MUTUAL RECOGNITION ADVANCES

Deal imminent in Japan-EU trade pact

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After nearly five years of tough negotiations, Japan and the 15-nation European Union are close to initialing an agreement to mutually recognize test results for some industrial products, government sources said Thursday.

The initialing of the mutual recognition agreement, or MRA, will come as early as this summer, when top Japanese and EU leaders hold regular talks in Tokyo, the sources said.

The Japan-EU meeting will be held immediately before the Group of Eight major countries begin a three-day annual summit in Okinawa Prefecture on July 21. The G8 comprises the United States, Canada, Britain, Germany, France, Italy, Japan and Russia.

The Japan-EU talks will be attended by Prime Minister Yoshiro Mori, French President Jacques Chirac and European Commission President Romano Prodi. France will hold the six-month rotating EU presidency during the second half of this year. The European Commission is the EU’s executive arm.

Japan and the EU launched negotiations on the MRA in May 1995, nearly two years after the EU proposed the talks. The two sides agreed in principle in early 1998 to include four product categories in the trade pact — electrical goods, chemical products, pharmaceuticals and telecommunications peripheral devices.

But the two sides have so far failed to sign the MRA, primarily because of internal squabbling within the Japanese government over legal procedures for implementation.

At a regular meeting of Japanese and EU ministers in Brussels in mid-January, EU Trade Commissioner Pascal Lamy complained about the lack of progress in MRA negotiations over the past two years. The top EU trade official was quoted as telling his Japanese counterpart, Takashi Fukaya, and other Japanese ministers that with the exception of the MRA, bilateral relations are in a very good condition.

Government sources said that the internal feuding within the Japanese government, especially between the Ministry of International Trade and Industry and the Ministry of Posts and Telecommunications, may soon be resolved following mediation from the Cabinet Legislation Bureau, the highest government legislative body.

The confrontation between the two ministries over the MRA is believed to reflect a behind-the-scenes struggle for greater administrative influence over some industries, including the telecommunications sector.

A settlement of the internal dispute would clear the way for Japan and the EU to initial the trade pact, the sources said, adding that the government will probably submit the necessary bill for implementation of the MRA to the next ordinary Diet session, to be convened early next year.

The MRA would help eliminate double-testing of similar products by Japan and the EU. Japanese electrical products sold in Europe, for example, would not have to be tested by European regulatory authorities for safety and other standards if they pass similar domestic tests. The MRA would simplify trade-related procedures, save both Japanese and European exporters money and time, grant them greater access to each other’s markets and help increase bilateral trade in the medium and long terms.

The EU already has a MRA with the U.S., which covers five product categories — telecommunications equipment, medical devices, pharmaceuticals, information technology and recreational equipment. Trans-Atlantic trade in the five product categories is estimated to total more than $50 billion a year.

The Japan-EU trade pact could be expanded to cover other products after it takes effect.

The EU initially insisted on covering five other product categories — including construction materials, boilers and medical equipment — in its MRA with Japan.

In Japan, organizations affiliated with government ministries and agencies carry out testing for product standards. Resistance from those ministries and agencies, as well as testing bodies with vested interests, is seen as a major obstacle to broader coverage of the Japan-EU MRA.