Japan-EU trade negotiations at crucial moment: Kishida

Japan and the European Union are at a crucial moment in their attempt to sign a free trade deal, Foreign Minister Fumio Kishida said Wednesday, with tariffs on European cheese a key sticking point.

The comments from Kishida come after four years of talks, with negotiators working toward signing a deal at a G-20 meeting in Hamburg next week.

The Nikkei financial daily said EU Trade Commissioner Cecilia Malmstrom and agriculture commissioner Phil Hogan may come to Tokyo for meetings with their counterparts on Friday.

“This week and next week is the most important period so we must communicate at the ministerial level,” Kishida told a forum.

“It’s important to have a face-to-face meeting at an important moment … either they come here or we go there.”

The European Commission said Hogan “stands ready to engage with Japanese counterparts whenever the ongoing discussions require a direct involvement at the political level.”

Clinching the long-awaited deal would be a victory for free-trade advocates after U.S. president Donald Trump pulled the United States out of the Trans-Pacific Partnership this year, dealing a possibly fatal blow to the mooted 12-nation deal.

The chief EU and Japanese trade negotiators have been holding “informal” talks in Tokyo this week.

On Tuesday afternoon, farm minister Yuji Yamamoto held phone talks with European Commissioner for Agriculture Phil Hogan, while top negotiators from the two sides—Yoichi Suzuki and Mauro Petriccione—had a meeting in Tokyo as part of working-level negotiations that started in mid-June.

In negotiations on Japanese tariffs on key farm products, including pork and wood, the tug-of-war on cheese is especially intense.

Japan’s tariffs on mozzarella, Camembert and other imported soft cheese products now stand at 29.8 percent.

The European side, which has a long history in cheese production, is demanding that Japan open its cheese market more aggressively than under the Trans-Pacific Partnership free trade deal.

The EU not only seeks the removal of Japan’s soft cheese tariffs, which the Asian country was allowed to maintain under the TPP accord, but also demands that the 29.8 percent tariffs Japan imposes on cheddar and other imported hard cheeses be abolished soon. Under the TPP deal, hard cheese tariffs are set to be removed in the 16th year after the pact’s effectuation.

Meanwhile, Japan is considering proposing varying cheese tariff rates and abolishing tariffs for cheese produced in certain areas and under specific brands.

The two sides still remain apart.

If Japanese cheese tariffs are fully removed, large amounts of inexpensive imported cheese are expected to enter Japan from the EU, which is responsible for half of the world’s cheese output.

Although such a development might be good news for Japanese consumers, there is concern that it could substantially push down the prices of domestic cheese products, disrupt the supply-demand balance in raw milk and deal a severe blow to aging domestic dairy farmers.

On Tuesday, Japan’s Central Union of Agricultural Cooperatives, or JA-Zenchu, held an emergency rally in Tokyo over the proposed Japan-EU EPA. At the event, Choe Okuno, president of the union, expressed concern over anticipated damage to domestic livestock and dairy farmers and urged the government to strengthen support measures.

With the negotiations on cheese not going smoothly, talks have stalled on the proposed removal of EU tariffs on Japanese automobiles, an important issue for Japan.

After the phone talks with Hogan, Yamamoto told reporters, “We want the EU side to make some concessions.”

“I hope to hold a summit meeting with the EU and reach a basic agreement” at the G-20 talks, Prime Minister Shinzo Abe said in a recent speech. “The Japan-EU Economic Partnership Agreement will be a model for 21st century economic order.”

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