Free Trade Agreement between the European Union and Japan

On 16 November the EU Commission has released the document EOS entitled “Trade Sustainability Impact Assessment of the Free Trade Agreement between the European Union and Japan”.

The Document is composed of 248 pages; the chapter dedicated to timber is at page 209.

The documents conclude that there is no negative impact on greenhouse gases and CO2 emissions from the FTA. In fact, the agreement should favour relatively less energy and emission intensive sectors, leading to a reallocation towards these cleaner sectors instead. “Lower trade barriers to environmental goods and services contribute to increased competition inducing greater innovation. This yields to positive environmental benefits with improved resource-use efficiency and pollution prevention. Nor will the FTA will induce a pressure on energy demand, nor imports of natural resources and waste production”. In particular the case study on forestry concludes that sourcing timber within the EU will not lead to negative impacts. The risks are imports from third countries as both the EU and Japan are known to import significant volumes of high-risk timber.

In extreme synthesis, the Report emphases the following considerations:

  • “Japan is not a major destination for EU exports, however, accounting for only about 0.9 per cent of total EU wood and paper exports. The sector accounted for about 3 per cent of total EU exports to Japan”.

  • “FLEGT: Activities in Japan have been much more limited.  In contrast to the EU, the Japanese government has preferred to pursue voluntary rather than regulatory measures. Its promotion of the country’s own legality verification system – the goho-wood system – has helped to raise awareness of the issue of illegal logging, but the system is only voluntary and suffers from serious design weaknesses, including a very loose definition of ‘legal’ and a general absence of any independent monitoring or verification of legality. In fact, the system may be inhibiting the take-up of wood products certified under the main global sustainability certification schemes. Since 2006, public procurement policy has required the purchase of goho-wood products; sustainability is preferred but is not a requirement. The policy only applies to central government, however, not regional or local authorities, and there are no penalties for noncompliance”.

  • “Japan’s imports of timber-sector products at high risk of illegality are estimated nevertheless to have declined since the start of the century.”

  • “Non-tariff barriers also appear to affect in particular the construction sector. The Wood Use Points System, introduced in 2011, was designed to favour the use of locally sourced wood in house-building; buyers of new homes were eligible for rewards in proportion to the volume of local wood used. In December 2013, the programme was extended to include the use of Douglas fir, regardless of its origin. Douglas fir is a species native to the Western United States and Canada; although it is also grown in many other countries, including Japan, the decision had the greatest impact on US exports; it is estimated that more than 90 per cent of the softwood products exported from the US to Japan are Douglas fir”.

  • “The revision of the construction code, due to be complete by 2016, to encourage the widespread use of cross-laminated timber (CLT) in buildings, displacing steel and concrete. The new standard for CLT published in December 2013 initially did not permit one type of resin adhesive widely used in the EU. A revision of the standard in February 2014 allowed the adhesive, but only on a case-by-case basis after the submission of technical data and evaluation by committee. More broadly, it is not yet clear whether the code will give priority to domestic species such as cedar over wood species used more commonly in the EU. Combined with the regulations on adhesives, this clearly poses a potential barrier to imports”.

  • “Given the limited extent of the trade in wood and paper products between the EU and Japan, the potential impact of the FTA on bilateral trade in wood and paper products between the EU and Japan is accordingly not very high, though more important for EU exports to Japan than Japan’s exports to the EU”

  • Recommendations of the Document:

  • “Exchange of information on best practice in public procurement policies for legal and sustainable timber, including efforts to reach mutually compatible and verifiable definitions of ‘legal’ and ‘sustainable’.

  • Exchange of information on the implementation of the EU Timber Regulation, with a view to providing assistance should Japan adopt similar legislation, including specific recognition of VPA licensed timber as meeting requirements for ‘legal’.

  • Encouragement for Japan to join existing VPAs, or negotiate similar such agreements, with countries exporting timber products to Japan, including in particular Malaysia, Indonesia and Vietnam”.

Generally speaking the “ Trade Sustainability Impact Assessment”  comes to the conclusion that the potential economic gains, outlined in the overall economic analysis, will not be outweighed by negative social and environmental impacts. The EU-Japan FTA adheres to the objective to create ‘smart, sustainable and inclusive growth’.

Copy of the report:

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