Japan-EU trade relations

DW: How much progress has been made so far on reaching a free trade agreement?

Antonio Parenti: We are still at the beginning of the discussion and this will be a long and complicated process. So far, we have reached the stage of better defining how we can achieve the goals we set out in the preparatory stage. We are preparing the ground for entry into the more substantive part of the negotiations.

So far, I think it has been going according to plan and we have had two positive meetings. I don't think that either side had expected a breakthrough at this stage. Nonetheless, we have seen progress in terms of understanding each other's position and I feel that this will pay off as we go forward.

How long do you expect the talks to continue?

It's very difficult to say. It took up to three-and-a-half years to reach an agreement with South Korea for instance. I think that given the time the type of efforts required on both sides, that is a reasonable expectation for these discussions. If it can be done faster, then the European side is ready to move forward faster in the negotiation process. However, the ratification process will also take some time as everything has to be translated into 24 languages - the 23 of the European Union plus Japanese - to ensure everything is accurate and understood.

Which areas are progressing most smoothly?

It's difficult to say in the sense that we have 15 working groups that look over the 15 to 20 chapters of the future agreement. None of those groups has got down to negotiations on the treaty texts yet. We are still in the process of explaining what we are looking for, why we want it and then understanding what the Japanese side wants and why they want it. I think at this stage we can say there will be areas that are easier to negotiate than others but, overall, the principle of negotiations is that nothing is agreed until everything is agreed.

The institutional issues such as dispute settlement mechanisms will most likely be easier to negotiate. All other areas will be more complicated, to varying degrees. We are talking about two major economies that want to integrate here, after all. This agreement will only make sense if we create an economic environment in which companies of both countries can compete in each other's markets on a fair basis.

The EU has the right to withdraw from negotiations after one year, if Japan does not agree to remove certain non-tariff barriers. What precisely are you looking for from the Japanese?

We were granted in our mandate the possibility to stop negotiations if, at the end of a year, we were not seeing on the Japanese side the implementation of what was agreed in the preparatory negotiations. These touch on a number of issues of particular importance that can pave the way for the elimination of certain barriers. What we are looking for is the implementation of what Japan committed to as liberalisation in some sectors and the facilitation of work in certain other sectors.

How large are the benefits, in terms of increased trade and jobs, of agreeing on a free trade deal?

When we did the assessment, we saw that if we were as ambitions as we could be - and we want to be ambitious - then this deal could bring about an increase in Europe's Gross Domestic Product ranging between 0.6 percent and 0.8 percent per year. That's close to 1 trillion euros in additional trade, and that means a lot of jobs as well.

Do certain business sectors have reservations?

For Europe as a whole, the area that is most sensitive is cars. The industry is undergoing a difficult period at the moment, but I think that trade can be more of an answer than a problem. If some of the problems in Europe are structural, then it will take time to rebalance from the economic crisis that we have been experiencing since 2009. That is an opportunity to export to foreign markets that are already growing again.

What is the long-term prognosis for Europe-Japan trade relations?

If we can conclude the discussions in two years and then ratify the agreement, I think we will start to see the benefits fairly rapidly in terms of liberalization of markets; maybe five to 10 years time.

Antonio Parenti is deputy head of the European Commission's unit for trade relations with the Far East.