How Japan Can Be a Normative Partner of the EU

MASTER THESIS

Trade, Markets, and Environmental

Regulations:

How Japan Can Be a Normative Partner of the EU

OSAKA SCHOOL OF INTERNATIONAL PUBLIC POLICY Master’s Course 2

Year

31B14008 HIROKI NISHIHARA

2016/01/07

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Contents

Abbreviations ... 4

1. Introduction ... 8

1-1. Research Question and the Argument of This Thesis... 8

1-2. The Concept of Normative Partnership ... 9

1-3. Focusing on Environmental Regulation: Case Studies of This Thesis ... 14

1-4. Structure of this Thesis ... 17

2. Background and Context of the Normative Partnership of Japan and the EU ... 20

2-1. Historical Developments between Japan and the EU ... 21

2-2. External Factors Affecting the Normative Partnership ... 26

3. The Essence of the Normative Partnership ... 31

3-1. Theories Explaining Europe’s Power ... 32

3-1-1. Soft Power ... 32

3-1-2. Civilian Power ... 34

3-1-3. Normative Power Europe... 37

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3-1-4. The Market Power of Europe... 42

3-2. Beyond Normative Power ... 47

3-2-1. The Discussion of Normative Partnership between the EU and Japan ... 47

3-2-2. Theoretical Framework: Five Conditions for Normative Partnership ... 51

4. Case Studies on Environmental Regulations ... 64

4-1. REACH ... 65

4-1-1. Ideational Perspective and Principles of REACH ... 65

4-1-2. Diffusion of REACH ... 72

4-1-3. Japan’s Regulatory Measures on Chemical Products ... 77

4-1-4. Japan’s Market Interest in REACH ... 81

4-1-5. Motivation to Be a Normative Player ... 84

4-2. The FLEGT Timber Regulation ... 88

4-2-1. Ideational Aspect and Principles of the Timber Regulation ... 88

4-2-2. Diffusion of the Timber Regulation ... 94

4-2-3. Japan’s Regulatory Measures on Illegal Logging ... 98

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4-2-4. Japan’s Market Interests in the Timber Regulation ... 103

4-2-5. Motivation to Be a Normative Player ... 106

5. Conclusion ...111

5-1. Summary: REACH... 112

5-2. Summary: Timber Regulation ... 115

5-3. Investigation of the Results ... 119

5-4. Proposal for the Future: Toward the Normative Partnership ... 125

Acknowledgement ... 129

References: Primary Sources ... 130

References: Secondary Sources ... 142

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Abbreviations

AIIB Asian Infrastructure Investment Bank

AFP Asia Forest Partnership

ASEAN Association of Southeast Asian Nations

COP 11 Conference of the Parties 11

EAP Environmental Action Program

EBC European Business Council

EC European Community

ECHA European Chemicals Agency

ECOS European Environmental Citizens Organization for Standardization

EEA European Economic Area

EFTA European Free Trade Association

ENP European Neighbourhood Policy

EU European Union

FDI Foreign Direct Investment

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FLEGT Forest Law Enforcement, Governance and Trade

FSC Forest Stewardship Council

FTA Free Trade Agreement

GATT General Agreement on Tariffs and Trade

GHS Globally Harmonized System of Classification and Labeling of Chemicals

GMO Genetically Modified Organism

GSP Generalized System of Preferences

ILO International Labour Organization

ITTO International Tropical Timber Organization

JBCE Japan Business Council in Europe

JFWIA Japan Federation of Wood Industry Associations

NAFTA North American Free Trade Agreement

NGO Non-Governmental Organization

OECD Organisation for Economic Cooperation and Development

RCEP Regional Comprehensive Economic Partnership

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REACH Registration, Evaluation, Authorisation and Restriction of Chemicals

REDD+ Reducing Emissions from Deforestation in Developing Countries:

Approaches to Stimulate Action

RoHS Restriction of Hazardous Substances

SAICM Strategic Approach to International Chemicals Management

SVLK Sistem Verifikasi Legalitas Kayu

TBT Technical Barriers to Trade

TPP Trans-Pacific Partnership

TSCA Toxic Substances Control Act

TTIP Trans-Atlantic Trade and Investment Partnership

UK United Kingdom

UN United Nations

UNEA United Nations Environment Assembly

UNECE United Nations Economic Commission for Europe

UNEP United Nations Environment Programme

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UNFCCC United Nations Framework Convention on Climate Change

US United States

VPA Voluntary Partnership Agreements

WTO World Trade Organization

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1. Introduction

1-1. Research Question and the Argument of This Thesis

The aim of this thesis is to investigate and identify the possibility of a normative partnership

between Japan and the European Union (EU). Existing literature has discussed the possibility of

normative partnership between Japan and the EU in the context of the rule of law or the

protection of human rights. Instead, this thesis focuses on the regulatory interactions between

Japan and the EU regarding environmental regulations.

Japan and the EU have developed their trading relations for some time; however, it was only

in 2013 that they started negotiations for a Japan-EU Free Trade Agreement (FTA), and the

negotiations still continue. One of the aims of the Japan-EU FTA is bilateral cooperation in

making regulations. In this sense, Japan and the EU aim to become normative partners and to

lead global rulemaking in line with sharing of fundamental norms. The research question of this

thesis is as follows: “Can Japan be a normative partner with the EU?” To answer this question,

evidence of Japan’s actions compared with the EU’s normative approach will be examined. This

thesis argues that if normative partnership is achieved between the two jurisdictions, the

position of Japan relative to the EU will be secured in international trade.

9 1-2. The Concept of Normative Partnership

As mentioned above, this thesis explores the possibility of a normative partnership between the

EU and Japan. The concept of the normative partnership is built on the past scholarship

concerning how the EU’s norms and regulations affect other nations. This section briefly

highlights several theories relevant to the notion of the normative partnership.

The soft power concept was first presented by Nye and Keohane in the 1970s as opposed to

hard power, which depends on military strength in transnational negotiations (Nye & Keohane,

1971). Soft power has been an important concept in political analysis. The discussion of soft

power has also influenced the debate over Europe’s distinctive power. Around the same time,

“Civilian Power Europe,” argued by Duchene, was discussed among European politicians.

According to Duchene, civilian power is a countermeasure for Europe against the absolute

military power of the United States (US) and the Soviet Union in the Cold War (Duchene, 1971,

p. 73). Opposing Duchene, Hedley Bull, one of the famous scholars of the English School,

argued that, although civilian power and especially economic power after World War II made up

much of European power, military prowess still remains important in demonstrating the EU’s

power in the world (Bull, 1982, p. 149). European power according to Bull is the coexistence of

civilian, economic, and military power.

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After the Cold War and the creation of the EU, it was argued that the EU’s policies involved

a normative power to solve regulatory issues and promote the internationalization of its rules.

This theory came to be called Normative Power Europe (Manners, 2000). Following his

discussion of the EU’s power, Manners argued the necessity to focus more on the European

ability to shape concepts of “normal” in international relations (Manners, 2002, p. 239). In his

opinion, the construction of the EU maximizes its power to diffuse its regulations as world

standards. The reason why Manners initiated debate over the normative power is that (to quote

Whitman): “Manners attributed the reason of introducing [Normative Power Europe] to the

academic parsimony in normative theorizing and the need to frame post-Cold War world politics

into a more principle oriented analysis since the EU has come to the fore with an emphasis on

the principles of democracy, human rights and the rule of law” (Whitman, 2011, p. 2). Scholars

of European affairs were attracted to the concept of the EU using norms to make and

disseminate its policies and regulations.

At the same time that the EU’s regulations influence the norms of other countries, they also

affect their economic aspects. To focus on these aspects, it is necessary to mention the EU’s

market power, that is, the influence of its market over other states’ economies. Damro and

Bradford have developed the concept of European power from the market aspect as distinct

from the normative power (Damro, 2012, p. 683; Bradford, 2012, p. 3). Besides the normative

power, the EU has market power to externalize its regulations through its trade policy. The EU

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diffuses

its regulations, which incorporate the EU’s ideas and norms, and thereby influences

international trade.

On this point, while economic norms are absent from Manners’s theory, ideational aspects

are absent from Damro and Bradford’s theory. As will be mentioned below, this thesis argues

that the combination of normative power and market power is key to analyzing the normative

partnership in regard to environmental regulations.

Besides the above theories, the EU’s normative power through trade has been addressed by

many other scholars. Those scholars have focused on cases of interaction between the EU and

developing countries in which significant normative gaps exist. For example, in the case of

negotiating an FTA with India, the EU had concerns about the normative gap regarding labor

and human rights. The EU attempted to diffuse its norms through the negotiations as “sticks”

(prohibitions) instead of presenting them as “carrots” (preferences). As a result, the Indian

business actors felt pressured by the EU’s “social model” throughout the negotiations (Orbie &

Khorana, 2015, pp. 261, 262). The FTA that was finally reached is set up to have enforcement

problems because “buy-in” on the part of the Indian business actors is lacking. In contrast to

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The definition of “diffuse” or “diffusion” is broad because the EU uses several measures.

According to Manners, there are six types of norm diffusion: contagion (unintentional diffusion

by the EU), informational (strategic and declaratory communications by the EU), procedural

(institutionalization of relationships by the EU), transference (exchange of benefits between the

EU and third parties), overt (physical presence of the EU in other states and organizations), and

cultural filter (cultural diffusion and political learning in other states and organizations)

(Manners, 2000, p. 35).

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such cases involving developing countries, Japan comes to the negotiating table already sharing

some of the EU’s fundamental values. When a partner shares some similarities to the EU’s

norms, the EU’s “carrots and sticks” strategy may take a different approach to exercising the

EU’s power. On this point, the concept of normative partnership, that is cooperation between the

EU and Japan, has been proposed as a means to diffuse fundamental norms in Asia.

A Japanese scholar, Hosoya, has argued for a normative partnership between Japan and the

EU in relation to democracy, human rights, and rules of law. Following Manners’s concept, he

argued that the EU and Japan have the potential to lead international rule-making in the

post-Cold War period. Japan plays a normative role in East Asia in diffusing the fundamental

norms shared with the EU. However, it is troublesome for the EU to manage this distant region.

Considering the EU’s attempts in Asia, Hosoya argued that: “[R]ecent serious normative

tensions between China and the EU make it necessary for Brussels to reconsider its Asian

strategy. At the same time, Japan needs more cooperation from the EU to strengthen peace and stability in East Asia” (Hosoya, 2012, p. 332). This mutual need means that there is a possibility

for the EU and Japan to work more closely together in the future. In this framework, he suggests

that it may behoove the EU and Japan to strengthen their relationship as normative partners in

relation to the other big actors such as China and the US.

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Hosoya’s view suggests the importance of the normative partnership between Japan and the

EU, but it does not provide ample evidence whether the two jurisdictions can in fact become

normative partners. The theoretical framework for building the normative partnership is not

mentioned in his research. Although Japan and the EU share fundamental values and notions,

this fact alone does not ensure regulatory cooperation. This thesis attempts to present the

theoretical framework of a normative partnership between the EU and Japan, and examines the

conditions to achieve it. In particular, this thesis considers that the following factors are

important to create the partnership: the EU’s normative and market power to diffuse the

regulations, and Japan’s incentive to partner with the EU.

Specifically, the theoretical framework of this thesis would use the arguments of Manners,

Bradford, Damro, and Hosoya. Manners developed the ideational background of the

environmental regulations; this can be useful for discovering the normative incentives in the

regulations. Bradford and Damro emphasized the influence of the market: this can be useful for

discovering the resources for diffusion of regulations and the influence of domestic actors.

Hosoya proposed the basic concept of normative partnership between the EU and Japan. In

short, by collecting the essences of the empirical arguments, the normative aspects of the

environmental regulations, market interests, and Japan’s incentive for a normative player can be

seen to be conditions for the normative partnership. The combination of these existing theories

comprises the normative partnership concept in this thesis.

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1-3. Focusing on Environmental Regulation: Case Studies of This Thesis

As stated, one of the major negotiating issues of a Japan-EU FTA is bilateral cooperation

regarding regulations. Environmental regulations in particular are controversial topics between

the EU and Japan. They are frequently discussed in World Trade Organization (WTO) and FTA

negotiations because the differences of stringency of each regulation and rule can function as

trade barriers. In particular, the EU has been recently noted for the stringency of its

environmental regulations. The EU’s regulations are generally regarded as high-level standards,

strongly concerned with the environmental although strongly market oriented. Other countries

attempt to deal with the EU’s regulations when exporting products to the EU’s market. Japan is

one of the countries influenced by the EU’s regulations. That being the case, it is a goal for

Japan to discover, through FTA negotiations, cooperative measures that compensate for

regulatory differences.

This thesis uses case studies as a method to analyze the Japan-EU relationship regarding

environmental measures. Two EU regulations are examined: Registration, Evaluation,

Authorisation and Restriction of Chemicals (REACH) and the Timber Regulation of the Forest

Law Enforcement, Governance, and Trade (FLEGT) Action Plan. Both regulations are

considered useful measures to protect human safety; and, in particular, are regarded as advanced

measures to protect the environment. These regulations focus on crucial environmental

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problems, and many countries recently have updated related regulations. On the Japanese side,

Japanese interests are strongly connected with both regulations: Japanese industries actively

export products containing chemical substances to the EU, and Japan is one of the major timber

importing countries, similar to the EU. On the EU side, these regulations are strongly supported

not only because of their protection of domestic industries but also because of their

effectiveness on the environmental issues. In contrast to other regulations of the EU, these are

regarded as advanced measures and are gradually finding acceptance as norms in other

countries.

On the other hand, these regulations remain among the most controversial because it is

claimed that they hinder fair trade under the WTO system.

The main reason of the critics is

the regulatory inconsistency in the EU. For example, these regulations give EU member states

the right to lay down penalties for infringements of their provisions even if the materials are

imported (Levashova, 2011, p. 296). This inconsistency makes it troublesome for exporting

countries to adapt their procedures to the various destinations. In that sense, Japan would like,

through the FTA, to overcome these overlaid requirements and conduct its exports under its

domestic regulations. In the FTA negotiations, Japan needs to overcome the regulatory gap

between Japan and the EU in order to be a leader in the adoption of the regulations.

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The WTO was established in 1995 and regulates global trade rules among member states.

Since the WTO’s decision-making system is consensual, it has become difficult to adjust the

levels of profit-making among the 162 member countries and regions in line with economic

development.

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Solving the regulatory friction of these cases can contribute to promoting discussion in the

WTO framework. Japan and the EU share the motivation for supporting the rulemaking system.

These regulations are important, for not only the EU and Japan, but also for the other regions

and countries, and thus research on these regulations contributes to discovering the normative

partnership between the EU and Japan. Therefore, the investigation of the possibility of a

normative partnership on the environmental regulations is the main purpose of this thesis.

17 1-4. Structure of this Thesis

This paper is divided into two sections: the theoretical part and the case studies. First, the theory

used in this research is presented. Chapter 2 addresses some context and background for the

normative partnership between Japan and the EU. It examines the historical relationship

between the two jurisdictions moving towards the normative partnership and also reviews the

existing literature discussing the possible developments for the normative partnership. Then,

chapter 3 discusses conditions for achieving the normative partnership. To examine the

conditions, firstly, several theories of Europe’s power are reviewed. Then, five conditions for

achieving the normative partnership are proposed: (1) the ideational background of the EU; (2)

the process of diffusion; (3) regulatory measures in Japan; (4) market interests in Japan; and (5)

Japan’s motivation to be a normative player. Each condition is briefly explained in the following

paragraph.

First, the ideational perspective is a condition of the normative partnership because it is a

normative ideology resource, and identifying the principles is necessary to confirm it as a

legitimate standard. The environmental regulations must include the ideational concept, which

the EU regards as a basic concept, and coherent principles by which the EU pursues its

coherence and legitimacy. These conditions are mentioned by Manners. Secondly, the diffusion

process is a condition of the normative partnership because no action by the EU or reaction from

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outside Europe is possible unless the EU’s regulations include the potential to be global

standards. This diffusion process is mentioned by Bradford, Damro, and Manners. Thirdly, the

Japanese background is an important condition for seeing whether there is a Japanese ideational

concept that could meld with the EU’s ideational concept. The regulatory capacity of Japan

would have to be close to the EU’s in order for Japan to become a normative partner. Fourthly,

market interest in Japan is a crucial condition to seeing how Japanese business actors react to

the EU’s regulations. If the business actors are concerned with the making profits in the EU

market, they may put pressure on the government to promote adjustment or harmonization of

the rules. The importance of market interest and regulatory capacity is argued by Bradford and

Damro. Finally, the Japanese government’s motivation to be a normative player is a condition of

seeing whether the Japanese government aims to organize a normative partnership with the EU

to diffuse common norms. If the government seeks to pursue a unilateral approach and allow the

business actors to follow alternative rules in each framework, a normative partnership cannot be

accomplished. This aspect is mentioned by Hosoya as a reason for Japan to become a normative

player. When these conditions are fulfilled, the normative partnership can be achieved.

The second part of the thesis, chapter 4, conducts case studies on REACH and the FLEGT

Timber Regulation, mentioned above. Both regulations aim at protecting the environment and

human safety, but are seen as controversial because of their regulatory stringency that may

affect trading of chemicals and timber. Applying the five conditions discussed above, the

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possibility of the normative partnership in each case is analyzed. The finding of chapter 4 is that

the two cases of environmental regulation have shown some difficulties in regard to promoting

cooperation between Japan and the EU. The chapter goes on to examine the reasons for such

limits on normative partnership.

In conclusion, this thesis argues that the normative partnership should be promoted through

the FTA negotiations. That is because the normative partnership is useful not only for the

growth of trade, but also for a deeper relationship with the EU. Promoting the normative

partnership can help eliminate trade barriers. In addition, the environmental cooperation

between Japan and the EU can be a good example for other Asian countries as an advanced

framework for solving environmental issues. In that sense, the negotiation of the Japan-EU FTA

is important for creating the normative partnership.

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2. Background and Context of the Normative Partnership of Japan and the EU

In this chapter, before developing the theoretical conditions of the normative partnership

between Japan and the EU, context and background that may lead to the possible normative

partnership are provided. First, this chapter looks at the historical relationship between the two

jurisdictions, which demonstrates how they are moving toward the normative partnership. Then,

this chapter reviews the existing literature which suggests the possibility of the normative

partnership between the two jurisdictions.

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2-1. Historical Developments between Japan and the EU

This thesis examines to what extent Japan and the EU can become normative partners and lead

global rulemaking in line with using the relationship, sharing fundamental norms. Japan and the

EU have recognized since the 1990s that they share fundamental norms: in 1991 the “Joint Declaration on Relations between the European Community and Its Member States, and Japan”

was adopted at the first summit meeting in The Hague. In this summit, both actors confirmed

the same interest in the fundamental norms of freedom, democracy, the rule of law, human

rights, and efforts to promote free trade and peace in the world. Japan and the EU jointly stated:

“The European Community and its member states and Japan will firmly endeavor to inform and

consult each other on major international issues, which are of common interest to both Parties,

be they political, economic, scientific, cultural or other” (EU-Japan Summit, 1991, p. 1). This is

the first document that mentions the common norms between Japan and the EU.

Through their annual meetings, Japan and the EU have promoted a cooperative framework.

The EU-Japan Regulatory Reform Dialogue was launched in 1994. Originally, it was a

mechanism under which the EU reviewed the implementation of Japan’s own deregulation

program (Wright, 2013, p. 158). After the first year, it was also organized among high-level

representatives of each side for review of regulations. Later on, it became the basis of the

regulatory cooperation in each area of regulation. The dialogue focuses on “[r]einforcing the

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regulatory reform dialogue in order to foster self-sustained growth by removing obstacles and

barriers to trade and investment” (European Union External Action Service, 2011). At the prime

ministers’ meeting in 2001, an Action Plan was launched, indicating future cooperation to shape

“our common future.” In addition, Japan was declared a “strategic partner” in the European

Security Strategy document. The partnership aims to attain a consensus and cooperation in areas

of international conflict (Rothacher, 2013, p. 176). Japan currently cooperates with the EU in

several kinds of issues.

When it comes to trade policy, Japan and the EU have gone through a similar process

regarding trade developments in the world. Regarding Japan, regionalism has motivated it to

formalize its FTA policy, marking a shift from multilateralism under the WTO system. Japan

first followed a conservative trade policy, but in line with the world trend, the government could

not help but start negotiating FTAs. However, to avoid huge domestic efforts, the FTA policy

focused on bilateral relationships with developing countries that were not competitive with

Japanese industries. In particular, the fact that Japan chose Singapore as its first FTA partner in

2002 shows the negative motivation for the FTA policy. Subsequently, Japan has negotiated

several bilateral and regional agreements to overcome trade restrictions and has gradually

moved toward opening markets while remaining concerned about agricultural competition. One

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of the most controversial cases in Japan is the Trans-Pacific Partnership (TPP).

Negotiations

on the TPP began in 2005, and Japan took part starting in 2013. Eventually the TPP framework

was concluded in October 2015. The negotiating parties included the US, which is the biggest

trading partner of Japan together with China. The TPP is the first concluded instance of a class

of comprehensive trade agreements called “Mega-FTAs”

(Ministry of Foreign Affairs of Japan,

2015a). Reaching agreement on the TPP may be the biggest step for Japan to accelerate its FTA

policy.

Regarding the EU, European Commission in 2006 presented its new trade policy called

“Global Europe.” Previously the EU, like Japan, had implemented conservative FTAs, focusing

on the neighboring countries of the EU, to avoid the disadvantages that arise from other FTA

policies. The EU has now established a free trade market and sets trade barriers for countries

outside Europe. However, changes in global trading patterns mean the EU has an interest in

negotiating bilateral agreements. In line with the world trend, the EU has initiated FTA

negotiations more actively with countries and regions “outside Europe” than with neighboring

countries as part of the European Neighbourhood Policy (ENP) (European Commission, 2006a,

p. 11). The EU has defined Asian countries as important trading partners in the future. First, the

3

This is a regional partnership whose members are Australia, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the US, and Vietnam (Ministry of Foreign Affairs of Japan, 2015b).

4

Mega-FTAs will likely serve as the primary driving force to promote both liberalization and rulemaking in the area of comprehensive coverage of economic activities (Nakatomi, 2013, p. 1).

The TPP, the Japan-EU FTA, the Trans-Atlantic Trade and Investment Partnership (TTIP), and

the Regional Comprehensive Economic Partnership (RCEP) are included in this class.

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EU reached an agreement with South Korea in 2010. That was the first instance of the EU

agreeing to an FTA with an Asian country, and the EU may expand its FTA policy into other

regions. In addition, the EU has been in negotiations for the Trans-Atlantic Trade and

Investment Partnership (TTIP) with the US since 2013 (European Commission, 2015a). There

are several controversial issues in these negotiations, relating to trade rules such as

environmental and food safety rules. These issues are believed to be major stumbling blocks to

concluding the agreement.

The FTA policy of Japan shares some similarities with that of the EU. Japan and the EU

have both led the international trade system since the Tokyo Round of the General Agreement

on Tariffs and Trade (GATT) period in the 1970s. The initiation of FTAs was a result of the

stagnation of discussions in the WTO. Both governments recognize the importance of

international standards. Since the EU, especially Germany, and Japan historically possessed

competitive export power in the world, neither government needed to rush into regional or

bilateral agreements. However, the world trend has changed, with developing countries

increasing their competitive power, and the importance of FTA policy has increased. To sustain

the amount of exports, currently the EU and Japan cannot ignore FTA policy.

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Alongside the TPP and the TTIP, the Japan-EU FTA negotiation was officially launched in

2013 (European Commission, 2015b). After long time spent scoping

the agenda for the

negotiating table, they began talks with a statement that, “[a]n economic partnership agreement

between the two advanced market economies will contribute to the stable growth of the world

economy and to global rule-making in trade and investment” (Ministry of Foreign Affairs of

Japan, 2013, p. 1). In short, creating an international framework is an important aim for both of

the governments. Therefore, the harmonization of environmental regulations can be one of the

goals of the negotiations.

5

The Japanese government had concerns about the EU’s exports of agricultural products. On

the other hand, the European Commission was concerned about electrical appliances and

automobiles exported from Japan (Watanabe, 2012).

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2-2. External Factors Affecting the Normative Partnership

The current relationship between Japan and the EU, as seen above, is as a “honeymoon”

period.

However, a majority of the scholars who have analyzed their political interactions have

evaluated the EU-Japan relationship as “not yet the best” relationship (Hosoya, 2012, pp. 332,

333; Nakamura, 2013, pp. 206, 207; Morii, 2015, p. 11; Frattolillo, 2013, p. 123). That is

because there are other large, influential countries in Asia, specifically India, China, and South

Korea. India and China are the largest economic partners for the EU in Asia; and South Korea is

the first Asian partner of the EU’s FTA policy. Therefore, the EU member states currently focus

on these countries to build a tighter relationship. Because the EU’s relationships with these

Asian countries may affect how Japan can develop a further relationship and partnership with

the EU, this subsection briefly looks at how the EU has recently approached China, India, and

South Korea.

The EU-China relationship has become closer since China’s accession to the WTO in 2001.

Up until then, the EU put pressure on China by blocking its accession to the WTO because there

seemed to be no improvement in the Chinese human rights policy since the Tiananmen

Massacre in 1989. However, the EU finally recognized China’s accession because it was a

6

This expression is from Zhang’s article about the EU-China relationship: “The leaders on

both sides decided in 2003 to upgrade their relationship to a comprehensive partnership,

kick-starting an EU-China honeymoon moment. The hallmark of the EU’s diplomacy towards

China for this period was what we would call, the partnership diplomacy” (Zhang, 2014, pp. 62,

63).

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priority for the EU to support the WTO trading system

after the Euro Crisis in 2008, the EU could not ignore the economic power of China in the current

international trade system. Recently several European countries have joined the Asian Infrastructure

Investment Bank (AIIB)⁷, launched by China in 2014 led by China. Along with the movement of

establishing the AIIB, the heads of European countries have been meeting often with the Chinese

president, Xi Jinping. This means that European countries have some expectations of the Chinese

economy. While some of the EU member states are dubious about Chinese policy, the EU has

changed its policy direction to build a partnership with China. The EU has promoted bilateral

rulemaking to sustain the market balance with China. In particular, the EU promotes a bilateral

investment treaty with China as part of its policy toward foreign investment (Godement & Stanzel,

2015, p. 1). The European Commission has stated: “China is regarded as a key foreign direct

investment (FDI) destination by European Union member states. However, compared with Europe's

other trading partners, the flow of FDI between the EU and China is lagging behind” (European

Commission, 2013, p. 1). Since China still maintains a restricted economic system, the EU attempts

to remove regulatory barriers and fill in regulatory gaps through building a closer relationship.

On the other hand, the EU and India have maintained a close relationship in recent decades.

The EU has been the largest source of FDI inflows for India since India began its economic

7

The AIIB is a multilateral development bank funded by China. Currently (December, 2015),

there are fifty-seven members, including EU member states Denmark, Finland, France,

Germany, Italy, Luxembourg, the Netherlands, Poland, Portugal, Sweden, and the United

Kingdom (UK) (Asian Infrastructure Investment Bank, 2015).

28

reforms in 1991; and the EU-India trade volume has increased about five times over the decade

of the 1980s (Jain, 2015, p. 186). India’s economic development is accelerating closer relations

with the EU, and the EU and India started FTA negotiations in 2007. The European Commission

states: “The FTA aims to improve bilateral trade and specifically aims to eliminate substantially

all import tariffs on both countries' exports, improve the access for suppliers of services and for

investors, and tackle non-tariff barriers to trade” (European Commission, 2010a). Because India

is still experiencing difficulties in improving human rights protection and environmental

protection, there is a normative gap between the EU and India. However, in contrast to China,

India has a similar democratic system, sharing common political values with the EU (Godement,

2015, p. 11). Furthermore, the Indian market is one of the most important export destinations for

the EU. These factors support the mutual close relationship between the two jurisdictions.

Besides China and India, the EU-South Korea FTA has become a focal point in the EU’s

trade policy with Asian countries. This FTA was influential in that it triggered the start of

negotiations for the Japan-EU FTA. The launch of the FTA negotiations was desired by

Japanese multinational corporations in particular. They urged the negotiations to counter the

trade impacts of the EU-South Korea FTA because it poses direct threats to Japanese businesses

trading with the EU in competition with South Korean firms (Nelson, 2012, p. 340). In terms of

regulatory issues, the EU-South Korea FTA contains additional bilateral regulations beyond the

WTO framework. In particular, the bilateral standards on products, such as automobiles, in

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which Japan is competitive, are crucial issues for Japan. In addition, the EU-South Korea FTA

includes a framework for cooperation on environmental issues (European Commission, 2011a,

pp. 64, 1335). The conclusion of the EU-South Korea FTA made Japan rush into negotiations

because Japan was concerned that it could negatively influence Japanese competitiveness in the

EU market.

In sum, the EU is willing to promote closer relations with emergent economic powers,

particularly after the Euro Crisis in 2008. The EU’s political motivation for a closer relationship

with Asia is getting stronger, but its current focus is mainly on China and India, not Japan.

Moreover, Japan lags behind South Korea in concluding an FTA with the EU. Against this

background, Japanese scholars have been concerned about the Japan-EU relationship. They are

concerned about Japan’s lower market potential than China and India. Japan has no other choice

than to search a new way to build the relationship with the EU to maintain competitiveness in

the EU market over other Asian countries.

In this regard, Okamoto has illustrated the new role of Japan in the decision-making process

of international trade. One of the important roles of Japan is that it should implement soft power

measures in international trade. She recommended that Japan promotes regional cooperation and

integration in East Asia to lead the region, not only as a driving force in the global economy, but

also as an open trade and investment area for the rest of world (Okamoto, 2012, p. 269).

30

As discussed, the EU is experiencing some difficulties in diffusing its regulatory influence

in Asia, but the geographical and economic importance of Asia is increasingly vital for the EU.

With regard to the normative and regulatory issues, Japan shares similar ideas and concepts with

the EU than with China and India. On this point, Japan can be a key actor to promote normative

values in Asia with a partnership with the EU. The next chapter investigates the conditions for

building the normative partnership between Japan and the EU.

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3. The Essence of the Normative Partnership

This chapter focuses on the concept of normative partnership as a key idea for establishing a

modern, desirable relationship between Japan and the EU. Before considering possible

conditions for the normative partnership between the two jurisdictions, the following subsection

starts with examining several theories relating to the EU’s power that can be important bases

underlining the concept of normative partnership.

32 3-1. Theories Explaining Europe’s Power

Several theories have been proposed as explaining the EU’s distinctive power as opposed to the

concept of hard power. In general, such a power is well known as the “soft power of Europe.”

The European Commission explains its soft power as: “[e]xpanding the regulatory space of the

single market, by promoting cooperation on Europe’s norms and values abroad enabling

European regulations to benefit from best practice everywhere and ensuring that European

norms are a reference for global standards” (European Commission, 2007, p. 7). Thus, the EU’s

soft power based on its norms and values is an important background theory to understand the

EU’s policy, which has been developed by and discussed among many European scholars.

Related to this was the theory of civilian power of Europe; and recently scholars have started

debating the normative and market power of Europe. In this chapter, the characteristics of and

differences between soft power, civilian power, normative power, and market power are

analyzed in order to develop the normative partnership theory of this thesis.

3-1-1. Soft Power

Soft power is a basic concept for understanding the EU’s normative power. Comprehension of

the concept is key to analyzing the power related to environmental regulations. Originally, Nye

and Keohane developed the idea of soft power from focusing on “transnational relations” during

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the Cold War rather than state-centric views because of the declining role of military power and

the growing importance of economics (Nye & Keohane, 1971, p. 11). The development of

economics has led to the expansion of transnational cooperation, and this has in turn influenced

government policies in controlling the flow of international trade through systems of tariffs and

quotas. Nye asserts that a power that does not merely depend on military strength is acting when

transnational negotiations, such as contracts, coalitions, and interactions, are organized. In short,

“[s]oft power rests on the ability to shape the preferences of others” (Nye, 2004, p. 5). Moreover,

Nye claims that soft power is the ability to attract. The attractiveness is the source of the power,

and this constitutes the force of policy. The point of the difference between hard and soft power

is to consider a variety of ways of obtaining the desired policy outcomes (Nye, 2004, p. 6). Soft

power does not use military force, but makes the sharing of values attractive and creates a duty

that contributes to the achievement of those values with transnational cooperation.

In his discussion of soft power, Nye mainly focuses on how the US projects such power.

Concepts such as environmental issues or human rights, however, can be considered a source of

soft power for Europe because these concepts belong equally to domestic policies and values.

The notable concerns of environmental and human rights are regarded as “European values”

(Nye, 2004, p. 76). Strongly held views such as the abolition of capital punishment or the

restriction of CO

emissions are more attractive for citizens in European countries than in the

US. “Not only can European soft power be used to counter American soft power and raise the

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price of unilateral actions, but it can also be a source of assistance and reinforcement for

American soft power and increase the likelihood of the United States’ achieving its objectives”

(Nye, 2004, p. 82). As Nye mentioned, environmental soft power can be identified as

characteristic of the EU.

Following Nye’s concept, it can be understood that Europe has a soft power that the US does

not possess and that the resource of power can be comprehensive. Diez and Manners, who

promote the theory of the EU’s normative power, argue that soft power is a resource of politics

and that it is defined as a tool to understand the political choice between hard and soft (Diez &

Manners, 2007, p. 179). To understand the current diffusion of EU regulations, it may be

necessary to ascertain the character of European policy and to focus on the process. In judging

the potential of the EU’s power, Nye’s idea can be used in the case studies, but the essence of

this research to discover the normative partnership is to understand the process of European

policy. In that case, it may be important to focus on understanding the European concept of soft

power.

3-1-2. Civilian Power

The EU’s distinctive power has been discussed since the Cold War against the military hard

power of the US and the Soviet Union. To survive the bipolarization of the world, Europe

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needed to sustain its power, and its hard power was largely gone; soft power was the key to

maintaining Europe’s influence. Civilian power became an important concept for Europe in the

1970s because the US had less power as a result of the wastage of resources in the Cold War. In

addition, Europe became independent of the need to rely on US military power. To stand on its

own, it was crucial for Europe to sustain its international position. In the process of becoming

more independent, European civilian power began to be noticed.

During the Cold War, “agreements on forces reductions could codify the relationship in

security terms and the process of civilian interchange gradually gain more weight and the

military confrontation less and the cold war be not ended but left behind” (Duchene, 1971, p.

73). Duchene’s term for this distinctive European power was “Civilian Power Europe.” He

urged that (to quote Orbie) “Europe must be a force for the international diffusion of civilian

and democratic standards and promote values that belong to its inner characteristics” (Orbie,

2006, p. 126). This is the central concept of civilian power for understanding the basic idea of

normative diffusion.

Maull has summarized the essence of civilian power as: “the acceptance of the necessity of

cooperation with others in the pursuit of international objectives; the concentration on

non-military, primarily economic, means to secure national goals, and a willingness to develop

supranational structures to address critical issues of international management” (Maull, 1990, pp.

36

92, 93). These three elements illustrate the essence of civilian power. Unlike Nye’s soft power

concept, this civilian power concept focuses on the motivation to create international standards

following civilian norms or ideas. In that sense, the debate over civilian power focuses more on

Europe than on the US.

The civilian power concept was appropriate for analyzing the European Community’s

(EC’s) policies during the Cold War. Nevertheless, having regard to the change in international

circumstances, the concepts of civilian power should be updated. The development of

international relations in the 1990s has provided room to reconsider both the notions of military

power and civilian power. The civilian power concept lacks analysis of the comprehensive

influence of European policy. Currently, the soft power of the EU covers comprehensive areas

of policy and exerts its general influence on the basis of European norms. To research the

current trade policy of the EU, it is better to understand the essence of power by applying a

normative power concept than a civilian power concept. Manners argues: “A better

understanding of the EU’s role in world politics might be gained by reflecting on what those

revolutions tell us about the power of ideas and norms rather than the power of empirical force,

in other words, the role of normative power” (Manners, 2002, p. 238). Following the civilian

power theory, the Normative Power Europe theory occupied an important position in analyzing

the EU’s soft power after the Cold War.

37 3-1-3. Normative Power Europe

The end of the Cold War accelerated the European incentive to create the EU. In that sense, the

influence of European policy became stronger than in the Cold War period. The focusing of the

EU’s policy, including the EU’s norms, on the world triggered the discussion of the EU’s

distinctive power. Currently, since the last decade, the Normative Power Europe concept has

become a popular theory to analyze the EU’s soft power. To conceptualize Normative Power

Europe, Manners considers the historical development of the concept. During the Cold War,

models of ideational power in the international system were used as tools for analyzing

European policy as distinguished from its economic or military power. In particular, Carr and

Galtung discussed the distinctiveness of different types of power. They distinguished economic

power, which is a part of civilian power, from normative power.

On the one hand, Carr defined the art of persuasion as power over opinion. He argued that,

in order to understand a political issue, power is always an essential element of politics,

although politics cannot be satisfactorily defined in terms of power (Carr, 2001, p. 97). To

understand international incidents, Carr distinguished the power of politics according to three

types: military power, economic power, and power over opinion. Power over opinion reflects

how “most political ideas which have strongly influenced mankind have been based on

38

professedly universal principles and have therefore had, at any rate in theory, an international

character” (Carr, 2001, p. 125). Following public mass opinion, a democratized policy includes

the power to formalize normative concepts. By applying this power, a government can not only

obtain public support, but can also easily appeal to the normative aspect of the opinion instead

of economic power or military power.

On the other hand, Galtung defined additional communication with other countries as

ideological power. He also noted that in political science, power is the most basic and richest

concept (Galtung, 1973, p. 33). Each analysis of power brings out a new aspect of social science,

and Galtung, like Carr, distinguished the power of politics according to three types: punitive

power (military), remunerative power (economic), and ideological power (normative). He

argued that ideology is an abstract expression of how things should be and is like a map of the

political landscape, not only outlining what the “promised land” is but also indicating what

paths to take to that land from the current situation (Galtung, 1973, p. 37). Power can be a

channel for putting ideology into practice. To create the channel, ideological power is

presupposed to include submissiveness. The ideology should be attractive for others. If there is

no attraction, it can no longer be taken for granted that one’s ideas are superior to the ideas of

others (Galtung, 1973, p. 35).

39

These three power analyses by Carr and Galtung made up the classifications of the EU’s soft

power, which is exerted through the combination of these powers. Thus, their analyses are

important for analyzing the EU’s regulatory diffusion. The ideas of ideological power and

power over opinion show the independent values focusing on the EU’s norms. In contrast to the

civilian power argument, these analyses explain the details of European soft power.

These analyses, however, have the problem that Europe is regarded as just a group of

member states. Currently, Europe constituted as the EU has an international identity that goes

beyond its consistent nations. The passing of time has enabled Europe to regain its original

power to shape conceptions of normality. Manners led the argument: “The notion of a

Normative Power Europe is located in a discussion of the idee force, ‘power over opinion’ or

‘ideological power’ and the desire to move beyond the debate over state-like actorness through

an understanding of the EU’s international identity” (Manners, 2000, p. 29). The combination of

the power of opinion, ideological power, and the actorness of the EU comprises the EU’s

normative power (Figure 1, p. 42).

As the theoretical framework of Normative Power Europe, Manners separates the normative

power into five factors: ideational, principle, action, impact, and consequence. He defines these

factors as the way of diffusion of the EU’s norms. These five factors show the character of

Normative Power Europe: it is a theoretical concept requiring an understanding of social

40

diffusion and normative practices (Diez & Manners, 2007, p. 179). Through analyzing the case

studies using the theory, the resource of normative concepts and the measure of diffusion can be

seen in the EU’s policies and regulations. Specifically, this concept consists of theoretical

studies of the ideational power of the EU and the desire to move beyond the debate regarding

the member states of the EU. Normative Power Europe analysis by Manners gave a theoretical

framework to understand European soft power.

Consideration of the possibilities of cooperation on the regulations can focus on the ability

of the EU’s normative power to promote its normative concepts outside the EU. Manners also

mentioned the relation between the EU’s trade policy and Normative Power Europe. The EU

compels developing countries to ratify agreements with the International Labour Organization

(ILO) in return for applying preferential tariffs. Regarding economic agreements, the EU

classifies its partners by the extent to which they have ratified ILO Core Labour Standards

agreements, and the application of a Generalized System of Preferences (GSP) is differentiated.

Manners stated: “As all the contributions to this special issue attest, the idea of the EU as a

global social power involves broadening the policy emphasis away from only focusing on trade

preferences to include the whole agenda of EU external action” (Manners, 2009a, p. 803). The

EU’s trade actions embody its acknowledgment that it is a normative actor and creates

normative partners in the world. This case shows the EU’s power to promote the norms through

its trade policy.

41

On the other hand, Falkner has applied normative power to environmental regulations. He

recognized the EU’s normative power in the area of biotechnology regulation. He analyzed the

Genetically Modified Organism (GMO) products policy of the EU and the normative role it

plays in the world. The EU’s precautionary system created a movement in the world that

recognized the uncertainty of the risks associated with GMO products. The role of normative

power supports the growing recognition that the regulation of trade follows a domestic

political-economic logic (Falkner, 2007, p. 521). In China, the public interest in GMO products

was quite low. However, when the EU’s attitude became known in China, public opinion there

took a challenging position vis-à-vis GMO products. In the political-economic perspective, the

shift in public opinion may be strongly related to the role played by normative power. This

study shows the efficiency of the EU’s normative power on the environmental regulatory

cooperation based on the EU’s regulatory norms. Focusing on the environmental regulations can

clearly show the influence of the EU’s power.

These two studies show the influence of the EU’s normative power, using the Normative

Power Europe theory. They explicate the process of making normative partners in the category

of EU trade policy. Both cases can be used to develop the discussion of normative partnership.

Nevertheless, these do not mention the influence of the EU’s market power in the process of

making normative partners. After analyzing the GMO case, Falkner mentioned that the EU’s

economic perspective also can be a force behind the environmental regulations (Falkner, 2007, p.

42

522). That suggests the possibility of a combination of the normative and market perspectives to

analyze the environmental regulations. In an analysis using only the Normative Power Europe

theory, it is difficult to see the influence of market power acting through the EU’s trade and

environment policy.

Figure 1: The structure of the normative power concept

3-1-4. The Market Power of Europe

This thesis is built upon the Normative Power Europe concept; however, it goes beyond that

concept in considering that Manners’s idea does not factor in the EU’s market power. Manners’s

concept, of course, focuses on the normative aspect of ideas. However, environmental

Normative Power Europe Ideological

Power

The EU as an

International Actor

Power over

Opinion

43

regulations should be analyzed from both normative aspects and market aspects. The

insufficiency of normative power alone has been argued by Hyde-Price as a critique on the

Normative Power Europe concept: “[T]he EU serves as an instrument of collective hegemony,

shaping its external milieu through using power in a variety of forms: political partnership or

ostracism; economic carrots and sticks; the promise of membership or the threat of exclusion”

(Hyde-Price, 2006, p. 227). Hyde-Price focuses on the varying forms of EU power: the

regulatory cooperation, he says, seems to be deeply related to the economic “carrots and sticks.”

The EU’s huge market is a “carrot” for exporting countries; but instead of “carrots,” the EU can

diffuse its regulations as “sticks.” Therefore, in considering the normative aspect of the EU’s

environmental regulations, the concept of market power may be essential.

The EU’s market influence started to be discussed empirically following the transformation

from the EC to the EU, when the EU took the initiative to restrict national regulations and create

single EU-wide regulations. Vogel analyzed the relation between trade regulation and market

size, stating “As the most important and ambitious effort of the postwar period to produce

national trade barriers, the experience of the European Community and its successor, the Union,

illustrates the close relationship between regulatory and trade policy” (Vogel, 1995, p. 24). The

EU’s policy of regulatory diffusion is triggered by the EU’s experience through the

transformation of international trade. Later, Vogel also asserted the following: “The EU’s efforts

to export its regulation represent a form of ‘empire building’ through the exercise of soft power.

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The EU’s global regulatory project has given Europe’s elites a new mission. It has enabled the

EU to carve out an identity and a profile for itself as a ‘normative’ or ‘civilian’ power on the

world stage” (Vogel, 2012, p. 13). European market power can be seen as one of the measures

for diffusing European concepts using the regulatory project. The experience of the single

market has created a new identity for the EU in the regulatory area of international trade. This is

the basic concern about the EU’s market power.

Following Vogel, some scholars have structured a theoretical framework of the EU’s market

power. Damro and Bradford focused on whether the EU contains an alternative basis of power

because it influences not only the basic norms of human rights or peaceful coexistence, but also

the regulation of international trade. On the one hand, Damro calls this alternative basis “Market

Power Europe,” illustrating the prominent role of the EU in the international market as an

interventionist body through social or economic regulations. In distinguishing Market Power

Europe from normative power, Damro argues: “The point of MPE [Market Power Europe] is not

to inspire analytical intolerance of norms-based and other approaches, but rather to encourage

new avenues of research into the EU as a power and the possible compatibility of other

conceptualizations with market power insights” (Damro, 2012, p. 697). In analyzing the trade

rules, if these contain norm-based conditions, it may be important to consider what the essence

of the EU’s market power is. The three conditions for market power proposed by Damro are as

follows: market size (the EU’s integrated market and various internal actors), the regulatory