Now that the U.S. and Japan have agreed on a watered-down version of the Trans-Pacific Partnership trade negotiations (America will keep its beloved chicken tax for at least another decade, Japan will protect its rice farmers from the evils of cheap American rice,) negotiations between the EU and Japan about a trade pact are getting underway, with considerably less drama.
The lead-up to the U.S.-Japanese discussions was big on harebrained hubris that played well at home but caused rolling eyes in more worldly circles. For years, Detroit carmakers accused Japan of closing its markets to American cars that few want in Japan and that Detroit makers don’t really try to sell to the Japanese in earnest. While a Japanese yen got stronger and stronger to the point of killing the Japanese export machine, a cabal of Detroit propagandists, UAW operatives and Democrat lawmakers could tell each other the story of Japanese currency manipulation, detracting from the fact that America was busy devaluing its dollar. And while the U.S. market is ringfenced by onerous regulations that allow only deep-pocketed and very determined importers to sell their cars in the U.S., the Detroit propaganda machine successfully sold the story of insidious albeit hard to find “non-tariff barriers” that allegedly close the Japanese market tighter than a you-know-what.
Compared to this lunacy that would have made a Goebbels (“The bigger the lie, the more people will believe it”) envious, the discussions between Japan and Europe are a down-to-earth exercise in realpolitik. The EU position is simple: The EU charges 10 percent tariff on imported cars, Japan charges none. So, what can Japan offer for the EU to drop its customs duty?
“The EU’s focus appears to be on regulatory issues, such as treatment of minicars. European automakers, like their Japanese rivals, excel in compact models. But the European Automobile Manufacturers Association complains that Japan gives minicars preferential treatment, including tax advantages, that essentially shuts out European competitors.
The EU’s demands are likely to include allowing European carmakers to export to Japan as long as they meet EU safety standards. With sales in their home market suffering from the economic chill caused by the euro crisis, the Europeans fear added Japanese competition. The EU is offering to lower tariffs only to the extent that Japan complies on deregulation.”
An alignment of EU and Japanese automotive standards should be quit doable. Japan and the EU are UNECE members, however, Japan so far has adopted only a subset of the UNECE regulations. The kei car issue is a bit tougher. Relaxed kei car regulations that would extend the kei car benefits to slightly larger and slightly better motorized versions could include a number of European models, and would at the same time be welcomed by Japanese makers who could sell what currently remains largely a Japanese oddity in foreign markets. Also, European farmers aren’t big on rice, and both Europe and Japan share a common disdain for gene manipulated food.