EU to OK JR Exemption from Procurement Accord

Brussels, June 25 (Jiji Press)--The European Union has broadly agreed to accept a request for exempting three Japanese railway operators from obligations under a global government procurement pact, an EU source told Jiji Press on Wednesday. Asked whether the EU will agree to remove the three firms from the list of entities covered by the World Trade Organization Agreement on Government Procurement, known as GPA, the source said, "Yes, they will...after they work out the procedural issues." The three are East Japan Railway Co. <9020>, Central Japan Railway Co. <9022> and West Japan Railway Co. <9021>, all of which are private companies. Since the three JR firms were previously owned by the state, they stay on the GPA list. The pact obliges signatories not to discriminate foreign suppliers in goods and services procurement by government and public organizations. Japan tried to remove the three former Japanese National Railways companies from the GPA list at WTO ministerial talks in 2011. But Tokyo could not achieve the exemption mainly because of the EU's opposition. A breakthrough in the issue would provide an impetus to negotiations between Japan and the EU on a proposed economic partnership agreement for free trade, because the treatment of the JR firms has been a key stumbling block. Recently, Japan and the European Commission, the EU's executive branch, have broadly agreed on a package deal on government procurement in the railway sector. Briefing the EU's Trade Policy Committee on the outcome, the commission proposed the exemption of the three JR firms. The proposal drew negative responses from France, Germany and Spain with big train and railway businesses. But at a Trade Policy Committee meeting Wednesday, the three countries did not oppose the removal of the three firms from the GPA list after the commission promised to continue closely monitoring Japanese procurement activities in the railway sector. Japan and the EU will hold their next round of trade talks in the week starting on July 7. END