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July 18, 2018

Don’t hold your breath about the EU-Japan trade deal

We noted that the new Italian government threatened that it might not ratify Ceta, the EU/Canada trade deal. We hear that this threat may be little more than noise, as Italy would be one of the main beneficiaries of the Canada trade deal. What is clear, however, is that the political climate for free-trade deals in Europe is not getting better.

What about Jefta, the EU-Japan trade agreement, whose conclusion the two sides celebrated in Tokyo yesterday? The deal will end up eliminating the EU’s 10% tariff on car imports. That’s ok with Germany, but not necessarily with Italy. France accepts it because it opens the Japanese market to French food exports to Japan, including cheese. Kobe beef would become tariff-free in the EU. In terms of trade volumes, Ceta is tiny by comparison. Jefta creates a free-trade zone between the world’s largest and third largest economies. Ratification would constitute a huge victory for global free trade. 

But we don’t expectat ratification, or even provisional application, to be a smooth ride. If the Italians block Ceta, they will certainly block Jefta. We think that ratification is uncertain until and unless the present Italian government loses its majority.

The following letter signed by an impressive number of NGOs opposed to Jefta, is a sign of the arguments to expect. This is only a summary of those objections that strike us as most important:

  • it reduces governments' ability to re-nationalise privatised services;
  • it constrains the ability to implement financial stability regulation;
  • it reduces the EU's ability to control GMOs;
  • it constrains the EU’s ability to strengthen data protection, copyright protection and patents;
  • it restricts the EU's ability to require Japanese car makers to submit their software for conformity checks; and finally
  • the EU and Japan are negotiating behind closed doors a separate agreement on investor protection tribunals.
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