BRUSSELS – The European Union has asked Japan to open up its market for goods and services procurement in municipalities with a population of 100,000 or more as the two economic powers work toward signing a free trade agreement, EU documents and sources said Thursday.
While it remains unclear how many EU firms intend to enter the market, a Japanese government source said Tokyo cannot accept the EU’s request since it means about a third of Japan’s 790 municipalities would be subjected to the burden of changing their procurement procedures.
The government of Prime Minister Shinzo Abe has been expediting talks on the envisioned FTA, seeing such frameworks as necessary to achieving economic growth. Abe met with EU chiefs during his trip to Europe earlier this month and reaffirmed their intention to reach a broad agreement by the end of the year.
Japan’s 47 prefectures and most of the designated major cities are already required to hold bids on public projects without discriminating against foreign firms under the government procurement rules of the World Trade Organization. The EU’s request calls for expanding the scope.
The European Union initially sought to ask Japan to open all of its government procurement market but later decided to narrow the scope to cover relatively large municipalities, including Tokyo’s 23 wards, according to the sources and the documents.
The EU has also urged Japan to further open up the market for state-ordered construction projects by giving its firms access to smaller projects with costs as low as about ¥16 million, instead of the current ¥740 million and over.
Japan and the EU began the FTA negotiations in April 2013, with Tokyo seeking to eliminate EU tariffs on Japanese automobiles and electronic appliances and the EU seeking to enter Japan’s food market and get greater access to the railway market, among others.
Although Japan struck the Trans-Pacific Partnership free trade deal with the United States and 10 other Pacific Rim countries in October, it did not budge in negotiations on government procurement.
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