How Phil Hogan helped to clinch a key trade deal

Japan deal to benefit Ireland’s dairy and pharma

Japan’s Agriculture Minister Yuji Yamamoto had concerns that the proposed removal of import tariffs would flood the market with European cheese, disrupt the supply-demand balance in raw milk and deal a severe blow to aging domestic dairy farmers. The Central Union of Agricultural Co-operatives, or JA-Zenchu, held an emergency rally over the proposed deal.

However, the positions were well known on both sides. The EU wants market access for goods, especially for processed agricultural products, because the EU is responsible for half of the world’s cheese output. Also, the EU wants acceptance of graphical indicators protecting regional food brands such as Clare Island Salmon, Connemara Hill Lamb and Timoleague Brown Pudding, in Ireland’s case.

For Japan, the main interests are eliminating the high tariffs on industrial products, particularly cars, car components, and electronics. At the end of June, Japanese media reported on extensive phone talks between Mr Hogan and Mr Yamamoto, with the latter stating to reporters: “We want the EU side to make some concessions.”

A quick face-to-face meeting was arranged and Agriculture Commissioner Hogan travelled to Tokyo with lead negotiator, the Trade Commissioner Cecilia Malmstrom.

After the meeting, the trade commissioner tweeted: “Hard work in Tokyo, but a lot of progress.’

A statement from Phil Hogan said EU food and drink exporters will, in time, get almost complete tariff-free access to nearly all Japanese markets. The final EU-Japan free trade agreement was left for signing at the EU–Japan Summit last week, in Brussels.

The deal is expected to significantly reduce the €1bn a year tariff duty paid on goods sent to Japan by EU exporters each year.

A particular focus will be Japanese customs tariffs on beef, which is close to 40%, up to 30% on cheese and 15% on wine.

While Ireland’s cheese and processed dairy producers will welcome the elimination of the high import tariffs, the real winners from this agreement are likely to be the pharmaceutical and medical devices exporters. Despite the regulatory barriers in selling to Japan, over €2bn worth of these life sciences products were exported from Ireland last year. The new trade agreement is scheduled to introduce mutual recognition of manufacturing standards in both countries, which will eliminate the current long and costly procedures, providing a significant boost to both indigenous and foreign owned multinational producers here.

The trade deal is also expected to open up Japan’s services market to EU businesses. Ireland’s dominant position in services exporting should receive a major boost from the lifting of non-tariff barriers, particularly by the opening up of Japan’s public contracts market. Considered an ambitious trade deal, the EU-Japan agreement demonstrates there is much to be gained from opening up markets with the potential to generate more jobs, reduce costs for consumers and offer wider choices in service provisions. It also comes at an important time of rising protectionist policies emanating from many countries, and offers a barometer of the appetite for abandoning austerity and returning to trade expansion measures.

Across the EU this deal will be strongly welcomed for many reasons but in particular acting as an antidote to the UK’s demoralising exit.

  • John Whelan is a leading expert and consultant on Irish international trade.


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