Diplomatist Magazine Diplomatist April 2018 - Page 32

GLOBAL CENTRE STAGE The importance of the EU-Japan EPA is, last but not the least, rooted in the efforts of both partners to counteract a loss of signifi cance in both economic and political terms. The EU regards the agreement as a vehicle to strengthen its position in the Pacifi c Rim, where China is gaining more and more infl uence. Despite the considerable expected economic gains through the agreement, challenges and risks remain. Economic theory and empirical research tells us that trade integration will not only stimulate economic activity, but it is also accompanied by an adjustment process that generates winners and losers. While the overall economic gain is expected to exceed the combined losses, it does not imply that every individual household, region or sector will gain from the process of economic integration. Strong public opposition to other major trade agreements of the EU during the past few years are a reminder of this fact. For example, the Comprehensive Economic and Trade Agreement (CETA) between the EU and Canada, which provisionally entered into force on 21 September 2017, faced major resistance from trade unions, NGOs, and environmental protection groups. Also, the negotiations on the Transatlantic Trade and Investment Agreement (TTIP) between the EU and the United States, which was associated with great hopes about the overall economic effects, has stalled. This is not only due to the de facto withdrawal of the United States from the negotiations but also due to public resistance in the EU. Given the fact that the EU- EU-Japan EPA is in the ratifi cation process and that there is still no fi nal agreement on some issues in the chapter on state-investor dispute settlement (which faced major public resistance in other agreements), the risk remains that opposition in some EU countries might delay the entry into force of the agreement. This fear is further nourished by the rise of populist political parties in the EU that advocate hostile attitudes towards further international integration. In addition to its economic dimension, the EU-Japan EPA has important implications for the global political landscape. The conclusion of the agreement is a milestone in the mutual efforts to strengthen cooperation and to consolidate the EU- Japan political relationship. Both parties share common goals as well as face common challenges in many areas, and are committed to a similar set of values, especially democracy and the rule of law. For example, both the EU and Japan face a dramatic change in their demographic structure where both need to fi nd new solutions to challenges resulting from an ever-aging society. Although the two economies have so far adopted very different approaches, with the EU focusing more 30 • Extraordinary and Plenipotentiary Diplomatist • Vol 6 • Issue 4 • April 2018, Noida