Japan-Switzerland EPA/FTA
Given Japan's stated criteria for selecting potential FTA partners (most notably geographical proximity, trade and investment volume and resource wealth) as well as its obvious prioritization of East Asian nations (ostensibly to counter China’s growing power in the region), its negotiations with Switzerland at first appear rather curious.
The trading relationship amounts to only approximately US$7 billion annually, with most goods subject to low or no tariff protection and no public trade dispute on the recent record, yet the recent joint study - Report of the Joint Governmental Study Group for strengthening economic relations between Japan and Switzerland (January 2007) - recommends launching negotiations "as soon as possible".
Thus, it would seem economics is not the most important reason for the negotiations. Instead, five mutually self-serving reasons come to mind (and, among others, are cited in the report):
- Both nations are attempting to raise international standards through the proliferation of TRIPS-Plus standards. The report states" "the highest level of IPR protection such as in the field of anticounterfeiting and anti-piracy cooperation should be pursued in a possible FTA/EPA with a distinctive part, which would satisfy the standards suitable for advanced IP nations." (p 19)
- Mutual interest in increasing and deepening the liberalisation of services (pp 15-16).
- Mutual interest in expanding the multilateral regime to include investment (p 17)
- As members of the G-10, both nations have an interest in proliferating FTAs which exclude or only marginally include agriculture (undoubtedly the agreement will contain clauses on non-trade concerns, such as "food security" and the seemingly indefinable "multifunctionality") [in fact, the report states at p 4: "Cooperation between Japan and Switzerland is particularly close also in the field of agriculture, as both countries attach a high importance to the multifunctionality of agriculture."]
- In their attempt to thwart China's regional importance and bargaining strength, perhaps both Japan and Switzerland (for different yet equally self-serving reasons) are seeking to establish a template for East Asian-European negotiations in an attempt to cement strong IP and investment provisions.
Given the limited scope and depth of the trading relationship, as well as the closeness of positions on numerous controversial trade issues, I suspect Japan will have a much easier time negotiating this agreement with Switzerland than it will have negotiating with Australia, South Korea and even Vietnam. But will this agreement provide a useful template for future Asia-Europe negotiations?