Japan, EU stepping up efforts to finalize trade deal by year end

TOKYO, Nov. 16 — Japan and the EU have confirmed that ministerial-level contacts could be set up to wrap up a trade deal before the year’s end, seeking to resolve a controversial proposed investment protection provision.

Both have considered separating the so-called investor state dispute settlement (ISDS) provision from the agreement, informed sources said.

Japan’s Foreign Minister Taro Kono talked with EU Trade Commissioner Cecilia Malmström over the phone on Nov. 15. Malmström also talked separately with Trade Minister Hiroshige Seko on the same day.

Senior officials from the two will meet again this month, focusing on the contentious issues including the ISDS provision.

The ISDS provision allows foreign investors or companies to sue governments over regulations if they allegedly harm their investments.

Tokyo wanted to include the ISDS in the agreement, as the provision is also part of the Trans-Pacific Partnership (TPP) as well as other trade agreements with Japan.

But Brussels wants the ISDS system to be replaced with a new system as some of the EU’s members fear the provision is a threat to their sovereignty.

As the two sides were unable to settle the difference, the EU proposed an option that Japan could detach the ISDS provision from the deal.

In September, Malmström indicated that the EU’s future negotiating mandates for trade agreements might not include rules protecting foreign investment.

Doubts were raised in October 2016 when the Belgian region of Wallonia blocked a trade deal with Canada due to the ISDS provision.

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