute to that opening. Though consultations on the ambition of the accord have been finalised, its success is uncertain. A number of stakeholders in the EU are sceptical of the benefits and of Japan's readiness to implement commitments, especially on non-tariff barriers. Yet others believe that if Europe postpones the process at a moment when it faces economic slowdown, the delay will send a negative signal to a country that is an important trade partner and investor.

Japan's recent economic performance is generally described as unattractive, particularly when compared to its growth twenty years ago. Yet perhaps the glass is half-full rather than half-empty: the Japanese economy still ranks third in the world after the US and China, living standards are high, and the country has recovered well from the 2011 earthquake, given the scale of the disaster. Yet Japan faces tremendous challenges, including economic stagnation, a high fiscal deficit and an ageing population. The 2011 catastrophe undermined the revitalisation programme that had been launched, although it also created a sense of urgency to move forward with reforms. Opening the country to competition from the outside is integral to its rebirth strategy, and the free trade agreement (FTA) with the EU would contribute to that opening. Though consultations on the ambition of the accord have been finalised, its success is uncertain. A number of stakeholders in the EU are sceptical of the benefits and of Japan's readiness to implement commitments, especially on non-tariff barriers. Yet others believe that if Europe postpones the process at a moment when it faces economic slowdown, the delay will send a negative signal to a country that is an important trade partner and investor.