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EU-Japan trade agreement enters into force

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The Economic Partnership Agreement (EPA) between the EU and Japan enters into force on 1 February 2019. Businesses and consumers across Europe and in Japan can now take advantage of the largest open trade zone in the world.

President of the European Commission Jean-Claude Juncker said: “Europe and Japan are sending a message to the world about the future of open and fair trade. We are opening a new marketplace home to 635 million people and almost a third of the world’s Gross Domestic Product, bringing the people of Europe and Japan closer together than ever before. The new agreement will give consumers greater choice and cheaper prices; it will protect great European products in Japan and vice-versa, such as the Austrian Tiroler Speck or Kobe Beef; it will give small businesses on both sides the chance to branch out to a completely new market; it will save European companies 1 billion euro in duties every year and turbo-boost the trade we already do together. More than anything, our agreement shows that trade is about more than quotas and tariffs, or millions and billions. It is about values, principles and fairness. It makes sure that our principles in areas such as labour, safety, climate and consumer protection are the global gold-standard. This only happens when you work with the most natural of partners, separated by thousands of kilometres but united in friendship and values.

Cecilia Malmström, Commissioner for Trade, said: “This agreement has it all: it scraps tariffs and contributes to the global rulebook, whilst at the same time demonstrating to the world that we both remain convinced by the benefits of open trade. As of 1 February, European companies will benefit from removed tariffs and simplified customs procedures. Our manufacturers, our service providers, our tech start-ups and our farmers all have something to celebrate. I am also proud that we have locked in our Paris climate deal commitments into a trade agreement for the first time, as well as setting high standards for workers’ rights and consumer protection. The stage is set for a significant boost in trade between us, which in turn creates jobs and lowers prices. It is now up to businesses and individuals to make the very most out of these new trade opportunities. We also count on all EU Member States to spread this message far and wide.

The Economic Partnership Agreement removes the vast majority of the €1 billion of duties paid annually by EU companies exporting to Japan. Once the agreement is fully implemented, Japan will have scrapped customs duties on 97% of goods imported from the EU.   The agreement also removes a number of long-standing non-tariff barriers, for example by endorsing international standards on cars. It will also break down barriers for key EU food and drink exporters to 127 million Japanese consumers and will increase export opportunities in a range of other sectors. Annual trade between the EU and Japan could increase by nearly €36 billion once the agreement is implemented in full.

The EU and Japan have agreed to set ambitious standards on sustainable development, and the text includes for the first time a specific commitment to the Paris climate agreement.

The key parts of the Economic Partnership Agreement

With regards to agricultural exports from the EU, the agreement will, in particular:

  • scrap Japanese duties on many cheeses such as Gouda and Cheddar (which currently are at 29.8%) as well as on wine exports (currently at 15% on average);
  • allow the EU to increase its beef exports to Japan substantially, while on pork there will be duty-free trade in processed meat and almost duty-free trade for fresh meat;
  • ensure the protection in Japan of more than 200 high-quality European agricultural products, so called Geographical Indications (GIs), and the protection of a selection of Japanese GIs in the EU.

The agreement also secures the opening of services markets, in particular financial services, e-commerce, telecommunications and transport. It furthermore:

  • facilitates to EU companies access to the procurement markets of 54 large Japanese cities, and removes obstacles to procurement in the economically important railway sector at national level;
  • addresses specific sensitivities in the EU, for instance in the automotive sector, with transition periods of up to 7 years before customs duties are eliminated.

The agreement also includes a comprehensive chapter on trade and sustainable development; includes specific elements to simplify for small and medium-sized businesses; sets very high standards of labour, safety, environmental and consumer protection; strengthens EU and Japan’s commitments on sustainable development and climate change and fully safeguards public services.

Concerning data protection, the EU and Japan adopted decisions on 23 January of this year to allow personal data to flow freely and safely between the two partners. They agreed to recognise each other’s data protection systems as ‘equivalent’, which will create the world’s largest area of safe data flows.

As of 1 February, a large part of another agreement – the Strategic Partnership Agreement between the European Union and Japan – also applies on a provisional basis.  This Agreement, which was signed in July of last year together with the Economic Partnership Agreement, is the first-ever bilateral framework agreement between the EU and Japan and strengthens the overall partnership by providing an overarching framework for enhanced political and sectoral cooperation and joint actions on issues of common interest, including on regional and global challenges. The Agreement will enter into force once it has been ratified by all EU Member States.

Next steps

The Economic Partnership Agreement is now in force. To take stock of the initial months of implementation, the first EU-Japan committee meeting will be convened in April 2019 in Brussels.
On the parallel issue of investment protection, negotiations with Japan continue on standards and investment protection dispute resolution, with a meeting of Chief Negotiators scheduled for March. The firm commitment on both sides is to reach convergence in the investment protection negotiations as soon as possible, in light of their shared commitment to a stable and secure investment environment in Europe and Japan.

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EU Politics

Green Deal: €1 billion investment to boost the green and digital transition

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The European Commission has decided to launch a €1 billion call for research and innovation projects that respond to the climate crisis and help protect Europe’s unique ecosystems and biodiversity. The Horizon 2020-funded European Green Deal Call, which will open tomorrow for registration, will spur Europe’s recovery from the coronavirus crisis by turning green challenges into innovation opportunities.

Mariya Gabriel, Commissioner for Innovation, Research, Culture, Education and Youth said: “The €1 billion European Green Deal call is the last and biggest call under Horizon 2020. With innovation at its heart, this investment will accelerate a just and sustainable transition to a climate-neutral Europe by 2050. As we do not want anyone left behind in this systemic transformation, we call for specific actions to engage with citizens in novel ways and improve societal relevance and impact.

This Green Deal Call differs in important aspects from previous Horizon 2020 calls. Given the urgency of the challenges it addresses, it aims for clear, discernible results in the short to medium-term, but with a perspective of long-term change. There are fewer, but more targeted, larger and visible actions, with a focus on rapid scalability, dissemination and uptake.

The projects funded under this call are expected to deliver results with tangible benefits in ten areas:

Eight thematic areas reflecting the key work streams of the European Green Deal:

  1. Increasing climate ambition
  2. Clean, affordable and secure energy
  3. Industry for a clean and circular economy
  4. Energy and resource efficient buildings
  5. Sustainable and smart mobility
  6. Farm to fork
  7. Biodiversity and ecosystems
  8. Zero-pollution, toxic-free environments

And two horizontal areasstrengthening knowledge and empowering citizens, which offer a longer-term perspective in achieving the transformations set out in the European Green Deal.

The €1 billion investment will continue building Europe’s knowledge systems and infrastructures. The call includes opportunities for international cooperation in addressing the needs of less-developed nations, particularly in Africa, in the context of the Paris Agreement as well as the Sustainable Development Goals (SDGs).

The deadline for submissions is 26 January 2021, with selected projects expected to start in autumn 2021.

A Horizon 2020 Green Deal Call Info Day & Brokerage event will take place as part of the virtual European Research & Innovation Days that will take place from 22-24 September 2020.

Background

The European Green Deal is the European Commission’s blueprint and roadmap to make Europe the first climate neutral continent by 2050, with a sustainable economy that leaves no one behind. 

To reach this 2050 goal, action will be required by all sectors of our economy, including:

  • investing in environmentally-friendly technologies;
  • supporting industry to innovate;
  • rolling out cleaner, cheaper and healthier forms of private and public transport;
  • decarbonising the energy sector;
  • ensuring buildings are more energy efficient;
  • working with international partners to improve global environmental standards.

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Why social fairness and solidarity are more important than ever

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EU Commission’s services have published the 2020 edition of the Employment and Social Developments in Europe (ESDE) review dedicated to the theme of social fairness and solidarity. The review provides evidence-based analysis on how to achieve greater fairness across the EU in the face of crises such as the COVID-19 pandemic as well as structural changes due to demographic ageing, and the green and digital transitions.

Commissioner for Jobs and Social Rights Nicolas Schmit said: “The ESDE report shows that strengthening social fairness is key to overcoming the crisis. This requires putting people front and centre. To ensure resilience, solidarity and cohesion, the EU’s response has to prioritise employment, reduce inequalities and ensure equal opportunities. The effective implementation of the European Pillar of Social Rights will serve as our guide.”

The review notes that the COVID-19 pandemic is having profound health, economic, employment and social effects, threatening much of the progress that the EU had achieved previously. All Member States are experiencing a greater economic shock than in 2008-2009. Economic output has contracted sharply and unemployment is on the rise. The most vulnerable persons, including Europe’s youth, are hit particularly hard.

Against this background, the ESDE report points to the following findings:

Adequate minimum wages and minimum income can have a beneficial effect on the social mobility of Europeans.

Strengthening social fairness, including through investments in people, pays off. Closing gender-related gaps brings particularly high returns, while extending working lives, and raising educational attainment also have positive effects.

Structural change, such as the green transition, has to be accompanied by social measures to be successful. Notably, this transition requires social investment in the form of re-skilling programmes and/or unemployment benefits. According to ESDE, this social investment could amount to €20 billion or more until 2030.

Short-time work schemes are protecting jobs effectively. The EU is helping Member States to provide such support through solidarity mechanisms like the instrument for temporary Support to mitigate Unemployment Risks in an Emergency (SURE).

Social dialogue and collective bargaining influence fairness and its perception at the workplace by promoting more equitable wages, better working conditions and more inclusive labour markets.

More generally, to repair the damage done by COVID-19 and prepare an economy and society for a future of faster structural changes, the EU and Member States need to embrace fully the opportunities offered by the transition to a greener, digitalised economy and build inclusiveness, solidarity and resilience into the design of all policies. Ensuring a broad-based recovery is a key policy objective of our policy action, which will help strengthen social resilience in the longer run.

Background

The annual Employment and Social Developments in Europe review prepared by the Directorate-General of Employment, Social Affairs and Inclusion, provides up-to-date economic analysis of employment and social trends in Europe and discusses related policy options. It is the European Commission’s analytical flagship report in the area of employment and social affairs, mandated by Articles 151, 159 and 161 of the Treaty on the Functioning of the European Union (TFEU).

There are many examples in which the Commission focuses on addressing the challenges raised in the yearly ESDE reports. In April 2020, the Commission proposed the SURE instrument, which will provide €100 billion in financial support to help protect jobs and workers affected by the coronavirus pandemic. In May 2020, the Commission put forward a powerful, modern and revamped long-term EU budget boosted by NextGenerationEU, an emergency temporary recovery instrument, to help repair the economic and social damage brought by the coronavirus pandemic, kickstart the recovery and prepare for a better future for the next generation. The Recovery and Resilience Facility will be one of EU’s main recovery tools, providing an unprecedented €672.5 billion of loans and grants in frontloaded financial support for the crucial first years of the recovery. The European Social Fund Plus (ESF+) will continue to invest in people, while an improved European Globalisation Adjustment Fund (EGF) will be able to intervene even more effectively to support workers who have lost their jobs. The European Pillar of Social Rights and its upcoming Action Plan, as well as initiatives and tools such as the European Skills Agenda, the Youth Employment Support initiative or the Digital Europe Programme will all contribute to address challenges identified in the ESDE.

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EU Politics

EU-China Leaders’ Meeting: Upholding EU values and interests

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The European Union and China held a Leaders’ Meeting via videoconference on 14 September 2020. An EU-China Leaders’ meeting with the participation of leaders of all EU member states was initially scheduled to take place on this date. President of the European Council, Charles Michel, President of the European Commission, Ursula von der Leyen, and the Federal Chancellor of Germany, Angela Merkel, for the Council Presidency, conducted the videoconference with Chinese President Xi Jinping. The meeting provided an opportunity to follow up on discussions at the 22nd EU-China Summit (22 June). The meeting was important to maintain the momentum of EU-China high-level exchanges in order to achieve concrete results in line with EU interests and values.

The comprehensive agenda of the Leaders’ meeting covered trade and investment, climate change and biodiversity, the response to the COVID-19 pandemic, as well as international affairs and other issues.

With regard to the negotiations for an ambitious EU-China Comprehensive Investment Agreement (CAI), while both sides registered progress on the rules regulating the behaviour of State-owned-enterprises, on forced technology transfer and on transparency of subsidies, the EU emphasised that more work was urgently needed on the issues of rebalancing market access and on sustainable development. The EU called on China to step up its ambition on these issues. The two sides reaffirmed their objective of closing the remaining gaps before the end of the year. The EU side emphasised that high-level political engagement would be required within the Chinese system to achieve a meaningful agreement.

On other trade and economic issues, the EU reiterated its call on China to engage in future negotiations on industrial subsidies in the WTO. The EU stressed that, in line with China’s stated commitment to open up and ensure that EU producers are fairly treated on the Chinese market, more needed to be done to improve market access in the agri-food trade, financial services and the digital sector. The EU also again made clear its concerns on overcapacity, both in traditional sectors such as steel and aluminium as well as in high tech.

The two sides welcomed the signature of the EU-China Agreement on Geographical Indications which will improve access to the Chinese market especially for high-quality European agricultural products.

The EU underlined the need for reciprocity and a level playing field in the area of science and technology, underpinned by high ethical and integrity standards. Leaders welcomed and agreed to continue the high level digital dialogue. They looked forward to concrete progress on ICT standards, product safety and research and innovation.

On climate change and biodiversity, the EU encouraged China to strengthen its climate commitments in terms of peaking carbon dioxide emissions and setting the goal of climate neutrality domestically. The EU also stressed the importance of a moratorium in China of building coal-fired power plants and financing their construction abroad, at least as part of a global initiative. The EU also encouraged China to launch its national emission trading system soon. The two sides agreed to establish a High-Level Environment and Climate Dialogue to pursue ambitious joint commitments on these issues.

The EU noted that joint commitments by both sides on biodiversity could be a game-changer at global level and China has a key role to play as host of the Conference of the Parties next year. An ambitious global agreement would be a major achievement.

On the COVID-19 response, the EU emphasised the shared responsibility to participate in global efforts to stop the spread of the virus, boost research on treatments and vaccines, and strengthen the role of the World Health Organisation, including through the full implementation of the World Health Assembly resolution of May 2020. The EU also underlined that the recovery measures should support the transition to a greener and more sustainable economy. China’s full engagement in G20 efforts to support low-income countries and effectively implement the G20 – Paris Club Debt Service Suspension Initiative will also be essential.

With regard to Hong Kong, EU Leaders voiced their grave concerns about the erosion of the fundamental rights and freedoms following the imposition of the national security law on Hong Kong on 30 June, which is contrary to China’s international commitments. They also reiterated the EU’s concerns at the postponement of the Legislative Council election and the disqualification of candidates.

The EU reiterated its serious concerns about the treatment of ethnic and religious minorities, the situation of human rights defenders, as well as the limitations to freedom of expression and access to information. The two sides agreed that the Human Rights Dialogue will take place as a physical meeting in China later this year.

On regional and international issues, the EU referred to the escalating tensions in the South China Sea, urging for self-restraint and a peaceful resolution of disputes in accordance with international law. Leaders welcomed the start of the intra-Afghan negotiations in Doha. They also confirmed their commitment to upholding the Joint Comprehensive Plan of Action (the Iran nuclear deal).

The EU also expressed readiness to continue to discuss the Strategic Agenda for Cooperation 2025, which can only be concluded once significant progress has been made in the negotiations on the Comprehensive Investment Agreement.

An EU-China Leaders’ Meeting with the participation of the Heads of State and Government of the EU member states and President Xi is foreseen to be held in 2021.

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