Japan free trade talks with EU a "masquerade": Ford

BRUSSELS (REUTERS) - Japan is not truly interested in opening up its economy to imports and upcoming free-trade negotiations are a "masquerade", according to a senior executive of Ford Motor Company.

Japan is set to launch trade talks with the European Union later this month and its prime minister said on Friday it would seek to join talks on a US-led Pacific free-trade pact, which could be agreed by the end of the year.

While many EU industries from pharmaceuticals to retail support negotiations with Japan, the car sector has deep reservations, arguing any deal would be a one-way street.

MR Stephen Biegun, Ford vice president of international governmental affairs, told Reuters this week that Ford was a great advocate of free trade, as long as it was truly free.

"Where it becomes challenging for us is when a negotiation masquerades as a free-trade agreement," he said in an interview in Brussels.

"In the case of (South) Korea and in particular in the case of Japan there should be no mistake about it: these can be called free-trade negotiations, but the intention of the negotiating party with Europe is not to embrace the model of two-way trade."

MR Biegun said no one believed European auto exports to Japan would increase after a deal.

South Korea's free-trade agreement with the European Union took effect in mid-2011.

European car manufacturers association ACEA refers to a Deloitte study forecasting that EU exports to Japan could rise by about 8,000 units by 2020, while imports from Japan could rise by 443,000 units, threatening 35,000 to 73,000 jobs in Europe.

Japan has zero import duties on car imports and talks are expected to focus on non-tariff barriers, such as differences in regulations between cars accepted in the different markets.

MR Biegun said removal or reduction of such barriers could provide marginal gains, but would not totally free up trade.

The European Commission, which will be conducting the negotiations, would not alter the imbalance unless it reached into "the very bowels of the Japanese economy", he said.

He said the fact that promotion of competition was lax in Japan, where Toyota has about half the auto market, and currency manipulation to boost trade, were the main impediments.

"We're more than deeply sceptical. There's not a single foreign (car) manufacturer in Japan, so there's really no possibility to enter the market," he said.

European auto makers are appealing to the Commission and EU member states to take seriously a clause in the bloc's negotiating mandate under which talks could be suspended after a year if Tokyo failed to remove trade barriers.

By contrast, carmakers are bullish about the prospects of a US-EU trade deal, negotiations over which are expected to start by the middle of the year.

MR Biegun said that the cost of designing and producing according to separate EU and US safety standards was between US$3 billion (S$3.7 billion) and US$6 billion (S$7.5 billion), while different environmental rules added a cost of US$1.5 to US$2 billion.

"This is a winner for manufacturing in Europe and the United States," Mr Biegun said.

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