Opportunities for Japan in the EU

Japan is looking abroad, also to the EU. But can Europe deliver? If Japan chooses to seize the opportunity, Europe can be a fertile ground for Japan’s home-grown strategies. The EU has long looked to expand its reach to the East, thereby even breaking with its multilateral ideals when trading with new partners. The extended reach of EU-Japan cooperation signals the willingness of both parties to create a stronger bond, and an opportunity for Japan to get closer to gain stronger security guarantees, closer relationships with external partners and more expansive trade.

Of all its allies, Japan has mainly turned its gaze across the Pacific, to the US. The partnership between the two countries has been going strong and is considered an integral part of both nations’ security strategies. The US benefits deeply from having a strong ally in Asia, as well as a well-developed trading and technology partner. In return, Japan gets security guaranties and American troops securing its borders. But with uncertainties looming amidst changing geostrategic dynamics, as well as in light of the upcoming US elections, the question is whether the time has come for Japan to look more West to the EU and its considerable economic power.

As Japan has long been seeking to expand its global reach in the realms of economics, trade cooperation and partnerships, it has adopted a range of related strategies since Abe’s re-election in 2012. Abe thereby worked closely with other pacific nations to adopt the Trans Pacific Partnership (TPP) ⎼ which was later reshaped into the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The TPP was initially created to help smaller economies gain power in the negotiation procedures and to help balance the growing impact of China on global trade. After the 2016 US presidential election, the TPP was dropped by the US, leaving its effectiveness undermined by its initial biggest promoter. This upset showcased the US as a temperamental ally for Japan, not unlikely to change its mind based on political considerations. As it has seen its foreign policy goals undermined by the US, Japan has felt the growing need to explore other avenues and seek alternative allies aligning with its goal of stability, securing its own nation and national interests. North Korean missile development has been a major motivator for Japanese rearmament, while Chinese and Russian support of North Korea, as well as Chinese actions in its proximity (e.g. in the South China Sea), have made the Japanese more guarded against future actions in its close surroundings. 

In contrast, the EU has become a more prominent player in Asia ever since it began to unfold partnerships with car manufacturers in South Korea. Overall, the EU has reached out to a number of external partners in the region to create Free Trade Agreements (FTAs) or Economic Partnership Agreements (EPAs). From 2006, the EU also started reaching out to South Korea in a bilateral manner in this context, breaking away from its usual multilateral approach. According to researchers, a new strain of neoliberal thinking had influenced negotiators, creating new opportunities for nations outside of Europe. With the EU increasingly reaching out also to nations individually, opportunities have been arising for partner countries like Japan. The Japanese government has already taken some of these to heart, upping its efforts to work closer with the EU and its Member States, engaging in talks and building a new era of cooperation.  

Mostly based on the security guarantees provided, Japan has tied its foreign policy very closely to the US. This relates to its perilous position in Asia, with China and North Korea in its vicinity. While the US has provided Japan a steadfast ally, it has become a more volatile one in light of recent internal polarisations. Trump’s Presidency has proven that even if ties between the nations remain deep, they can change in an instant. As such, Japan has been looking to hedge its bets and diversify its alliances. 

After the US, the EU has been a long-time preferential partner for Tokyo and the two have already made progress in growing closer together, especially since their goals align closely in many areas, including a focus on safe maritime trade routes.  While a decisive pivot is not (yet) in the cards, Japanese ties with the EU are certainly growing stronger. Moreover, Japan has identified several concrete opportunities in the EU, including in the field of maritime trade, wanting to expand its security guarantees, while sharing a strong belief in democratic principles and shared values. Japan sees many like-minded partners in Europe that subscribe to the rules-based world order, pushing them to connect with these partners and expand their ties. Their similar approaches thereby align them as natural allies. 

A Rules-based World Order

While Japan’s close relationship with the US is based on their shared history since the end of WWII and the US’s wish to gain an ally and military base in the region, Tokyo has come to appreciate the impact and support of the world’s largest military in the Indo-Pacific region. Japan has worked very closely with the US and has thus been able to enjoy a peaceful existence in Asia, while it could take a backseat to the US on security issues. Yet, in recent years, Japan has started to reach out to new partners in an attempt to find alternative ways to secure its shores. For instance, a new program was set up to develop the next generation fighter planes (GCAP) as a joint initiative between the British, Italian, and Japanese governments. With the help of established military industries in the three countries, the price tag of the project can be brought down, experiences will be shared and variants of the aircraft will be exported to external partners. Moreover, Japan has signed a number of deals, including a cooperation with Germany on military procurement; and joint defence pacts with the UK; in addition to offering support to Ukraine

Because of constitutional constraints, Japan has been a leader in “Check-book Diplomacy”. The policy started in 1991, when the country was dependent on middle eastern oil exports but could not assist militarily and instead decided to use its economic leverage to influence partners and competitors rather than to exert military power or support. A similar approach has been applied to its relations with Ukraine, when in February 2024, Japan hosted a meeting to sign 54 individual documents with Ukrainian leaders on the reconstruction of their country. Their approach is a reflection of the EU’s, as it can not intervene militarily, but instead manages to leverage its significant wealth and internal single market.  

The EU can serve as a strong partner on economic issues, as well as in the realm of security, diversifying existing options and strategies. However, the EU would need to invest and take a more definitive stance on its defence posture for the partnership to work in the long term, particularly aligning on security issues and how to invest in their strategic future. Europe can be a trusted ally to Japan, which has engaged in its trademark “Check-Book Diplomacy” with Ukraine, already signing up for the reconstruction of the country. At the same time, Japan has called on European allies to do more for Ukraine, and would no doubt contribute more if it could. 

Free trade

The biggest opening for Tokyo has been in the field of free trade. Despite the construction of several Non Tariff Barriers (NTBs) which has kept the country from fully opening its markets to foreign firms, Japan and the EU have joined each other in a Digital partnership, and in the earlier signed Free Trade Agreements (FTAs). Such barriers to internal market access have prevented foreign brands from making major inroads in Japan, and kept back EU-Japan cooperation in automotive manufacturing. These NTBs have been found to be a major hurdle to free trade with Japan. The government has tried to protect its own domestic industries from foreign imports but has made trade agreements and consolidation difficult to remedy.  

The most common way through which Japan has maintained an NTB is for example the concept of Kei-cars (a category of small cars with a small engine less than 660cc displacement that receive a tax break). The cars have been a problem for European manufacturers, as they would not pass the European safety standards. As a result, European cars would have to compete with these cheaper and smaller Japanese cars. Resolving this issue could be beneficial for both Japan and the EU and open up the market for cars in both directions. However, Japan has been insisting on safeguarding its domestic industries, which has left a sour taste to European car manufacturers. 

Increased foreign investment in Japan could open the road towards new construction and manufacturing opportunities, as well as the opening of new markets. Alternatively, European manufacturers could decide to take part in the construction of Kei-cars in Japan, joining the lucrative market. Yet, there is further untapped potential for the EU to enter the market and invest in the manufacturing of other car categories such as minivans and crossovers that have proved popular in recent years. 

Clearly, the EU and Japan hold major untapped economic potential in the sphere of trade and investment. Their Free Trade Agreement, similar approaches and close alignment can serve as important tools and mechanisms to embark on new ventures. 

Security cooperation

Japan relies strongly on its allies for security guarantees, especially from the US. Because of its proximity across the Pacific, Tokyo has closer ties to the US than most European nations. However, shifting US allegiances, priorities and policies have raised tensions in Asia. During his Presidency, Trump engaged in dialogues with North Korea, whose aggression had been one of the key reasons for Japan’s military development, portraying the US as a temperamental ally to Tokyo. In this context, the EU, with its stable, yet slow-moving bureaucracy and value-based approach arises as a strongholder and potential auxiliary. Yet, the EU does not hold strong security competences and is not a military force, thereby lacking sufficient ability to project power as a major security actor in the region. Nevertheless, the individual countries in Europe could be able to provide the guaranties and support that Japan would require. For instance, Britain has already signed joint defence pacts with Japan and Germany is joining Japan in military procurement. 

Tokyo has also opened up to the possibility of exporting domestically produced military equipment. This change in policy is primarily designed for Japan to export the products of its joint fighter jet programs to countries it signs defence equipment and technology transfer deals with, a measure primarily in place to try to earn back a return on its investment related to the program.  

Cultural exports

In the last 50 years, Japan has followed a policy known as “Cool Japan”. This has been a project of cultural exports, mainly to nations in western Europe and the USA. Its impact is obvious, with Anime shows like Dragon Ball and Attack on Titan having massive followings in the western world. Sushi and ramen have become a staple in most European countries, while videos and stories of life in Japan continue to attract tourists and exchange students. However, as with most of these opportunities, they have been primarily aimed at the US, and there has been a distinct lack of focus on Europe. While Europe has not been as important to Japan in modern history, this is changing, and cultural exports are changing with it. Today, Japanese media meet an interesting intersection with European history and aesthetics. But if Japan decided to further reach out to Europe and the EU, it would see the positive results of its action in both the short and long term. More interest in Japan from European citizens leads to positive outcomes across the board, with increased foreign investments, numbers of foreign members of the workforce, exchanges and cooperation. By building closer ties, Europe can forge a similarly strong relationship to the one that Japan already has with the US, enhancing cooperation on international policy. 

A rising Tide
As hedging your bets and diversifying becomes the global norm, Japan is looking for new partners in its campaign to secure the home island, engage in free trade, export its culture and uphold the rules-based world order. In these efforts, Europe and the EU have proven to be dependable allies, with Europe presenting itself as a like-minded partner in more than one arena. With Japan already taking part in NATO meetings and activities as an AP4 partner and a non-member participant under the informal cooperation framework in place, Japan is looking to shore up as much support and cooperation as it can, also from European partners. Undoubtedly Europe can provide more for the Island nation, and one day Japan may be able to rely not only on the US for its security, cultural, and trade needs, but also on the EU and vice versa.

Author: Kasper Danielsen, EIAS Associate Researcher

Photo credits: Pixabay