Hopes high of a start to EU-Japan free trade talks

Hopes were running high Thursday that EU ministers will decide to start talks on a free trade deal with Japan, which together with the 27-member bloc accounts for more than a third of world output. Despite concerns from some quarters, notably Europe's auto industry, EU trade ministers will consider at their meeting at 0800 GMT authorising the EU executive -- the European Commission -- to begin the free trade negotiations. "I'm fairly optimistic" of an agreement to start talks with Tokyo, said a senior EU diplomat. "It's not a given, there are still a few points to work out, but it's very likely the ministers will give the Commission a mandate," said another senior diplomat close to the matter. Europe's trade commissioner Karel De Gucht has said a free trade deal, or FTA, could increase the EU's gross domestic product by almost one percentage point, boost EU exports to Japan by one third, and add 400,000 extra jobs across the 27-nation bloc. "Let's be clear. We need these jobs, and we need this growth in the current economic climate," he said in the summer. Europe's struggling car and car part manufacturers are fearful the removal of tariffs would lead to a rise in Japanese car imports, pointing to a previous trade deal with South Korea that bumped up sales of their vehicles in Europe. Other European manufacturers complain of failing to find a footing in Japan, notorious for being a closed market.But EU sources say Japan is ready to open up its market, recently having finally agreed to grant liquor licences for EU firms. As for the car industry, its troubles, they say, are due to the economic crisis and to over-capacity, not to competition from elsewhere. De Gucht said in July that a number of European industries supported a deal tying the globe's largest market to the world's third biggest economy. Among the sectors he cited were agri-food, drinks, chemicals, ICT, services ad pharmaceuticals. Britain is supportive, having welcomed a deal as "a significant economic prize for Europe", worth up to 33 billion euros $43 billion) a year in GDP and an extra 43 billion euros a year in additional export opportunities." De Gucht has pledged to ensure Japan dismantles non-tariff barriers as set out in a roadmap agreed by both sides this year. "If the implementation has not been satisfactory, I will stop the negotiations," he said. He said he had also made it clear that Europe would not reduce tariffs before Japan delivers on regulatory barriers. Struggling to boost growth and create jobs, the EU is looking to accelerate trade deals worldwide, in particular with emerging economies. Should the EU conclude all the FTAs currently being negotiated, it would boost EU GDP by more than two percent, or 250 billion euros, officials estimate. That would be the equivalent of economies the size of members such as Austria or Denmark.