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EU-Japan Trade Agreement: hearing and criticism in the European Parliament’s Trade Committee

On 17th July 2018, “JEFTA”, the biggest trade agreement ever concluded by the European Union, shall be signed in Tokyo: together, Japan and the EU are responsible for a third of the global gross domestic product. Due to the co-decision right relating to trade agreements the European Parliament has to give its approval prior to the Agreement’s definite entry into force; however, it can no longer be revised. Therefore, on 9th July 2018, the European Parliament's Committee on International Trade (INTA) invited the most important players, among them the Commission and the Japanese Ministry of Foreign Affairs, to a debate in the European Parliament.

After the European Commission had negotiated the EU-Japan Trade Agreement with the Council mandate between 2013 and December 2017 - until June 2017 under wraps and not on the radar of the wider public - it is now the turn of the European Parliament. According to the tight schedule, the ca. 2,000 pages of the Agreement text should be reviewed prior to the planned vote mid December 2018. The EU-Parliament will only be able to deliver a Yes or No; any renegotiations will no longer be possible. Due to the fact that JEFTA does not provide for any rights of action for foreign investors, there is no need for the Agreement text to be additionally confirmed by national parliament, as it is the case with CETA.

However, the Investment Court System (ICS), which from the Chamber of Labour's point of view is extremely problematic, is the subject of continuing negotiations with Japan in a separate Agreement. So far, no settlement has been reached. Positive, however, is the fact that the Commission excludes a return to the old Investor-State Dispute Settlement (ISDS) procedure, which provides for purely private arbitration courts, and which, due to the so-called “Achmea ruling” by the ECJ, has been banned within the EU in the meantime. For the time being Japan is reluctant to agree to the “new” Investment Court System (ICS) in accordance with the CETA model, which has been proposed by the Commission.

The hearing in the Parliament's Committee on International Trade on 9th of July revealed further problems, which might stand in the way of MEPs vote in favour: with regard to the labour-law standards in the Agreement, the Committee’s rapporteur, Pedro Silva Pereira (S&D, PT) pointed out that Japan had still not ratified two of the eight Core Labour Standards of the International Labour Organisation (ILO). These are Convention No. 111 concerning Discrimination in Respect of Employment and Occupation, and No. 105 concerning the Abolition of Forced Labour - both fundamental human and labour law minimum standards. Even though, Japan commits herself within the scope of the Trade Agreement to observe the standards independent of their ratification, however, she does not commit to the ratification itself. Accordingly vague were the answers of the Commission representative Jean-Luc Demarty and the Japanese delegate, Yoichi Suzuki: Tokyo was currently engaged in reviewing the integration of ILO Standards in Japanese law.

Another main point of criticism by MEPs referred to the Trade Agreement’s Sustainability Chapter, which is to regulate social and environmental standards. MEP Jude Kirton-Darling (S&D, GB) criticised that regarding this aspect JEFTA would fall short of the previously concluded Agreement with Canada (CETA) and that any progress made regarding this Agreement would be lost. The Commission explained this shortfall compared to CETA by declaring that each Agreement had to be negotiated on its own. Standards, which would equally apply to all trade agreements, would not exist. Apart from that, the Sustainability Chapters had once again been designed without sanctioning enforcement mechanism, which means that any violation of, for example, the Paris Climate Agreement or ILO Labour standards, which are part of the Agreement, would not entail any consequences. However, the studies by the University of Warwick or by the Friedrich Ebert Foundation show that only sanctioning Sustainability Chapters can achieve sustainable effects concerning trading partners’ social and environmental standards.

Some MEPs shared their worries about the impact of the Agreement on public services and procurement. Klaus Buchner (Greens, DE) criticised the approach of the so-called “Negative lists”, which is enshrined in the Agreement: this makes it possible that all sectors of public services, which are not explicitly listed as a reservation, are automatically released for liberalisation. This includes among other the water industry - hence, the German Association of Energy and Water Industries (BEDW) is opposed to the Agreement; the Article on “Rights and Obligations Relating to Water”, as enshrined CETA, is not part of JEFTA. Hence, the privatisation of public goods is able to gain further ground.

Therefore, the Chamber of Labour and the ÖGB have taken a clear Position against JEFTA and written a joint open letter to MEPs of the European Parliament's Committee on International Trade, in which they ask them not to agree to this Agreement until the problems mentioned have been eradicated..

Further information:

Commission: Key elements of the EU-Japan Economic Partnership Agreement

AK & ÖGB submit positions on Trade agreement with Japan and Singapore to EP Trade Committee

AK Europa: JEFTA - An exclusive trade between EU negotiators and big business

Labour rights and environmental protection in EU Trade Agreements: Commission tries Implementation without Sanctions

AK Europa: Integrating conditional labour standards in trade agreement at last!

Video: Core Labour Standards Plus (CLS+)

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