EU and Japan close to market-opening deal

Date: 17/06/1999

By Gareth Harding
THE EU and Japan are on the verge of clinching a ground-breaking deal which will make it faster, cheaper and easier for firms to do business in each other's markets.

The two sides had hoped to sign a so-called Mutual Recognition Agreement (MRA) at a summit in Cologne this Sunday (20 June), but last-minute hitches mean that a final accord is almost certain to be delayed until next month

or the early autumn. However, EU ambassador to Tokyo Ove Juul-Jorgensen says that after years of talks, the two sides are now "very, very close" to rubber-stamping their first-ever formal treaty.

Despite the undoubted boost to EU-Japan relations the agreement will bring, this weekend's summit is likely to be overshadowed by continuing spats over the rate of market opening in Asia's largest economy.

Earlier this year, Tokyo presented a list of more than 200 steps it was taking to deregulate its economy, but the European Commission believes these do not go far or fast enough. "An enormous amount still needs to be done," said one official. "The scope for greater foreign investment in Japan is huge, but it will not come until the regulatory environment is more favourable."

The EU will be pushing Japan to create a level playing-field in competition policy at the Bonn summit. It will also urge Tokyo to sign up to more international norms and procedures in the business arena.

However, both sides will highlight the progress made on the MRA as a significant step forward. The Union has already signed a similar agreement with the US, but Japan has traditionally been more reluctant to open its markets to foreign firms.

Under the proposed agreement, products which have been tested and certified in the EU would be granted free and unrestricted entry into the Japanese market and vice versa.

Heralding the MRA as a "major breakthrough in relations between the EU and Japan", J¿rgensen said the deal would simplify the way the two sides do business and avoid a costly duplication of tests and certificates. This, he added, would lead to lower costs for producers and consumers.

Industry groups have also welcomed the imminent signing of the agreement as removing one of the major obstacles to EU firms trying to break into the Japanese market.

Marie-Elisabeth Rusling of the European Chambers of Commerce said the MRA was a "concrete step forward" for European firms which would "help convince them that they can do business in Japan".

One area where there is likely to be little disagreement between the two sides at this weekend's summit is over the forthcoming round of world trade talks. J¿rgensen said the two sides had made "spectacular progress" towards agreeing a joint position in recent months.