Topics: EU-Japan Relations in the Multipolar Era: How EU-Japan EPA/SPA matter in the World ?
Economic assessments and remaining issues of Japan-EU EPA
2021 Volume 2021 Issue 41 Pages 27-53
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2021 Volume 2021 Issue 41 Pages 27-53
Japan-EU Economic Partnership Agreement （EPA） got into force from February, 2019, and this paper examines three concerning issues, that is, the objective background of EPA, the assessment of EPA, and the implications regarding multinational enterprises （MNEs）.
Japan-EU EPA was negotiated and agreed in the unique context of globalisation. Three features of globalisation are the expansion of international economic exchanges, the growing economic importance of national governments, and the increase of regional trade agreements. Under this unique situation, both Japan and the EU have experienced the decline in global economy, while the bilateral relationships changed from Japanese trade surplus to deficit. Furthermore, at the later stage of negotiation, anti-globalisation movement like Brexit and Trump administration accelerated the negotiation to show their co-operative attitude for global economy.
Indeed, the EPA shows high level of liberalisation of trade and investment, but that does not guarantee the revival of Japanese and EU economies. The economic impacts of GDP growth by the EPA estimated for 10 or 15 years are not so significant. Rather, both sides emphasise the opportunities of increasing exports through the EPA, and seem to treat it as a mercantilist tool. It might well of Japan and the EU to increase their exports simultaneously through realignment of “trade diversion effects” caused by previous FTAs to “trade re-diversion”.
The issue missed in the previous analysis of the EPA is on MNEs, although the EPA stresses the liberalisation of investment. The EU is one of the largest investors as well as recipients, while inward foreign direct investment （FDI） to Japan is much smaller. Under this asymmetrical condition, MNEs’ operations in Japan and the EU are investigated. Both Japanese and European MNEs are actively engaging the exports from, and the imports to their hosts. However, the trades with home are very much constrained. Thus, the EPA may well have limited effects for MNEs’ exports and imports, compared with those with neighbour countries. At the same time, MNEs create jobs along with sales, while the R&D activities are significant. Therefore, the increase of inward FDI along with the EPA could surely contribute economic performance of hosts, and further efforts for this purpose can be recommended.
