Mega-regionals and the EU-Japan Economic Partnership Agreement: A Historical Institutionalist Analysis. College of Europe EU Diplomacy Paper 4/2020.

Kakara, Tatiana (2020) Mega-regionals and the EU-Japan Economic Partnership Agreement: A Historical Institutionalist Analysis. College of Europe EU Diplomacy Paper 4/2020. [Working Paper]

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Abstract

The turn of the European Union (EU) towards the conclusion of mega-regional free trade agreements (FTAs) in the past decade signified the beginning of an ambitious trade policy. Although initially marked by limited success and civil society opposition in certain cases, some of the EU’s mega-regional projects have borne fruits. A recent example of such a comprehensive agreement is the EU-Japan Economic Partnership Agreement (EPA). Drawing on historical institutionalism, this paper aims to explain why the EU negotiates mega-regional FTAs, to illustrate these motivations through a case study of the EU-Japan EPA, and to examine likely implications of EU mega-regionals for the partners to the agreements, third countries and the multilateral trading system. The paper argues that the stalemate of the World Trade Organisation (WTO), which triggered the 2006 Global Europe Strategy, constitutes a critical juncture that opened the path towards mega-regional agreements. Furthermore, the EU’s long-standing practice of promoting rules and values in its trade relations, as well as the more recent path created by the ‘template’ of the Comprehensive Economic and Trade Agreement between the EU and Canada (CETA), contribute to the motivations of the EU to conclude mega-regionals. In the case of the EU-Japan EPA, agreements such as the Transatlantic Trade and Investment Partnership (TTIP), the Trans-Pacific Partnership (TPP) and CETA acted as critical junctures. Power asymmetries and bargaining help explain how the EU and Japan succeeded in negotiating a comprehensive EPA, including some pioneering elements such as climate change and corporate governance. Among the likely implications of EU mega-regionals are positive feedback effects, such as economic growth for the partners to the mega-regionals, domino effects inducing nonmembers of mega-regionals to join the bloc, as well as the (unintended) consequences of mega-regionals for the multilateral trading system.

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