Cheese, cars at is­sue as Ja­pan and EU inch to­ward trade pact

Kuwait Times - - BUSINESS -

TOKYO: Ja­pan’s for­eign min­is­ter is ex­pected to head to Brus­sels this week to seek a break­through in talks on a free trade agree­ment with the Euro­pean Union. For­eign Min­is­ter Fu­mio Kishida said over the week­end that he was hope­ful the two sides would re­solve re­main­ing dif­fer­ences, mainly over trade in cheese and au­tos, be­fore Fri­day’s sum­mit of the Group of 20 in­dus­trial na­tions. Such a deal will re­quire fi­ness­ing Ja­pan’s pro­tec­tions for its dairy farmers, whose home mar­ket is pro­tected by tar­iffs of up to 40 per­cent on pro­cessed cheese.

Talks on the pro­posed Eco­nomic Part­ner­ship Agree­ment ended late Satur­day with of­fi­cials say­ing they be­lieved they could re­solve re­main­ing dif­fer­ences and reach a po­lit­i­cal deal by the time Prime Min­is­ter Shinzo Abe and EU lead­ers are due to meet on Thurs­day. Kishida and Ce­cilia Malm­strom, the Euro­pean Com­mis­sioner for Trade, both said they be­lieved an agree­ment was within reach de­spite re­main­ing stick­ing points over EU tar­iffs on cars and Ja­pan’s tar­iffs on cheese.

Ja­pan wants the EU to lift tar­iffs on au­tos, a de­mand that EU of­fi­cials said was dif­fi­cult to do im­me­di­ately. Both sides are ask­ing the other to open their mar­kets to each other’s wines, and there are a few other is­sues still yet to be re­solved, the Yomi­uri and other news­pa­pers re­ported. It was un­clear just what the po­ten­tial for com­pro­mise on cheese might be, given Ja­panese farm min­is­ter Yoji Ya­mamoto’s re­jec­tion of a EU re­quest that Ja­pan match its com­mit­ments for re­lax­ing its trade rules on cheese im­ports to match those it agreed to in ne­go­ti­a­tions with mem­bers of the Trans Pa­cific Part­ner­ship.

That trade pact was cast into ques­tion by US Pres­i­dent Don­ald Trump’s de­ci­sion to pull out of the formerly US-led Pa­cific Rim trade ini­tia­tive. But the 11 re­main­ing mem­bers have been dis­cussing ways to pur­sue a re­vised ver­sion with­out the US as the an­chor. Aus­tralia and New Zealand, the big­gest ex­porters of cheese and other dairy prod­ucts to Ja­pan, fought hard to per­suade Tokyo to grad­u­ally open its mar­ket over a 15-year pe­riod. Both Ja­pan and the EU have a tra­di­tion of pro­tect­ing their po­lit­i­cally pow­er­ful farm sec­tors, and dairy prod­ucts are an es­pe­cially sen­si­tive is­sue for the EU, with its long tra­di­tions and half the world’s mar­ket share for cheese.

Ja­panese eat only about 2 kilo­grams of cheese per per­son a year, way less than Euro­peans, partly be­cause of dif­fer­ent tastes and food cul­tures, and partly be­cause costs are so high. A small, choco­late-bar sized block of im­ported Parme­san costs over $7 and a sim­i­lar amount of Swiss cheese at least $6. Costs are rel­a­tively high thanks to a com­pli­cated sys­tem that is en­gi­neered to en­sure the coun­try’s 17,700 dairy farmers, over­whelm­ingly small fam­ily busi­nesses, con­tinue to pro­vide a sta­ble sup­ply of raw milk, even though their av­er­age costs are dou­ble those of farmers in Europe and the US.

About a quar­ter of the cheese im­ported into Ja­pan is re­pro­cessed and repack­aged so as to “add value” be­fore prod­ucts reach con­sumers. A glut in milk pro­duc­tion in the past two years in the US, Europe and Ocea­nia has helped push prices lower and boosted im­ports, ac­cord­ing to a re­cent US De­part­ment of Agri­cul­ture re­port. It also has lent ur­gency to the EU’s ef­fort to win eas­ier ac­cess to Ja­panese con­sumers.—AP

TOKYO: In this photo, a cus­tomer looks at var­i­ous types of im­ported cheese sold at a de­part­ment store in Tokyo. —AP

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