Aid and trade top EU-Japan talks agenda

Date: 19/09/1996

By Elizabeth Wise

THE marriage is more than a year old now, but the honeymoon is still going on.

The happy couple will celebrate at the end of the month with a EU-Japan summit which should show off the range of their political and commercial cooperation.

Japanese Premier Ryutaro Hashimoto will welcome Irish Prime Minister John Bruton and European Commission President Jacques Santer to Tokyo on 30 September for talks on a growing list of foreign policy projects.

The three will discuss their cooperation in the former Yugoslavia, the Middle East and on the Korean peninsula.

The first two items on the list clearly demonstrate one of the main reasons for the EU-Japan alliance - both are economic heavyweights who have sought to increase their political stature in recent years by playing significant roles at international donors' conferences.

The two sides will discuss their humanitarian aid efforts and consider expanding EU-Japan cooperation in both humanitarian aid and education.

On the Korean peninsula, where Japan is a key player (with the US) in the KEDO initiative encouraging the substitution of alternative energy capacity for nuclear power plants, Tokyo wants greater EU participation. Last year, Japan managed to bully the Union into making financial contributions to the initiative, and the EU is now trying to join as a project partner.

But no discussion of EU-Japan ties would be complete without commercial talks and Hashimoto, who was his country's trade minister until January this year, will surely stray back into those waters.

Trade Commissioner Sir Leon Brittan will accompany Santer to Tokyo and keep an eye on discussions on a series of ongoing trade issues between the two sides.

First on the agenda, according to Brittan aides, will be the preparations now under way for the first ministerial meeting of the 100-plus nations of the World Trade Organisation (WTO). The EU and Japan, together with the US and the Association of Southeast Asian Nations (ASEAN), are effectively setting the agenda for the December meeting in Singapore.

Hoping that the Singapore assembly can make progress on promoting a world agreement on trade in telecommunications and information technology, Brittan's aides say the Commissioner will hint that the Union would consider lowering its tariffs if Japan was prepared to make a similar contribution.

The Santer and Hashimoto teams will also exchange views on their relations with ASEAN and Washington.

That may allow Brittan and Japanese Trade Minister Shunpei Tsukahara to form a coalition before they meet their US and Canadian counterparts at a two-day 'quadrilateral' trade meeting set for 26-28 September in Seattle, Washington.

The EU-Japan alliance acquired real substance some 16 months ago when the Union took Tokyo's side in a US-Japan dispute about trade in automobiles and car parts.

Auto talks between Washington and Tokyo are still continuing, and the Union has managed to position itself as mediator. In that capacity, EU officials attended the most recent round of car talks in San Francisco earlier this week (17-18 September).

But the EU's own auto agreement with Japan has been free of contention this year, mainly because Japanese car imports to the Union have not strained EU quotas due to the yen's high value, which has made such imports too expensive for most European consumers.

On the exports side, EU officials say European-made cars are selling well. “The Japanese gave us a lot of concessions a year ago and we are not doing badly in the Japanese market,” said a Commission official.

The Union has also scored points in Tokyo this year by pushing for a role in US-Japan talks on the semiconductor trade. Japan welcomed European interest as a helpful counterweight to US pressure and even proposed trilateral talks, but Washington rejected that idea and eventually struck a bilateral deal despite EU disgruntlement.

Brittan aides say the Trade Commissioner will raise the issue again at the summit.

“We will give them a foretaste of our deep-down reaction to the US semiconductor agreement and how we will play our cards as a result of it,” said one. But he added that the US-Japan deal did not appear to be “too threatening” to European interests.

Europeans are also feeling happier about their relations with Tokyo because Japan's current account surplus fell to 2.2&percent; of Gross Domestic Product last year, down from 4.2&percent; of GDP in 1986.

The Union's deficit with Japan is also down. EU exports are now worth 70&percent; of its imports from the Asian powerhouse. A decade ago, that figure was 44&percent;. “We are closing the gap,” said one EU official proudly.

The Commission maintains the shrinking gap is thanks to persistent EU efforts to get Japan to deregulate its industries.

Japan's deregulation action programme was top of the agenda at last year's EU-Japan summit in Paris after Tokyo pledged to open up its markets over a three-year period.

At that meeting, French President Jacques Chirac impressed the then Japanese Premier Tomiichi Murayama with a long speech praising Edo period culture, and the flattery flowed copiously through the rooms of the Elysée Palace.

Just how long relations can remain so warm when two-way annual trade worth many billions of ecu is involved is a question which more than a few businessmen are asking.

As a Europe-based representative of one Japanese industry association said recently: “We keep wondering when the honeymoon is going to end.”