The recent withdrawal of the United States from the Trans-Pacific Partnership (TPP), the halt in the Euro-American TTIP negotiations, the Brexit process and all the burgeoning voices worldwide demanding stronger protections of their special interests are signs of a general deterioration of trust in international trade (we predicted such changes back in 2016).
But as it is often said, times of crisis are also times of opportunities.
As the Anglo-Saxon dominance of world affairs keeps eroding, unlikely challengers make it to the trade front lines. The European Union, despite rising protectionist tendencies among its members (check our previous assessment on the EP’s support for free trade), concluded a trade agreement with Canada and it is trying to finalize an FTA deal with Mercosur by the end of the year (we already exchanged with Brazil Ambassador Everton Vieira Vargas on the subject). Japan, the 4th largest national economy, is not discouraged by Trump’s decision to pull out of the TPP negotiations and it is actively working on relaunching the project with the remaining countries.
The two economic giants just reached a deal on an unprecedented Free Trade Agreement, encompassing a quarter of the world’s GDP. Through this trade agreement, the EU and Japan are proposing themselves as the new leaders of economic integration on the world stage, at a time when free trade is challenged by the rise of nationalism and protectionism.
From the impact of Brexit to the role of the EU in the South Pacific region, VoteWatch Europe had the honor to discuss with His Excellency Kazuo Kodama, Ambassador of Japan to the EU.
In this interview transcript below, Ambassador Kodama shares his views on the potential benefits of the FTA between the EU and Japan, the impact of Brexit on UK-Japan relations, the response to North Korea’s military program, as well as the current status of the TPP negotiations.
VoteWatch: You were posted as Ambassador of Japan to the EU during unusual times for both players. The European block seems to be facing increasing challenges to promote its interests internationally while facing Brexit and rising nationalism internally. At the same time, Japan is undergoing significant political developments this year: after the change of the rules to facilitate emperor’s abdication, there is a strong move to also change the country’s constitution to allow the strengthening of its military power.
What can the Europeans expect from Japan in the coming years, what role will Tokyo play in the region and in the world in the coming years?
Ambassador Kazuo Kodama: It is indeed fair to say that I assumed my functions as Japanese Ambassador to the EU against a backdrop of interesting political developments both in the European and Asia-Pacific regions. However, I have always remained optimistic. All of these uncertainties have come about because our liberal democracies are functioning. We must remember that democracy, by definition, embraces what I call “an organized chaos” or “organized disorderliness” causing changes in government through general elections.
We, therefore, have to live with and through the consequences of these sovereign decisions.
Today, we are living in a world of uncertainty. The international order based on the rule of law has been challenged in various ways. In times like this, the cooperation between Japan and the EU, as strategic partners which share universal values such as freedom, democracy, the rule of law and support for market economies, is becoming even more important.
The agreement in principle on the Japan-EU Economic Partnership Agreement (EPA) and the Strategic Partnership Agreement (SPA) in July this year sent a powerful signal to the world regarding the strong political will of Japan and the EU to further enhance their cooperation, to maintain and expand the free and open international order and to lead the international community in the pursuit of peace and prosperity.
Japan and the EU already cooperate across diverse fields including development cooperation, climate change, energy, as well as science and technology. In addition, the EPA and the SPA will further broaden Japan-EU cooperation and allow it to enter a new stage.
A free and open maritime order based on the rule of law is a cornerstone for peace and prosperity across the international community. Between Japan and Europe lies the Indo-pacific region which covers a vast area from the Asia Pacific through to the Indian Ocean and on to the Middle East and Africa. This is the center of global growth which comprises more than half of the world’s population, and in which both Japan and the EU hold vital strategic interests [as we noted before].
It is important to achieve peace and stability in this whole region by ensuring that the Indo-Pacific region remains free and open as a global commons. Based on these principles, Japan promotes a “Free and Open Indo-Pacific Strategy”. The EU has been vocal about engaging with Asian regions in the context of its Global Strategy through which the EU will strengthen its engagement not only in economic aspects but also on political and security and defense matters. Further cooperation between Japan and the EU is expected in these areas in the future.
In all of these matters and more, the Japan-EU EPA and SPA will underpin and strengthen our cooperation initiatives. So to answer your question in a nutshell, Europeans can expect Japan to be an indispensable and like-minded partner as we continue to jointly promote prosperity and our shared values in the years ahead.
VoteWatch: The negotiations for the EPA and SPA between EU and Japan have taken longer than expected, partly due to EU’s internal politics. Does Japan feel that it can rely on the Europeans as a trade partner?
Ambassador Kazuo Kodama: Since the negotiations began in April 2013, the firm commitment and determination which exist on both sides to achieve a comprehensive, high-level and balanced agreement – from the level of the political leaders down to the level of the negotiators – have never been in doubt. This shared confidence is further demonstrated by our extensive and successful cooperation across many fields.
Japan and the EU are united by our common values of democracy and the rule of law as well as by our determination to promote together an open and fair global economy that benefits everyone. These are the foundations of our political and economic strategic partnership for peace, prosperity and a rules-based international order.
From this strategic perspective, I am very pleased to acknowledge that the agreement in principle of the Japan-EU EPA, as well as the SPA, truly marks the beginning of a new chapter in the strategic partnership between Japan and the EU, elevating our relationship onto a higher terrain.
It should be noted that with respect to the timing of reaching the agreement in principle, our leaders sent a clear message against the backdrop of recently rising protectionism and anti-globalization. The message was crystal clear: Japan and Europe have shown to the world that free trade, with clear and transparent rules which fully respect and enhance our values, remains an important tool for promoting prosperity in our societies. We believe that the highly ambitious and comprehensive EPA should take its rightful place beyond the bilateral context and that it will be a model for the 21st-century economic order based on free, open and fair rules.
The EPA will bring our two economies closer by addressing issues related to market access for goods, services, investment, procurement including railways, as well as intellectual property rights. This agreement will allow us to renew and strengthen our joint commitment to international standards for even closer cooperation in the future.
In a nutshell, it will contribute to boosting economic growth, creating employment and strengthening business competitiveness both in Japan and the EU, and the bonds of friendship and trust which exist between Japan and the EU will be further strengthened as a result.
VoteWatch: Japanese Prime Minister, Mr. Abe, has met three times in the last 8 months with the EU leaders (Tusk and Juncker). On the occasion of the 24th Japan-EU Summit, Prime Minister Abe requested continued consideration for not only transparency, but also for predictability in the United Kingdom’s withdrawal process. Why is the Brexit process so important for Japan?
Ambassador Kazuo Kodama: BREXIT is indeed an extremely important topic for the Japanese government. Since the June 2016 referendum, one of the primary tasks of the Japanese Mission to the EU has been to monitor the BREXIT process as thoroughly as possible. The withdrawal of the UK from the EU constitutes an event that will have a substantial impact not only on the future of European integration but also on the international community as a whole, which is why the world including Japan is paying close attention to the BREXIT negotiations.
There are numerous Japanese businesses operating in Europe, which have created 440,000 jobs. A considerable number of these firms are concentrated in the UK. Nearly half of Japanese direct investment intended for the EU in 2015 flowed to the UK, and the UK is one of the major destinations for Japan’s investment stock within the EU. While benefiting from the single market of the EU, Japanese businesses have contributed to the development of the European economy. Since Europe, including the UK, is a major trading partner and an investment destination for Japan, it is in our interest that we continue to have access to the free market of Europe, including the UK. It is of great importance that the UK and the EU maintain market integrity and remain attractive destinations for businesses, where free trade, unfettered investment and smooth financial transactions are ensured. A number of Japanese businesses, invited by the UK government in some cases, have invested actively in the UK, which was seen to be a gateway to Europe, and have also established value-chains across Europe. In light of this, we have strongly requested that the UK consider these facts seriously and call upon the UK to respond in a responsible manner to minimise any harmful effects on these businesses.
Although the negotiations are sure to encounter difficulties from time to time, I have no doubt that the UK and the EU will overcome such difficulties and lay the foundations for the creation of a stronger, new Europe. Japan enjoys strong political, economic and security partnerships with the UK and the EU on the basis of our shared fundamental values and the global perspective that underpins our contribution to the international community. Japan expects to continue cooperating and collaborating closely with the UK and the EU for international peace, stability, and prosperity.
VoteWatch: Recently, the Japanese Minister of Foreign Affairs, Mr. Kono and the High Representative, Ms. Mogherini strongly condemned North Korea’s launch of the ballistic missile over the territory of Japan on September 15. Do you think the EU should be more vocal on the security of the Asia-Pacific region?
Ambassador Kazuo Kodama: We have been working closely with the EU on security issues in the Asia-Pacific region as well as globally. Japan and the EU share basic values such as democracy, the rule of law and human rights. It is not only important but also necessary for Japan and the EU to join forces to tackle security issues.
North Korea is a case in point. As North Korea repeatedly launched ballistic missiles, including the launch on 29 November, and conducts nuclear tests in flagrant violation of the United Nations Security Council Resolutions, Japan, and the EU strongly condemned North Korea and imposed a series of sanctions to maximize pressure on North Korea.
As an increasing variety of challenges and uncertainties arise, it is only natural to expect more cooperation between Japan and the EU in the years to come.
VoteWatch: The revival of the TPP even without the US has been a surprise to some. Does this prove that the democratic world can advance free trade despite the seemingly protectionist stance of the Americans?
Ambassador Kazuo Kodama: Japan has strongly supported the TPP ever since it decided to participate in the negotiations in 2013. This is further demonstrated by the fact that Japan was the first signatory country to announce the completion of domestic ratification procedures. On November 10th, we achieved an agreement in principle at the ministerial level among 11 countries at the TPP Ministerial Meeting held in Da Nang, Vietnam.
This agreement has substantial strategic significance because it will maintain the high-level content of the TPP agreement. Furthermore, it will also build a free and fair economic order for sharingprosperity in the Asia-Pacific region, where there has been remarkable growth, as well as create the foundations for further expanding that order. I am convinced that it will also contribute to the peace and stability of Japan and the Asia-Pacific region. Based on the agreement reached in Da Nang, the 11 member states of the TPP will pursue the earliest possible signing and early entry into force of this agreement.
At the same time, it is very important that the US remains involved in the Asia Pacific region, thus this process is not intended to exclude the US but to leave the door open to the return of the US to the TPP in the medium term. Japan will continue to talk to the US regarding the importance of the TPP and will act as a bridge between the other member states of the TPP and the U.S.