Paper short abstract:

We discuss the international political economy context of the EU-Japan EPA, formal and informal trade barriers, and the response of European businesses in Japan to the EPA, and find that this broad and deep agreement remains short of tackling informal trade barriers in Japan.

Paper long abstract:

This paper considers how the issue of formal and informal trade barriers is addressed in the European Union's recent Economic Partnership Agreement (EPA) with Japan, and whether it reflects the aims of the businesses in norm-setting for international trade. The aim is to analyze the international political economy context of the EU-Japan EPA, its impact on the institutional business environment in Japan, and to assess the contested issues from the viewpoint of European businesses. An eclectic theoretical approach is adopted to study the economic, legal and political aspects of trade barriers at several levels. Whereas formal trade barriers, such as tariffs, quotas and codified non-tariff barriers are easily discernible, the more subtle informal trade barriers include unwritten rules related to norms, social codes, and business cultures. Based on interviews of trade policy officials as well as the Foreign Chambers in Japan's Business Confidence Survey of European firms in Japan, we observe that the EPA includes challenging issues related to technical barriers to trade and the regulatory environment in Japan. Our findings on the EPA, its international context and the response from businesses have a number of implications to the theorizing on trade barriers. First, the case strengthens the view that trade barriers are mainly removed through bilateralism, as the recent changes in international political economy undermine the previous long process of globalization. Second, the broader global political economy context of trade talks is complex and subject to quick changes. The EU-Japan EPA talks were triggered by outside events, such as the changing US trade policy and the 'Korea effect'. Third, the imbalances in EU-Japan economic relations - in trade, investments, and pre-EPA trade policies - point to the informal barriers to trade and inward FDI in the Japanese institutional environment. Fourth, technical barriers remain the stickiest formal barriers to trade in Japan, with the national industrial standards as the prime example, as indicated by the responses from European businesses. While the broad and deep EPA represents a degree of success in the European aims in addressing the 'behind-the-border' barriers, its ultimate success will depend on its grassroots level enforcement.

Paper short abstract:

Can Japan once again become a leader in Asia? Or this is more a wish of declining western influence being able to leverage its clout in Japan to maintain a more prominent role through them as their agent? Authors will examine trade and FDI flows, as well as multilateral relationships in the region.

Paper long abstract:

In November 2019 Ian Bremmer, well renowned in the fields of political science and political global risk, delivered a speech at the 2019 GZERO Summit in Tokyo. The topic of the speech was, "The End of the American International Order: What Comes Next?" The overall tenor of the speech was the decline of US preeminence in the world and the rise of powers that will be far more prevalent, especially China, in the Asian theater. Bremmer hypothesizes that Chinese influence emanating from many new initiatives such as the Belt and Road Initiative, can be ameliorated by a resurgence of Japanese influence in the region. Based on Japan's stability, social safety net, their emphasis not on growth and profit at all costs, ability to act as a buffer between the US and China, especially with respect to creating the AIIB as a more multilateral institution, its international work the Five Eyes intelligence alliance and its preeminent position in providing healthcare, creating smart cities and redesigned workplace for the 21st century.

That is quite an ambitious outlook for Japan, which has long languished secondary (and decreasing) role in the Asian theater. The question this article asks and intends to answer is: Is Bremmer's contention of Japan once again becoming a leader in the Asian theater founded, or is this more the wish of a declining western influence being able to leverage its clout in Japan to maintain a more prominent role through them as their agent?

The authors will examine trade and FDI flows in the region with respect to the US and the EU over the last twenty years in order to make assumptions on the waxing or waning influence of the diverse players. Secondly, the authors will look at multilateral relationships amongst the diverse players and draw conclusion here as well, with respect to relative power and influence.

This will be set within a theoretical framework and finally conclusions drawn on the feasibility of Japan being able to once again rise to a position of power in the waning days of US hegemony in Asia and in the world.

Paper short abstract:

Japanese acquisitions at the periphery of the EU is little known. We are taking Sweden as an example, home of several world-leading companies. We are analyzing four major Swedish companies acquired by large Japanese MNCs from locational, managerial, and R&D perspectives.

Paper long abstract:

With the turmoil associated with the Brexit vote in 2016, many Japanese MNCs started to prepare for relocating their activities out of the UK. Japanese MNCs had already a long history of investments in Europe. Japanese FDIs, ranging from being natural resource-seeking to strategic asset-seeking investments, to the EU can also be seen as a result of an organizational and managerial reorientation of the Japanese corporate landscape that did start by mid-1990s as a direct result of the bursting of the Bubble economy.

In this context, Japanese acquisitions at the periphery of the EU is little known. In this study, we are taking Sweden as an example of a highly developed European industrial nation, home of several world-leading companies. We are analyzing four major Swedish companies acquired by large Japanese MNCs in the 2000s from locational, managerial, and R&D perspectives.

Our results suggest that the Japanese parent MNCs have let the acquired Swedish firms be highly autonomous, allowing them to independently decide on operational issues, business decisions and R&D. We observe high level of trust and respect for the Swedish firms’ market and product knowledge and competencies while refraining from a heavy-handed HQ management by control and fiat.