Protecting prosperity

European Commissioner for Trade Cecilia Malmström

Text by Andrew Howitt

As the EU’s commissioner for trade, Cecilia Malmström lives to strengthen connections and increase prosperity. She oversaw negotiations on the EU–Japan Economic Partnership Agreement (EPA), the world’s biggest and most comprehensive trade pact, which came into force on 1 February. Before taking up her current post, she served as Minister for European Union Affairs from 2006 to 2010 and as European Commissioner for Home Affairs from 2010 to 2014. In Japan from 9 to 11 April, Malmström spoke with Eurobiz Japan about the purpose of her visit, the importance of the EPA, and the EU trade office’s current priorities.

Could you tell me about your visit to Japan?

This was the first chance both sides have had to sit down and discuss how the EPA is going. It has been an opportunity for celebration — this is the first time I’ve been in Japan since the deal came into force. Yet, we must remain clear-eyed. In many ways the work has only just begun. Two months in, the focus must now shift to implementing the agreement effectively. This meeting will be the first of many; I want to keep up a regular dialogue. We must continue to listen to businesses and make sure that the EPA is working for them.

How does the EPA stand out from the EU’s existing trade agreements?

We’ve signed many trade agreements in the past few years, but the EPA with Japan is by far the largest, covering around 635 million people and 30% of world GDP. This is a huge opportunity for EU exporters, for many reasons. To give the most obvious example, the vast majority of the duties paid to enter the Japanese market will be scrapped. This will translate into €1 billion in savings every year. All in all, our studies show that annual trade between the EU and Japan could increase by nearly €36 billion once the agreement is implemented in full.

It has always been important to me that our trade agreements reflect our values, and the EU–Japan EPA is a flagship achievement in that respect. One important innovation is the inclusion of a commitment to the Paris climate agreement, a first for an EU trade agreement. This is because both the EU and Japan consider climate change an urgent issue and are committed to working together to implement the UN climate accords effectively.

Who have you met with and what have you discussed?

I met with Foreign Affairs Minister [Taro] Kono and Trade Minister [Hiroshige] Seko to take stock of the trade agreement, as well as broader EU–Japan relations. I also met with members of the European Business Council for lunch in order to hear more about the situation for EU companies on the ground. They are already making use of the agreement and there is a real interest in the opportunities still in store. We must keep working to help them take advantage of these.

I also took part in a very interesting panel discussion at the Japan Institute of International Affairs. I always find it fascinating to see how different nations look at a single issue from different perspectives. The EU and Japan share many priorities, but often we arrive at them from different angles.

What are the main areas of focus for your office right now?

Amidst the current trade tensions, protecting the World Trade Organization [WTO] is our number one objective. The WTO is facing its deepest crisis since its inception, and there is today a genuine risk of the demise of the multilateral trading system. Together with the United States, the EU and Japan are looking for solutions to the current problems in a trilateral format.

The EU has set out a comprehensive plan to reform the WTO and put forward first ideas and concrete proposals. We will deepen and accelerate our efforts to prevent the rules-based multilateral system from foundering.

The EU is also looking to expand its circle of friends even further through bilateral agreements, so we are building closer ties with major trading partners. Our deal with Canada entered into force in 2017. Now, we are strengthening our alliances with Vietnam and Singapore. In Latin America, we are upgrading our existing deals with Mexico and Chile, and we still hope to conclude a deal with the Mercosur trade bloc. We are also negotiating with Australia and New Zealand, so we are very busy.

Also high on our agenda are enforcing our anti-dumping and anti-subsidy laws and putting our brand-new EU-wide investment screening framework into practice. Unfair competition subsidised by governments threatens EU industries, and it is important that we are able to monitor foreign investments to safeguard our interests.

What reforms are you hoping to see implemented at the WTO?

The most pressing issue is to resolve the Appellate Body crisis. The WTO dispute settlement system will be paralysed by the end of the year if the appointment of Appellate Body members is not swiftly unblocked. This is an essential part of the WTO that can resolve disputes in an organised, rules-based manner. Without proper enforcement, we cannot ensure that the rules will be followed. We therefore must make certain that it can continue functioning.

Updating the WTO rulebook will also be critical to ensure that the WTO remains relevant. We need new and better rules to maintain a level playing field and eliminate unfair practices, notably industrial subsidies. We also need new rules to stop forced technology transfers — when companies have to give away valuable technology as a price to pay for investing in a given country.

What are your hopes for the EU–Japan relationship over the coming years?

Over the next months and years, we should see even more cooperation between us; for example, on connectivity. This is a priority for Japan during the G20 — held this year on home turf in Osaka — and fits nicely into the EU’s 2018 Strategy of Connectivity. In this context, connectivity means everything from improving transport links and digital infrastructure to bridging energy networks, as well as bringing our people closer together. This obviously has a very clear link to trade, which relies on strong connections to deliver prosperity. The two go hand in hand.

With the new Economic Partnership Agreement and Strategic Partnership Agreement now in place, the future of EU–Japan relations looks very good indeed. Our international goals broadly align and we are both pushing in the same direction. •