World Trade Agreement Japan

Between 2009 and 2019, the EU`s trade deficit with Japan increased from 18 billion euros in 2009 to 2 billion euros in 2019. The EU and Japan meet regularly to discuss issues and best practices in implementing the agreement. The EU has negotiated an economic partnership agreement with Japan. In particular, Japan strongly supports and often uses the rules-based WTO dispute settlement mechanism. At the same time, in recent years, the adoption and implementation of regional and mega-regional trade agreements in Japan`s trade policy has become crucial as the Doha Round negotiations in the WTO have stopped. Traditional trade relations between the EU and Japan were once characterized by large trade surpluses in favour of Japan. Another change in Japan`s trade policy is the growing importance of national security considerations. For example, the potential risk of additional tariffs on motor vehicles and auto parts for national security purposes, as predicted in point 232, overshadows bilateral TPP negotiations with the United States. The issue of national security is also controversial in japan-South Korea trade relations.

On July 4, 2019, Japan strengthened its licensing policies and procedures for the export of certain controlled products and their technologies destined for Korea. According to the Japanese government, measures taken for national security reasons, in accordance with the national security exception under ARTICLE XXI of the GATT, may be justified by the fact that “the relationship of trust between Japan and Korea (ROK) has also been significantly compromised in the area of export control and regulation” and that the government “recently found that certain sensitive objects have been exported to ROC under the under-management of companies.” However, South Korea has requested consultations with Japan under the WTO dispute settlement mechanism, saying that Japan`s actions are contrary to WTO agreements and are not justified by GATT Article XXI. The two countries held consultations but were unable to find a satisfactory solution for both sides. At this time, it is not clear that they will be able to reach a satisfactory solution for both parties through consultations. If this is not the case, the matter will be reviewed by a panel. In the services sector with Japan, the EU recorded a surplus of 13 billion euros in 2018. The multilateral trading system under the World Trade Organization (WTO) has been of the utmost importance to Japan`s trade policy. First, Japan had to change its approach to regional trade agreements, as the United States left the Trans-Pacific Partnership (TPP) agreement. In September 2018, Japan and the United States agreed to open negotiations for a bilateral trade agreement on goods and other key sectors, including services. The negotiations were conducted at an unprecedented pace, in part because of political pressure from the U.S. agricultural sector.

On October 7, 2019, Japan and the United States signed a trade agreement and a digital trade agreement, which came into force on January 1, 2020. Prime Minister Abe hailed the trade deal as a “win-win” for both countries because it covers products of interest to both sides. However, the agreement provoked mixed reactions in Japan on the following three points. First, the trade agreement could be detrimental in the long term to the Japanese beef and pork industry. Second, the agreement is also not satisfactory to the Japanese automotive industry, as it does not reduce tariffs on motor vehicles and auto parts. Third and finally, the question of consistency with Article XXIV, paragraph 8, point b), of the General Agreement on Tariffs and Trade (GATT), which stipulates that tariffs and other restrictive trade rules must be abolished as part of a free trade agreement “essentially all trade”.

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