The Decade of Japan-Europe Cooperation: Part II

John de Boer (University of Tokyo & GLOCOM Platform)

Part II of this series on The Decade of Japan-Europe Cooperation focuses on outlining and analyzing the second objective highlighted in the Action Plan. This objective is to "strengthen the economic and trade partnership between Japan and the EU by utilizing the dynamism of globalization for the benefit of all". Towards this end, the two have identified two priority items: (1) encouraging their bilateral trade and investment partnership and, (2) promoting development and the fight against poverty. According to the Action Plan, Japan and the EU believe that a deeper and wider economic trade relationship between the two will promote economic stability worldwide and in that way benefit all countries.

Bilateral Trade and Investment:
Both Japan and the EU currently feel that their bilateral trade relationship has not reached its full potential. The lack of business interaction between the two seems to stem from the misguided notion among their business people that the most profitable and beneficial business opportunities are in the US and investment in the EU/Japan is of secondary importance and only to be realized if resources permit. Currently, business relations between the two remain largely undeveloped and both governments have realized that they need to begin by promoting dialogue between business groups and between consumer organizations before any major breakthroughs are made. Simultaneously however, a number of problem areas where specific policy coordination is needed have been highlighted. These include regulatory reform, market access, improving the investment environment, competition policy, customs cooperation and information technology. On the multilateral level further coordination at the WTO and the G8 has been emphasized by both.

In the bilateral sphere, the focus of both governments has been identified as "fostering an open environment for trade and investment", with an emphasis on rapidly growing areas of the economy. The objective seems to be the creation of an "attractive business environment" that will assist both to overcome their tendency of prioritizing investment opportunities in the US over each other. The major concern for the EU and Japan, according to the Action Plan, does not seem to be the promotion of an attractive business environment for the sake of Japanese and European transnational corporations (who are already investing in both), but to encourage investment by small and medium sized enterprises. However, relations remain limited by the existence of too many trade barriers and inconsistent regulatory practices particularly in the telecommunication, environment, energy supply, commercial transport services and construction sectors. Recognizing this, the two have pledged further cooperation to eliminate these barriers and inconsistencies.

In order to promote commercial interactions between small and medium sized enterprises the EU-Japan Business Dialogue Roundtable has been identified as a forum in which useful recommendations and best practice guidelines can be discussed. Further to this, exchanges through the "Gateway to Japan" program and the EU-Japan Centre for Industrial Cooperation will be actively pursued and funded. Finally, in order to facilitate the movement of employees with "specific skills" the simplification of visa formalities has been encouraged.

A major obstacle to the promotion of trade and investment between the two is manifest in the fact that the Cooperation Agreement Concerning Anti-Competitive Activities has not been fully implemented. Opinions concerning competition policy differ widely between the relevant authorities with the primary source of conflict being the selective establishment and implementation of competition laws depending on the sector. This is relevant in many sectors, including for example in the Japanese health care sector where drug pricing has nothing to do with market prices.

A particular area of interest for Japan and the EU is strengthening cooperation on information and communication technology (ICT). Towards this end closer consultations on the fourth generation mobile communications system to ensure its realization along international standards have been encouraged. However, the wide discrepancy in regulatory practices in the area of telecommunications continues to limit extensive cooperation and few efforts are being made to remove these barriers despite both sides recognizing that they are in contravention of WTO rules. Nevertheless, the EU and Japan are striving to facilitate industry-university-government collaboration in this sector by creating an e-network that binds European and Japanese individuals and institutions in areas of common interest. This is thought to be an important and promising endeavor.

On the multilateral level, Japan and the EU have often formed a common front against the US, Canada, Australia, New Zealand, and other strong agricultural producers to protect their farming industries. Despite many of their protectionist agricultural policies being in contravention of WTO rules the Action Plan reaffirms the need for cooperation between the two in this sector with an emphasis on increasing their mutual understanding of the agricultural situation in both countries. Another preoccupation is the rise of China as an economic superpower. In order to ensure that their interests are maintained they have pledged mutual cooperation to ensure that China implements the various WTO agreements and commitments.

Development and the Fight Against Poverty:
Currently, Japan and the EU pledge approximately 70 percent of all Official Development Assistance among OECD/DAC members. Both have been extremely active in funding development projects in every region of the world. In many cases, funding activities have overlapped leading to waste, corruption and ultimately failing to contribute to development. As such, the Action Plan has pledged to engage in policy coordination with the stated objective of promoting development.

Combating infectious diseases is the priority for both with primary emphasis being placed on the fight against HIV/AIDS, tuberculosis, polio and malaria. To date, the battle against these diseases has been a losing one. Not because cures are not available, but because measures to treat them have either been ineffective or remain unimplemented. The Action Plan has proposed increased information exchange, the organization of seminars and symposia and the dispatch of joint assessment missions, which could provide important insight into what needs to be done to control and eventually eradicate these diseases.

The main area of interest for Japan and EU in terms of such cooperation is in Africa. Both have voiced concern over the health care situation in Africa where millions of people die of preventable diseases each year and where close to 30 percent of the population in countries such as Zimbabwe is infected with HIV. Although it is not said, the death of millions of Africans in their youth is of major concern to Japan and Europe not only because of its humanitarian impact but also because of their importance as a source of cheap labor and resources for the Japanese and European economies.

Ultimately, in an increasingly globalized world the elimination of discrepancies in the level of development between the North and the South is of primary importance. The world, in particular Europe, is already witnessing what poverty in the South implies in terms of the number of illegal immigrants that arrive on its shores in search of a life. A widening of the gap between the 'have' and 'have nots' will only produce more illegal immigration, more insecurity, more suffering and more instability. As such both have recognized that assisting in the development of lesser developed countries is critical if Japan and Europe are to live in peace and prosperity.

Overall, the strategy to promote trade and investment between Japan and the EU remains undeveloped. In terms of priority areas, this is likely considered to be one of the most important. For this very reason little progress has been made in removing trade barriers, in promoting transparency and in reforming regulatory practices. It is hoped that Japan and the EU will manage to find a way to eliminate these discrepancies before the decade of cooperation expires. In terms of combating infectious diseases, Japan and the EU cannot wait any longer. The scale of suffering caused by such diseases is alarming and continues to increase on a daily basis. Japan and the EU must not only continue to dedicate resources to fight this problem but need to implement effective and honest strategies with urgency.