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Marchio di Ospitalità Italiana

Interview With EBC President Duco Delgorge

We have asked Mr. Duco Delgorge, current president of the European Business Council, to explain to our readers which challenges and hopes are embedded in the incipient Free Trade negotiations between the EU and Japan.

Q. While the overall quality of the relationships between Europe and Japan is excellent, and both parties recognize the extremely high potentialities of a free trade agreement, the history of the attempts at making one has been crippled with failures. In your opinion, is the cause more relative to some specific, mutual vetos (e.g., cars versus agricultural products) or is there a more structural reason behind?

Delgorge. The relationship between the EU and Japan has been very strong for a long time now. We all acknowledge our shared values of human rights, democracy, and the rule of law. Indeed, I would argue that we share much more than this. What is a great shame, or better said in Japanese as “mottainai”, is that we have never fully leveraged this critical relationship. It is not only Japan and the EU who need to ensure this relationship starts to deliver, but the rest of the world as well. I don’t speak in only economic terms, though that is surely very important, and at the top of most people’s minds, but also regarding geo-political stability, for without this, any economic growth is based on a wafer thin foundation.

Failure to realize any meaningful breakthrough until now is due to failure on both sides of the globe. But I see little merit in spending time in analyzing these. It can be summarized by two factors in my opinion: protectionism and narrow-mindedness. Since neither of these has ever contributed to growth or success in the long-term, it is time to move forward. What I find encouraging is that the vast majority of stakeholders in the EU and Japan finally realize this. The momentum is now such that any remaining obstacles will be systematically dealt with, such that all of us can finally look forward to a long overdue fruition of the EU-Japan relationship, with enormous benefits in terms of GDP growth, job creation, and improved stability.

Q. The EU has stressed many times that the current negotiation will feature an increased focus on non-tariff measures. This is easily said, but what are the negotiation instruments the EU can leverage to obtain a change in barriers that are deeply rooted in the Japanese way of dealing with bureaucracy and business?

Delgorge. There is no question that non-tariff measures are more difficult to address than tariffs. However, many people outside the process simply dismiss NTMs as being difficult if not impossible to address. Through its committees, the EBC has spent many years identifying and analyzing such measures and making clear recommendations to change or remove the respective regulations involved. When the scoping exercise for the FTA started in 2012, the EBC further intensified these investigations and prepared a “digital compendium” which looked at each significant barrier to trade and investment, and identified the regulation(s) requiring change or abolition.

The EBC’s objectives regarding the FTA can be summarized effectively by what is also the framework for the EU-Japan Business Roundtable, which is being held next on April 29-30 in Paris. We wish to resolve all pervasive issues limiting trade and investment, including:

  • Mutual recognition of regulations, standards and market authorisations to the extent possible and adaptation of international standards
  • Lifting of both tariff and non-tariff barriers as well as unnecessary bureaucracy
  • Ensuring fair competition and equal treatment of all companies, domestic & foreign
  • Ensuring fairer and more open competition in services
  • Improving conditions for foreign direct investment
  • Further enhancing incentives for growth of SMEs and for investment in R&D 

All of these are challenging goals, especially the NTMs, but we feel that both sides are ready to do what is required to ensure this now happens.

Q. The negotiation process was initiated last year, before the political change in Japan. Do you think that the new push to export reinvigorated by the current Japanese government will pose some challenge to the outcome of the talks? 

Delgorge. Not at all. Both the DPJ and LDP have been strong advocates of trade liberalisation. Indeed, Abenomics is certainly having a short term positive impact on the economy and exports. It remains to be seen what the long-term consequences of this will be. But a big part of the government’s agenda is trade liberalisation, as witnessed by the frenzy of activity in this area. Japanese government and business alike also increasingly recognize the need for restructuring which will be an essential part of the process. In this regard, Japan also has a very favourable outlook on European companies as potential partners for the future. Indeed, many such partnerships already exist, some for a very long time.

Q. Besides extra-ordinary actions such as the FTA Agreement negotations, can you mention other signs that the commercial relations between Japan and EU are becoming easier over time? 

Delgorge. I have been involved with the EBC for about 15 years now. In this time, I have seen tremendous change in the relationship between Japan and the EU. We know each other better, we understand each other better, and we genuinely like and respect each other. Japan has always been a country where patience and persistence have been essential to success. That is true in business and it is also true in our broader relationship.

The evidence of improved and easier commercial relations between Japan and the EU is quite substantial. There is a growing presence of European business on the Japanese landscape, commercial partnerships are being formed, new businesses are establishing and succeeding, whilst some mature businesses reinvent themselves to reignite growth in the Japanese market. We also see it in the various associations and networking events where EU and Japanese businessman are increasingly mingling together. In this respect, there is a continuously growing population of Europeans who consider Japan as their home. I am definitely part of this group. We love Japan and Europe, and want to see the best possible future for both regions. The same can be said in reverse for our Japanese friends.

Q. What can be the role of EBC and the European Chambers of Commerce in Japan to facilitate this process?

Delgorge. The EBC will now intensify its efforts to ensure that all key non-tariff measures are fully communicated to and understood by the stakeholders, as far as possible, on both sides of the negotiating table. We also hope that the European national Chambers of Commerce will use this unique opportunity to galvanise the support and input of their members, and that they will proactively encourage their members to join the EBC, preferably as a committee member, or at least as an affiliate member. The more support we can get at this critical juncture the better we are able to ensure that European business gets what it wants from an EU-Japan FTA.  Beyond this, there are still many companies out there who are part of the trade and investment equation, who are not yet members of any European national chamber of Commerce. They should be sought out by the chambers and invited to join them and, then in turn, encouraged to join the EBC.

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