This policy paper identifies a problem for consideration in current EU-Japanese negotiations arising from the transition of EU-Japan trade within the data economy, signified by the 2024 Protocol on cross-border data flows. Analysing the Protocol, it identifies an issue of lacuna in cyber security considerations posed by the sharing of data. It poses corresponding recommendations, namely positing advancing measures outlined in Article 8.82 of the Protocol, utilising the growth in cooperation to address global changes witnessed between the EU-Japan in recent years, and the vision of political and economic collaboration within multilateralism represented by the EPA.
The EU is Japan’s third largest trading partner, and Japan presents as a strong business market for European companies. In 2022, EU imports of goods to Japan were valued at €69.8bil, and exports valued at €71.5bil, an increase of 11.9% and 14.9% respectively. The EU-Japan trade relationship has been redefined by the EU-Japan Economic Partnership Agreement (“the EPA”), signed in 2018 and coming into effect since 1 February 2019. Prior to this, their bilateral trade was recognised as “impressive and expanding”, but hindered by barriers to market access experienced by European companies, and challenges arising from regulation curtailed European investment in Japan. This was despite Japan having supported EU enlargement within central and Eastern Europe due to business interests, including providing investment in Poland and Hungary upon their ascension to the EU. The aim of EPA was to reduce barriers to trade, and its first year of implementation witnessed increased growth in EU-Japan and Japan-EU trade.
The EPA as a “far-reaching liberalisation of trade” presented a new model of preferential trade arrangements. It primarily focused on widening market access to goods, through removing duties and non-tariff barriers; it also commenced the opening of services markets, namely financial services, e-commerce, telecommunications and transport. Research analysis indicates the EPA can incentivise European companies to strengthen their position in the Japanese market. It further notes that some goods still face barriers in the form of customs duties, which will affect competition. This also suggests the primary outcome of the EPA remains focused on marketing goods, raising questions as to future economic relations in the context of data sharing and the broader data economy. Concerns as regards this focus, and lack of innovative engagement with “new” economic markets were raised during negotiation , and it is suggested revisitation is required to modernise existing EPA provisions to address developing EU economic objectives in the data economy. This is identified as important given the EU Council’s adoption of a Protocol to the EPA in January 2024, which inserts provisions on cross-border data flows into the agreement.
The EPA was negotiated against a backdrop of recognition of interconnected free trade agreement structure and EU and Japanese political leaders’ responses to a trend of global anti-multilateralism. It is as much a political agreement as an economic one , providing a foundation for the development of further political and economic ties and demonstrating the potential growth in economic cooperation. Research has found the EU-Japan partnership has grown in cooperation to face global challenges such as open trade, climate change, and the COVID-19 pandemic , and it is suggested it can continue to do so to address matters such as cybercrime / cyber security.
This policy paper produced by Leah Rea identifies a problem for consideration in current EU-Japanese negotiations arising from the transition of EU-Japan trade within the data economy, signified by the 2024 Protocol on cross-border data flows. Analysing the Protocol, it identifies an issue of lacuna in cyber security considerations posed by the sharing of data. It poses corresponding recommendations, namely positing advancing measures outlined in Article 8.82 of the Protocol, utilising the growth in cooperation to address global changes witnessed between the EU-Japan in recent years, and the vision of political and economic collaboration within multilateralism represented by the EPA.