Japan, EU to Look into Free-Trade Agreement

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Japan, EU to Look into Trade Agreement

“We still have a long way to go, but the objective is now clear,” EU Council President Herman Van Rompuy told reporters in Brussels after the summit. “Some might say we have not gone far enough, I say we should not underestimate the political meaning of our decision.”

Japanese Prime Minister Naoto Kan agreed with Van Rompuy and European Commission President Jose Manuel Barroso to start “the process for negotiations” on a free-trade pact, which will include discussions to decide the areas that such a deal would cover, a joint statement issued after their meeting said.

Japan had been keen to make headway on a free-trade deal after South Korea sealed a deal with the Europeans. A trade agreement is scheduled to take effect in July, and Japanese businesses had been putting the pressure on Tokyo not to fall behind South Korea.

Japanese diplomats had expressed confidence in reaching some form of an agreement, but other officials had said that convincing the EU was a difficult task given that the trading block runs a deficit with Japan.

The scoping exercise will “set clearly the level of ambition for these negotiations and address the matters of concern,” Barroso told reporters following the summit. “We are speaking about Japan, one of the biggest markets in the world, so this cannot fail.”

“I am convinced that with such efforts, we can reach a final agreement that would have great meaning,” Kan told the joint news conference.

Japan’s economy contracted an annualized 3.7% in the January-March period, slipping into a recession as the earthquake dented domestic economic activity such as consumer spending and production, data released earlier this month showed.

Japanese officials stressed the importance of the agreement, noting that today’s decision represented a change from the country’s previous sentiment.

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