An LSE Enterprise study for the European Commission has found that the EU-Japan Free Trade Agreement (FTA) should provide considerable benefits for EU businesses and consumers, while incurring negligible environmental and social risks.
The agreement is designed to strengthen Europe’s weakening economic relationship with Japan, the world’s third largest national consumer market. Negotiations have been ongoing since 2013 and are nearing their end.
The EU-Japan Trade Sustainability Impact Assessment (Trade SIA), run by LSE Enterprise, assessed the potential economic, social and environmental effects resulting from trade and trade-related provisions of the agreement in the EU, Japan and other countries, including developing ones. It has fed into the negotiations, providing information on the possible social, environmental and economic consequences of a trade agreement.
The team used case studies, stakeholder consultation, and various economic analyses and models to evaluate indicators including GDP, consumer prices and choice, healthcare costs, use of pesticides, C02 emissions and energy efficiency. They worked across economic, social and human rights, and environmental areas, with an additional focus on affected sectors ranging from railways to medical devices.
They found that the economic gains from this agreement are of the same magnitude as a free trade agreement with the United States, and could lead to major increases in exports (notably in the food and feed, and processed food sectors).
There are also considerable benefits for consumers, business and employment from an effective liberalisation of both markets that encompasses tariffs and regulatory issues. These gains are more symmetrically distributed than earlier FTAs, and benefit groups that do not always stand to gain from trade liberalisation.
The study found that the environmental and social risks are negligible, or offset by new technologies and opportunities provided by the agreement. Even in sensitive sectors, such as the motor vehicle industry, no tangible employment losses are foreseen compared to a scenario in which there is no EU-Japan FTA.
The report recommends how to maximise the benefits of the agreement while ensuring the competitiveness of enterprises and preventing or minimising potential negative impacts.
The EU-Japan FTA has the potential to contribute substantially to the ‘Trade for All’ strategy of the European Commission and to the goal of smart, sustainable and inclusive growth throughout the EU. It has been a great opportunity for all of us at LSE Enterprise to engage closely with multiple stakeholders to discuss the potential impact of the FTA.
Elitsa Garnizova, project manager and researcher at LSE Enterprise
Contact us using the form below to explore what consultancy or tailored training we can offer in this area.
