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Tuesday September 26th, 2017 1:44AM

Cheese, cars at issue as Japan, EU inch toward trade pact

By The Associated Press
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TOKYO (AP) — Japan's foreign minister is expected to head to Brussels this week to seek a breakthrough in talks on a free trade agreement with the European Union.

Foreign Minister Fumio Kishida said over the weekend that he was hopeful the two sides would resolve remaining differences, mainly over trade in cheese and autos, before Friday's summit of the Group of 20 industrial nations.

Such a deal will require finessing Japan's protections for its dairy farmers, whose home market is protected by tariffs of up to 40 percent on processed cheese.

Talks on the proposed Economic Partnership Agreement ended late Saturday with officials saying they believed they could resolve remaining differences and reach a political deal by the time Prime Minister Shinzo Abe and EU leaders are due to meet on Thursday.

Kishida and Cecilia Malmstrom, the European Commissioner for Trade, both said they believed an agreement was within reach despite remaining sticking points over EU tariffs on cars and Japan's tariffs on cheese.

Japan wants the EU to lift tariffs on autos, a demand that EU officials said was difficult to do immediately. Both sides are asking the other to open their markets to each other's wines, and there are a few other issues still yet to be resolved, the Yomiuri and other newspapers reported.

It was unclear just what the potential for compromise on cheese might be, given Japanese farm minister Yoji Yamamoto's rejection of a EU request that Japan match its commitments for relaxing its trade rules on cheese imports to match those it agreed to in negotiations with members of the Trans-Pacific Partnership.

That trade pact was cast into question by U.S. President Donald Trump's decision to pull out of the formerly U.S.-led Pacific Rim trade initiative. But the 11 remaining members have been discussing ways to pursue a revised version without the U.S. as the anchor.

Australia and New Zealand, the biggest exporters of cheese and other dairy products to Japan, fought hard to persuade Tokyo to gradually open its market over a 15-year period.

Both Japan and the EU have a tradition of protecting their politically powerful farm sectors, and dairy products are an especially sensitive issue for the EU, with its long traditions and half the world's market share for cheese.

Japanese eat only about 2 kilograms (about 1 pound) of cheese per person a year, way less than Europeans, partly because of different tastes and food cultures, and partly because costs are so high. A small, chocolate-bar sized block of imported Parmesan costs over $7 and a similar amount of Swiss cheese at least $6.

Costs are relatively high thanks to a complicated system that is engineered to ensure the country's 17,700 dairy farmers, overwhelmingly small family businesses, continue to provide a stable supply of raw milk, even though their average costs are double those of farmers in Europe and the U.S.

About a quarter of the cheese imported into Japan is reprocessed and repackaged so as to "add value" before products reach consumers.

A glut in milk production in the past two years in the U.S., Europe and Oceania has helped push prices lower and boosted imports, according to a recent U.S. Department of Agriculture report. It also has lent urgency to the EU's effort to win easier access to Japanese consumers.

  • Associated Categories: Associated Press (AP), AP Business, AP Business - Economy, AP Business - Industries, AP Business - Agriculture
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