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INTA Japan Monitoring Group meeting with stakeholders

European Parliament (Strasbourg – Room Louise Weiss – S 3.5)

Tuesday, 11 September 2012 - 10h00 to 12h00

Summary of ESF Contribution

  1. Thank you for the invitation. Japan is an important market for the European services companies, and the removal of existing trade barriers with this countryis key for many European services sectors.
  1. Introduction of the European Services Forum: (membership convers all major services sectors that are exporting and investing abroad; i.e. financial services, insurance, telecommunications, professional services, distributions services, construction services, tourism, transport services, logistic services, IT services, environmental services, etc. ESF is working closely with companies and associations on the ground, including the EBVJ (European Business Council in Japan).
  1. Importance of services in the EU economy:The services represent 73,2% of the EU GDP (2011 – Agriculture: 1.8%, manufacturing industry: 24.9%). In Japan, Services represent 72% of the Japanese GDP. 67% of the EU labour force work in services sectors, and approximately 53% for the services private sector.
  1. Importance of EU-Japan trade & investment in services:
  2. High volume: 34,3 billions € (2010); 19.5 Bio €= EU exports, Benefit = 4.7 bio €. This benefit contribute to reduce the overall trade deficit that the EU has with Japan (Total volume of 150.8 Billion €, with export of 68,5 Bio €, and deficit of 13.8 Bio €.
  3. Only 3.7% of global EU exports of services go to Japan (2010) (US: 24%)
  4. 28.5% of total EU export trade (goods & services) to Japan are services (world average: 25%)
  5. 54% of EU FDI stocks in the Japan (+93.6 billion € in 2010) are invested in services sectors. But Japan has disinvested from the EU in 2010 (-5.1 Bio €) and the EU has also disinvested from Japan in 2010 (-2.2 Bio €). Investing in Japan is difficult and Japan is one of the only country where the EU has a deficit in terms of FDI stocks (-35.5 Billion €; i.e. Japan invests more in the EU, while the EU is by far the biggest investor in most of developed and emerging economies). Japan’s Inward FDI remains very low in comparison with other OECD countries.
  1. A large potential of development of services trade is hampered by regulatory restrictionsIn Japan. Contrary to the Transatlantic services market that is already very much integrated, this is not at all the case with Japan. ESF therefore strongly supports the launch of trade negotiations between the EU and Japan, since this will be a unique opportunity to negotiate new market access for the European services companies in Japan. Given the weight of services in the EU economy, in EU employment and in the EU external trade and investment with Japan, the Services chapter, as well as chapters in the interest of the services sectors (Investment protection, public procurement, IPR, regulatory cooperation disciplines), will have to be a major part of the agreement with Japan.
  1. Since Japan is a developed economy and has already signed FTAs with trading partners following that model, ESF favours services negotiations with Japan on a negative list approach, which should cover market access negotiations not only at the federal level, including independent agencies, but also at provincial or municipal levels when services sectors (or part of their activities, like outlet licencing, etc. are regulated at those levels.
  1. Among the major priorities for the services sectors are the following:
  2. Japan Post is one of the major issue to be solved, since that company has be credited with discriminatory advantages in postal & express services, in insurance services and in financial services, with exceptions to regulatory requirements, etc.
  3. Telecommunications: Interconnectivity obligations in non-discriminatory terms, rights for Virtual operators, independent regulator, etc.
  4. Distribution services: Removal of restrictions on opening retail outlets and stores, reform of the zoning regime, etc.
  1. The agreement should also comprise a comprehensive disciplines and market accessto public procurement for services, with low thresholds and substantive coverage of all public institutions, at national, provincial and other relevant levels, and of all public entities (universities, hospitals, etc.).
  1. The agreement should include high level investment protection at the EU level, with efficient investor-to-state dispute settlement. This will be essential, since according to UNCTAD Data base on Bilateral Investment Treaties, Japan has not signed any BIT with EU Members states.
  1. ESF supports the work undertaken by the two countries in the two-wayvarious Regulatory Reform Dialogues that took place over the last decade,aiming at reducing the number of unnecessary and obstructive regulations which hamper trade and foreign investment. We also acknowledge the EU-Japan Business Dialogue Round Table that is meeting since 1999.But unfortunately, there is no regulatory cooperation in the services sectors (except for the financial services, which is well appreciated and should continue), and the business round table dealt with services sectors only on rare occasions. The progress made in Legal Services where a smooth unilateral opening has been undertaken thanks to dialogue is well noted. Given that services activities are nearly all strictly regulated, there is a clear need to envisage the setting up of regulatory cooperation also in some services sectors, involving regulators all levels. ESF encourages the adoption of a strong regulatory cooperation chapter in the FTA, with binding disciplines, transparency rules and a revision clause, ensuring the continuity and efficiency of the dialogues.
  1. Finally, to react on the Draft Motion for a Resolution, we would like to welcome the initiative and support the trend of the Resolution in favour of the launch of FTA negotiations with Japan as soon as possible. The dimension of the “first to be in” will be important, as Japan is indeed active in negotiating its TPP accession and the China, Japan & Korea triangle. Japan could also be used as a hub to access to China and as a partner to strengthen international rules and standards. The absence of any reference to the services sectors is however astonishing, given its high importance to the EU economy and trade.
  1. On §7, ESF can agree with a binding review clause in the Agreement itself, but would like to highlight that such a review clause should not only cover the implementation of the roadmaps for NTBs and the roadmap for public procurement, but should also cover the implementation of the any other commitments undertaken by parties in the agreement, notably the market access and regulatory disciplines in the services sectors. We consider not appropriate to fix this adoption of a binding review clause as a pre-condition for authorising the Commission to launch negotiations with Japan. On §9 of the draft resolution, we support the possibility for the Commission to suspend the negotiations (after consultation with the Parliament and the Council) if Japan does not demonstrate sufficient ambition in the negotiations. Such negotiations should not drag for years. The EU has already this kind of negotiations which do not lead anywhere because of lack of political will (ASEAN, MERCOSUR, etc.).

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