Japan and the European Union announced they will start free trade talks in April, as Japanese Prime Minister Shinzo Abe pushes for deregulation in a bid to revive the world’s third-largest economy.
Negotiations on an agreement covering free trade and political cooperation will begin in April, according to a joint Japan-EU statement issued by the European Council today.
“I believe that today marks a historic event in the history between Japan and the European Union,” EU Trade Commissioner Karel De Gucht said in Tokyo after meeting Japanese Trade Minister Toshimitsu Motegi. “We are convinced that such an agreement would greatly contribute to the welfare of both peoples.”
Today’s move comes less than two weeks after Abe announced Japan would seek to join talks on the Trans-Pacific Partnership, a U.S.-led regional trade agreement, in defiance of opposition by farmers. Buoyed by the popularity of his plans for bold monetary easing and fiscal stimulus, Abe is now pursuing growth strategies including free trade and regulatory reform as the third prong of his economic policy.
Big manufacturers such as Nissan Motor Co. have long urged the Japanese government to catch up with South Korea, which already has free trade agreements with both the U.S. and the EU.
Japan is seeking the removal of EU tariffs on cars and other products, while Europe wants to scale back non-tariff barriers in the Japanese market for financial services as well as for goods. The two governments have agreed to unify car safety regulations, the Nikkei newspaper said on March 21.
Japan posted its longest run of trade deficits in three decades last week, as February exports fell.
The EU, Japan’s third largest trading partner, applies a 10 percent tariff to Japanese cars, while there is no tariff on European cars imported to Japan.
The agreement was cleared by EU governments last November, and De Gucht said at that time that the negotiations could easily last two to three years, and that it could take four to five years for any deal to be ratified.
Japan will also start free trade talks with China and South Korea on March 26.
Abe, EU President Herman Van Rompuy and European Commission President Jose Manuel Barroso held a phone conference today as a scheduled summit was postponed because the European leaders were involved with talks over Cyprus’ bailout.