The EU–Japan Partnership in the Shadow of China

The Crisis of Liberalism

Axel Berkofsky, Christopher W. Hughes, Paul Midford, Marie Söderberg, Axel Berkofsky, Christopher W. Hughes, Paul Midford, Marie Söderberg

• Publisher: Routledge
• Year: 2018
• Print ISBN: 9780815397984
• eBook ISBN: 9781351172141
• Edition: 1
• Topic: Business
• Subtopic: International Business
• Index: Business

Both the European Union and Japan have been major beneficiaries and supporters of the liberal international order, first led by the United States since the end of World War II. During this period, they have emerged as global powers, however, the very order that nurtured their rise is now facing twin threats. First, through authoritarian China's promotion of alternative models of global governance, and second from a crisis of liberalism, manifested in the policies of President Donald Trump and Brexit.

This book explores these challenges faced by both the EU and Japan, providing a multidisciplinary approach to studying the relationship between the two. It analyses their cooperation in terms of security, defence and trade and examines how their shared normative values are ultimately implemented. Having recently concluded an Economic Partnership Agreement and with a Strategic Partnership Agreement in the pipeline, this book asks whether they can convert their latent and modest cooperation into an alternative form of leadership and an antidote to the illiberal tide sweeping the developed world?

As the first book to shed light on the new Economic Partnership Agreement between the EU and Japan, this book will be useful to students and scholars of Japanese Studies, as well as European Union politics and international political economy more generally.

1 Introduction

Now or never?

Marie Söderberg, Axel Berkofsky, Christopher W. Hughes and Paul Midford

The European Union (EU) and Japan have been two major beneficiaries and supporters of the liberal international order led by the United States since World War II. During that period these two powers have emerged as global economic, technological, political and ‘normative’ powers. Now the very order that nurtured their rise faces twin threats: from without by the rise of an authoritarian and ostensibly illiberal China promoting (and financing) alternative models of economic and global governance; and from within by a crisis of liberalism, itself manifested in seemingly failing Western leadership and institutions. The EU’s position and credibility as a promoter of a liberal world order has been diminished by its travails in responding effectively to repeated financial crises since 2008, and a massive refugee crisis since 2015. The United Kingdom’s (UK) vote to leave the EU in June 2016 is a prominent manifestation of the fraying legitimacy and capacity of the EU. Meanwhile, the election of Donald J. Trump as President of the United States—matching the emergence of populist and xenophobic groups and movements in numerous EU member states—points to the emergence of a new wave of illiberalism impacting on the US’s established position since the post-war era as the leader and upholder of the liberal international order.

Set against this background, this edited volume examines the challenges the EU and Japan now face as the two main leading and remaining supporters of the global liberal order in an age of doubt over the durability of US leadership: can they convert their latent and to date modest cooperation in international politics and security into robust action to offer an alternative form of leadership and antidote to the illiberal tide sweeping the developed world? Can their political rhetoric—constantly referring to each other as ‘natural allies’ in international politics and security—translate into political reality and substance in the years ahead? In other words, can the EU and Japan actually implement together the kind of policies they have listed over recent years in joint statements published after annual EU–Japan Summits?

This volume’s central theme is EU–Japan cooperation across the dimensions of trade, finance, development assistance, and traditional and non-traditional security in the context of the challenges of the rise of an illiberal and authoritarian China and rising illiberalism in the US as well as Europe. It seeks to examine the tasks that Japan and the EU face as two of the leading supporters of the liberal world order led by the US. Can they convert their very modest cooperation into robust action to offer an alternative to the illiberal tide threatening to sweep the world and unsettling the global economy and even peace?

The approach of this volume is a multidisciplinary one, drawing on insights from International Relations, Political Science, Economics, and Business Studies, and achieves coherence by addressing consistently in all chapters the following five main questions. First, how can we assess the significance and impact of EU–Japan cooperation in the areas covered by individual authors? Second, how do China and/or the US individually or through their bilateral relationship affect EU–Japan current or potential cooperation in the areas the volume’s authors are addressing? Third, how does EU–Japan cooperation in trade, politics and security impact on cooperation between the EU and China and the EU and the US, Japan and the US, and Japan and China respectively? Fourth, how does EU–Japan cooperation in trade, politics and security affect Sino–US relations? Finally, what is the impact of recent instability in the OECD countries on EU–Japan cooperation? Our edited volume will provide readers with an in-depth analysis of the areas of cooperation that Europe and Japan are currently engaged in, and seek to assess whether the extent of their joint activities is substantive enough to fill the leadership gap the liberal world order faces in the years ahead.

The EU, despite the impending Brexit, is still the main economic and political powerhouse of Europe. However, this does not mean that bilateral relations between some of the major European powers and Japan are unimportant. In this book we will thus provide coverage of EU–Japan cooperation but also Europe–Japan cooperation in a broader sense to encompass also bilateral relations between Japan and some of the principal individual European states.

Judging by the previous and indeed current level of EU–Japanese cooperation, there are understandably doubts about whether political leaders in both Europe and Japan are prepared and equipped with the instruments and resources to enact substantive cooperation. Nevertheless, as this edited volume reveals, the track record of EU–Japan non-military security cooperation in Asia, Central Asia, Africa and elsewhere is not unimpressive, and Tokyo has over recent years increased also military-to-military security cooperation with individual EU member countries, most notably the UK and France. In January 2014, France and Japan held their first ministerial-level foreign affairs/defence ministers (2 plus 2) meeting. During the second 2 plus 2 meeting in 2015, respective foreign and defence ministers discussed the so-called ‘Plan of Action for Africa’, which included the possibility of joint border security actions in Niger, Mali and Burkina Faso and joint peacekeeping policies and missions in Africa. In July 2014, Paris and Tokyo signed a memorandum of understanding (MOU) to increase defence cooperation, including the joint development of military equipment. This is envisioned to include, among other areas, the joint development of unmanned underwater vehicles.

In April 2012, Tokyo and London signed their first joint weapons development agreement which in July 2013 was followed-up by two additional British–Japanese agreements—the so-called ‘Defence Equipment Cooperation Framework’ to facilitate joint development of military equipment and the ‘Information Security Agreement’ facilitating increased cooperation in intelligence. This resulted in British–Japanese joint development efforts in chemical and biological warfare suits and cooperation in missile technology. Furthermore, British and Japanese armed forces have increased the frequency of military exercises, and Tokyo and London in January 2015 held their first 2 plus 2 meeting, involving their respective foreign and defence minister. In May 2014, London and Tokyo initiated negotiations on a bilateral Acquisition and Cross-Servicing Agreement (ACSA), which looks to provide mutual of logistical, material and technical support for both states’ armed forces.

EU–Japan cooperation in the shadow of two superpowers

This volume transcends the current literature on EU–Japan relations that in certain cases can be prone to offer little more than self-congratulatory celebrations of the current state of the relationship, especially of elite dialogues and exchanges, which offer very little and often only light empirical verification of the concrete cooperation between the two sides and its broader impact. In other words, large parts of the existing literature on EU–Japan relations limits itself to providing rather superficial, as opposed to in-depth information and analysis, on what the EU and Japan are currently doing as regards concrete cooperation in the field of politics, trade and investment, and security. Moreover, the existing literature on EU–Japan relations tends to overly focus on the bilateral EU–Japan relationship while ignoring the broader international environment within which the relationship is embedded. This bilaterally focused approach and thinking generates an environment that at times unnecessarily creates obstacles to the EU and Japan moving forward and implementing the kind of policies that have featured in the official EU–Japan bilateral agendas over the last fifteen years. Instead, this volume takes a wholly different approach, and applies a critical and empirically based multi-disciplinary methodology to the analysis of bilateral economic, political, and security cooperation between two of the world’s largest economic powers.

Although the US and China are always mentioned as number one and two in the rankings of economies, the EU’s twenty-eight member states in aggregate make the EU the largest economy in terms of GDP. The EU’s trade with the rest of the world accounts for around 16.8 per cent of global exports and imports in 2016. That makes it the world’s largest trader (DG Trade Statistical Guide, 2017, p. 25). According to the World Bank, Japan is the world’s third largest national economy in terms of GDP in 2016 (World Bank, 2017). The EU and Japan are both mature economies, meaning that they typically record comparatively low economic growth rates and are less affected by fluctuations in commodity and energy prices. Consequently, given the size of the EU and Japanese economies, and their already existing complementarity in trade and investment, it is obvious that the EU–Japan bilateral Free Trade Agreement/Economic Partnership Agreement (FTA/EPA) concluded on 8 December 2017 has the potential to increase significantly bilateral trade and investment flows. A bilateral EU–Japan FTA becomes even more crucial set against the background of the failure of the US-led Transpacific Partnership Agreement (TPP). During his visit to Japan in November 2017, US President Donald Trump, speaking to business leaders in Tokyo, reaffirmed his decision to pull the US out of the trade agreement (Cislo and Takahashi, 2017). Although Japan might continue pushing for implementation with the remaining participants, this is likely to become a considerably weakened agreement. On the European side, the Transatlantic Trade and Investment Partnership (TTIP) is also not moving forward.

In the field of international politics as well, the US and China are usually identified as the two central actors and protagonists, whereas by comparison the EU and Japan receive relatively little attention as contributors to regional and global security. However, if a closer look is taken at the actors contributing to global peace and security through measures such as development aid, technical assistance, and capacity-building in developing and/or post-conflict countries, it turns out that the EU and Japan make very significant contributions. In other words, the EU and Japan are crucial contributors to global peace and stability through instruments and policies which might not always (in fact, almost never) receive front-page coverage but are nonetheless significant, and, indeed, in many cases essential contributions to stability and peace in countries and regions prone to conflict, ethnic tensions, and war. This volume assesses where and to what extent such contributions from the EU and Japan prove to be crucial, whether on an individual or joint basis. To be able to analyse the cooperation some knowledge of the development of EU–Japan relations is essential.

The historical background

Japan, following defeat in 1945, became an occupied country. A programme of ‘demilitarization’ and ‘democratization’ was initiated by SCAP (the Supreme Commander for the Allied Powers). Although the occupation was termed ‘Allied’, European leaders took little interest in Japanese affairs since most of the running of SCAP was in the hands of the American military. At the time European countries also had more pressing issues to contend with, such as economic collapse and identity crises at home. The US came to play an important role in the rebuilding not only of Japan but also of parts of Europe through the Marshall Plan.

The close ties that had developed between the US and Western Europe after the war, and which were reinforced by the Cold War alliances, became tinged with the sense in the US that the European countries with their strong economic growth were not contributing sufficiently to their own defence. The setting up of NATO (the North Atlantic Treaty Organisation) was intended to remedy that and the US was supportive of European integration (Gilson, 2000, pp. 11–15). The US was even more closely associated with the post-war system in Japan. As Mao Tse-tung and his Communist Party gained power in China, occupation policies changed radically, and in the ‘reverse course’ there was a move not only to demilitarize and democratize Japan, but also to build up a strong allied country to counter the communist threat (Gilson, 2000, pp. 11–15).

Diplomatic relations were resumed between Japan and various West European states when Japan gained independence in 1952, but US dominance impeded any form of substantive bilateral dialogue. Japan watched the formation of the EEC (European Economic Community) in 1957 with the suspicion that it would lead to a common external tariff, while the Europeans feared a Japanese economic invasion. It was not until the 1960s and the boom in Japanese exports that the European states started signing trade agreements with Japan and bilateral contacts were revitalized. These individual national approaches overlapped with, and occasionally clashed with, the drive for a more assertive role on the part of the EEC, attempting to deal with Japan in a collective European fashion. The Japanese were unsure about the future of the Community, and the Commission of the EEC for its part repeatedly failed to secure a mandate to coordinate trade negotiations for member states (Gilson, 2000, pp. 20–21).

During the 1960s, Japan and the EEC states also interacted in multilateral settings such as the GATT (General Agreement on Tariffs and Trade) and the UN (United Nations). However, it was not until after 1969, when the EPC (European Political Cooperation) was established, that the Commission was authorized to enter into negotiations for a trade agreement between the EEC and Japan. This was further strengthened when the EEC’s Common Commercial Policy came into effect in the 1970s. But special rules permitting the retention of certain national measures, some of them directly targeted at Japan, hampered these attempts. The so-called first Nixon ‘shock’ in 1971, when the US suspended the convertibility of the dollar against gold and decided to place a surcharge on all imports, led to a major increase in Japanese exports to Europe. This increased tensions and the Europeans became more hostile to Japan as the trade deficit grew, even though some ‘orderly marketing’ measures were agreed to by Keidanren and the Commission (Gilson, 2000, p. 23).

The 1970s was a decade of continued trade disputes between Japan and the EEC, but also produced a new high-level bilateral dialogue. The Japan–EU Joint Communiqué issued after Foreign Minister Ohira’s visit to Brussels in May 1973 was not only focused on trade, but also included other areas of cooperation such as East–West issues, as well as cooperation in the financial and energy sectors. The prospects of a real partnership were, however, hampered by trade disputes, as well as by Japan’s lack of conviction in the EEC’s viability as a single unit. The 1980s went by with the two parties showing only a lukewarm interest in each other. Trade did pose new issues, though, with the Europeans starting to put pressure on Japan to open up its own market, and attention turned to a number of non-tariff barriers (NTBs). High-level bilateral contacts increased, and the idea of a broader cooperative relationship was more frequently raised. This was facilitated by the Single European Act of 1986 giving the EC more of a single external face, and by the fact that Japan had started searching for a new role in the international community. However, only with the fall of the Berlin Wall and the end of the Cold War was this process ready for true take off.

The 1991 Hague Declaration

The collapse of the Soviet Union catalysed change in the Japan–US relationship and EU–US relations. Although the apparent Cold War enemy had been vanquished, the US, burdened with huge military expenditure and the failure of its macroeconomic policy did not appear as a strong victor. The US’s dominant role since the end of World War II seemed significantly diminished. In this wider context of international political restructuring, interest grew both in Japan and in the EEC in wider international cooperation, and in creating alternative allies to the US (Abe, 1999, p. 135).

Business relations between Japan and the EEC countries had developed more or less independently of the state of diplomatic ties (Strange, 1996). On the political side, the earlier attitude of mutual indifference was increasingly problematic in the ‘New World Order’. In Japan the domestic actor that handled the 1991 Joint Declaration between Japan and the European Community (European Commission, 1991), ‘The Hague Declaration’, was the Ministry of Foreign Affairs (MOFA). MOFA tried to keep the agreement well fenced off from trade issues, where it would have had to allow to cede influence to the Ministry of International Trade and Industry (MITI) and the Ministry of Finance (MOF). On the European side, the actors were the Commission (which had only limited external policy competence and power) and the governments of the member states. The EC’s trade deficit with Japan was growing and there was strong pressure to include economic relations in the declaration. MOFA firmly objected to this proposal, with its intention being to produce a political declaration similar to the Transatlantic Declaration between the EC and the US, and the declaration between the EC and Canada (Abe, 1991, p. 135). The EC states were not united. Some like the UK and the Netherlands sought a political agreement, while others such as France wished to stress economic and trade issues (Abe, 1991, p. 134). In the end the Joint Declaration was mainly a political document with only vague references to trade issues. The declaration led to the initiation of a number of policy dialogues between Japan and the EC.

In the field of security, during the Cold War, discussions between the Japanese government and European leaders generally took place in the context of the European states’ NATO membership in which the US presence was significant—to the extent that military issues were considered at all. Generally, security-related issues were understood within the context of economic concerns that were the core of Europe–Japan relations. With the fall of the Berlin Wall in 1989 there was a rethinking of security issues in Europe as former Soviet bloc countries started joining Western European organizations. The Japanese government was also quick to assist countries such as Poland and Hungary to transition to a free-market economy. On the security side there was limited cooperation between Japan and Europe, and the Europeans proposed no consistent security policy. The Hague Declaration, however, pledged cooperation between Japan and Europe in dealing with Central and Eastern E...

Table of contents

• Cover
• Half Title
• Fm
• Title
• Copyright
• Contents
• List of illustrations
• Notes on contributors
• Preface
• Notes on names and transcription
• List of abbreviations
• 1 Introduction: now or never?
• PART I: Political and security cooperation
• PART II: Political economy, development, and normative issues
• PART III: Reflections by the two superpowers
• Index