The European Union (EU) and Japan are negotiating a Free Trade Agreement (FTA), hoping to complete their mission by the end of 2017.

Last month, the EU and Japan reached an agreement in principle on the main elements of the EU-Japan Economic Partnership Agreement. In 2013, EU governments instructed the European Commission to start negotiations with Japan.

EU businesses already export more than €58 billion goods and €28 billion in services to Japan every year. However, European firms have continued to face trade barriers when exporting to Japan—making it harder for them to compete.

Japan has instituted higher tariffs on imported food in recent years—for example, 40 percent customs tax on beef, up to 30 percent on chocolate and up to 40 percent on cheese.  Removal of these tariffs is expected to translate into an increase of EU exports of up to €10 billion per year.

There are hopes that EU exports of chemicals will grow by up to €3 billion per year. Under this agreement, the Japanese automotive industry will see the removal or reduction in tariffs related to cars and components--translating to cheaper vehicles.  

A new EU trade pact with Japan is designed to: 

  • Help design rules and standards to ensure global trade is free and fair.
  • Create EU jobs.
  • Open Japan’s service market to EU firms.
  • Align two economies—more than 1/3 of the world’s Gross Domestic Product.

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Additional Source: European Commission

 

 

Opening-round talks Aug. 16-20 to remodify the North American Free Trade Agreement (NAFTA) revealed early fissures dividing the United States from Mexico and Canada. The round table discussions included an administration proposal to require a “substantial” portion of autos and auto parts produced under the pact to be manufactured in the U.S.

The second round of NAFTA talks will be Sept. 1-5 in Mexico City. One of the key points in NAFTA talks is Rules of Origin (RO)--meaning a certain percentage of parts in a product, such as a car, have to originate from North America.