Japan has joined hands with the European Union in a “connectivity partnership” that sets an example to the world. Sano Kentaro reports.
Japan and the EU share fundamental values and principles such as democracy, the rule of law and human rights, and common positions on a number of global issues. In September this year, the two deepened their relationship with the establishment of a “connectivity partnership,” this following the signing in July 2018 of the Japan-EU Economic Partnership Agreement (EPA) and Japan-EU Strategic Partnership Agreement (SPA).
With globalization breaking down market borders, the world is, in a sense, changing around the economy and a situation in which players sit down at the round table to strike business deals even in the face of conflict. Mega FTAs have been concluded and are also being sought.
The establishment of the Trump administration has impacted various existing bilateral relations or regional economic cooperation frameworks, and ultimately security, too. In the meantime, a rising China is continuing its global expansion. In this situation, the world’s largest and second largest economic powers have generated enormous trade friction, which has in turn affected the whole world.
With the values and order emphasized and shared among the international community shaken, on September 27, 2019, Japan and the European Union (EU) reached a new agreement and further strengthened their relationship. In these protectionist times, they have established what appears to be a most ambitious trade framework yet one that may serve as a model for global society going forward.
Japan and the EU have continuously held Summit and other meetings at various levels since the Japan-European Community Joint Declaration of 1991 and more recently via the Japan-EU Action Plan of 2001–2010. In May 2011 at the 20th Japan-EU Summit, leaders agreed to start the process for parallel negotiations for “a binding agreement, covering political, global, and other sectoral cooperation in a comprehensive manner […]” (SPA) and to establish an Economic Partnership Agreement (EPA). After the launch of the negotiations in March 2013, Japan-EU SPA decisions were agreed in February 2018, and the Japan-EU SPA was signed at the 25th Japan-EU Summit in July 2018. The impetus for moving to conclude a comprehensive agreement to develop Japan-EU relations was a recognition of the need to respond to the change in the international situation.
The New Partnership
On September 27, 2019 Prime Minister Abe Shinzo and Jean-Claude Juncker, President of the European Commission, signed “The Partnership on Sustainable Connectivity and Quality Infrastructure between Japan and the European Union.”
The key points of the Partnership are: (1) Japan and the EU affirm their commitment to establishing a Connectivity Partnership based on sustainability as a shared value, quality infrastructure and their belief in the benefits of a level playing field; (2) Japan and the EU intend to work together on all dimensions of connectivity, bilaterally and multilaterally, including digital, transport, energy and people-to-people exchanges; (3) Japan and the EU envisage working together to promote openness, transparency, inclusiveness and a level playing field for those concerned, including investors and businesses in connectivity. They also intend to promote free, open, rules-based, fair, nondiscriminatory and predictable regional and international trade and investment, transparent procurement practices, the ensuring of debt sustainability and the high standards of economic, fiscal, financial, social and environmental sustainability. And (4), in view of their commitment to promoting rules-based connectivity globally, both sides intend to cooperate in international and regional bodies, including international fora such as G7, G20, the OECD, the World Bank, the International Monetary Fund, the European Bank for Reconstruction and Development, and the Asian Development Bank.
The essence of the Partnership is the recognition and promotion of “the importance of mobilizing levers and tools to spur private investment,” “cooperation on enhancing digital connectivity,” “interconnection of transport corridors and enhancement of safety and security of transport,” “supporting sustainable energy connectivity building,” “expanding international people-to-people exchanges between institutions in higher education and research sectors,” and “cooperation in the framework of the Connectivity Partnership.”
Clearly, the Partnership sends a strong counter message to the trend of trade protectionism while also demonstrating a readiness to implement original rules.
Strong and Steady Pillars
Prior to the Partnership signing ceremony on September 27, Prime Minister Abe delivered a keynote speech at the Europa Connectivity Forum (EU-Asia Connectivity: Building Bridges for a Sustainable Future) in Brussels at the invitation of Jean-Claude Juncker. His speech was titled, “Japan and the EU: The Strong and Steady Pillars Supporting Many Bridges.”
At the Forum, Prime Minister Abe noted that the Partnership was preconditioned by the Japan-EU SPA, saying:
“The declaration [of SPA] made is that Japan and the EU are able to continue their deep and long-lasting cooperation as strategic partners because they share common values and principles. That is because those values and principles constitute the basis for their cooperation.” He further noted, “The SPA cites ‘democracy’ as being of primary importance, followed by the ‘rule of law,’ ‘human rights,’ and ‘freedoms.’”
The EU is a vital global partner that shares the same outlook as Japan on many issues and with which Japan can hold frank dialog on matters including the global economy, combating terrorism, global commons, energy, climate change, and the security environment in East Asia, the Middle East and North Africa, while still pursuing its national interests. The two sides have worked together to fight against protectionism with the support of the World Trade Organization (WTO), cooperated in the dispersal of Japan’s official development assistance (ODA) and with the EU’s Common Security and Defense Policy (CSDP) missions and anti-piracy activities off the coast of Somalia and in the Gulf of Aden. They have implemented expert meetings on humanitarian assistance and disaster relief, held Japan-EU consultations on cyber and space issues, promoted interactions among young people in Japan and the EU and among researchers in the science and technology area. They have also worked closely together in their strong commitment to implementing the Paris Agreement.
And they have concluded an EPA.
Among the factors behind the conclusion of the EPA are Japan and the EU’s shared recognition of protectionist movements and emerging economies’ market-distorting measures, the issues of mandatory industrial subsidies and technology transfer, and the need to reform the Doha Round of WTO negotiations, which are presently in a stalemate.
Against this background, the Partnership document describes the EPA as “a model of high standard rules in the 21st century for free, open, rules-based and fair trade and investment, and policy coordination for boosting innovative technology.”
The Japan-EU EPA, which entered into force on February 1, 2019, covers 8.6% of the global population, 28% of global gross domestic product (GDP), and 37% of world trade. This is the largest “mega free trade agreement” (FTA) concluded by Japan since the conclusion of the Japan-Singapore EPA in 2002. It is a mega FTA comparable to the TPP (36%) and RCEP (29%) prior to the United States’ withdrawal, and its impact is significant.
Japan has led mega FTA negotiations, such as TPP11 and RCEP, to build a twenty-first-century economic order model based on free, fair rules and set the realization of the Japan-EU EPA as the pillar of the growth strategy of Abenomics.
On July 17, 2018, Jean-Claude Juncker, President of the European Commission, Donald Tusk, President of the European Council, and Prime Minister Abe held a signing ceremony for the Japan-EU EPA and the Japan EU SPA at the Prime Minister’s Office.
In the abovementioned keynote speech, Prime Minister Abe commented on the fact that Presidents Juncker and Tusk had traveled to Tokyo for the signing ceremony after Abe was unable to go to Brussels as planned as a result of heavy downpours in southwestern Japan. “Well, in that case, Shinzo, we’ll come to you,” Prime Minister Abe reported his counterparts had said. “It was a signing of historic documents. The two came to Tokyo as they wanted to have no delay.”
Prime Minister Abe continued, “Our EPA made Japan and the EU flag bearers of free trade, while our SPA made us the guardians of universal values. With the two of them in balanced combination, if the world were a ship sailing the open seas, these two agreements would serve as a stabilizer to counteract even the most severe pitching and rolling.”
There are multiple trade routes and corridors around the world and also movements that involve connecting new roads. Even if there are other options, it matters whether the roads are efficient, safe and connected to other roads.
“Whether it be a single road or a single port, when the EU and Japan undertake something, we are able to build sustainable, comprehensive, and rules-based connectivity, from the Indo-Pacific to the Western Balkans and Africa,” said Prime Minister Abe. “It goes without saying that in order to make the connectivity linking Japan and Europe something rock-solid, the Indo-Pacific, the sea route that leads to the Mediterranean and the Atlantic, must be free and open.”
All sea routes and roads must have common rules applied to them and be safe. The Japan-EU frameworks demonstrate an unshakable model for today’s global society and suggest a roadmap to the future. Whether the model will result in global prosperity will depend on the establishment of further such free and open measures around the world.
SANO Kentaro is a freelance writer.
[This article first appeared in the November/December issue of the Japan Journal.]