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The EU thinks that it can stem some of its credit woes by stimulating more trade with the rest of the world. Its diplomats are in talks with 80 countries in every corner of the world to make trade cheaper into and out of the EU. The deal farthest ahead though is a possible free trade deal with Japan. However, businesses on both sides of the agreement still have their doubts.
Europe's automakers are not totally convinced that the idea is a good one though. Sergio Marchionne who in addition to being the CEO of FiatFiatItaly, 1899 > present and ChyrslerChryslerUnited States of America, 1925 > present is the president of the European Automobile Manufacturers' Association (ACEA) says that unless auto sales begin to increase in Europe, his group will oppose the plan.
"We are ready to go ahead with Japan talks, but we will not be able to continue if there is no movement on auto market access," said an Italian trade diplomat.
On the Japanese side, free trade would mean opening up government contracts to EU companies, especially in the construction sector. For instance, only 3% of Japanese government contracts are currently awarded to foreign companies. German and French companies have tried to bid on these jobs and failed. A trade deal would give them an advantage that they did not have before.
Another sign of possible trouble is the recent EU trade agreement with South Korea. South Korea has increased trade into the EU significantly, but EU companies have had problems breaking into the South Korean market.
Talks have not yet started with Japan, and it would take several years for a final plan to be agreed on. EU governments must first give the EU Commission permission to negotiate with Japan on their behalf, which could happen as soon as October. Then once the plan was finalized, the European Parliament would have to give it a final agreement.
Source: Automotive News Europe