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Free Trade Agreement with Japan is an important signal against protectionism


12 Dec 2018


Trade & Society
Frankfurt, December 12, 2018 – The EU Free Trade Agreement with Japan is an important signal against protectionism and opens up new export opportunities for European industry. On the occasion of the ratification of the treaty by the European Parliament, Thilo Brodtmann, Executive Director of the VDMA, said: "Two major economies, the EU and Japan, are sending out a signal for free trade at the right time. With this strategy of open markets, Europe is better positioned in the long term than countries which want to create supposed advantages by sealing themselves off."
Japan is an important market for the mechanical engineering industry in Germany. Due to its size, it offers European companies great sales potential, although the strong Japanese industry continues to prevent major export successes. "In Japan, domestic machine manufacturers dominate business, while foreign suppliers only come into play for special machines," says Brodtmann. In the first three quarters of 2018, the country ranked 20th among the largest foreign markets for German mechanical engineering companies with an export volume of just under 2 billion euros. After all, this meant growth of 6.2 percent compared to the same period last year. Nevertheless, Germany has a trade deficit with Japan in the machinery trade. 
"The mechanical engineering industry hopes that the trade agreement will provide indirect impetus for future business," says Brodtmann. This is because tariffs on engineering products were already abolished in Japan many years ago and the technical barriers to trade are low. Nevertheless, the VDMA supports the approach laid down in the agreement to harmonise technical requirements and install a corresponding EU-Japan body. This allows cost reductions to be achieved for both sides. European companies will also benefit from an opening of public procurement in Japan. The VDMA is pleased to note that the agreement for the first time includes a separate chapter for the interests of small and medium-sized enterprises. "By focusing on small and medium-sized enterprises, the agreement is tailored to companies in European industry," explains Brodtmann. 
At the same time, the VDMA is warning that the EU's free trade agenda must not lose any of its momentum. "Next, the trade agreement with Mexico must be finalized. And we are still waiting for a breakthrough in the negotiations with Mercosur," warns the VDMA Executive Director.