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EU – Japan economic relations

06/07/2017

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We are publishing this information on trade and investment between Japan and the European Union (EU) to mark the EU – Japan summit, taking place in Brussels on 6 July.

 

EU deficit for goods

Japan is the sixth most important EU trading partner after Turkey and before Norway, accounting for 3.6% of total extra-EU trade in goods in 2016 (compared with 4.9% in 2006). Over this 10-year time period, the share of Japan in extra-EU imports fell from 5.7% in 2006 to 3.9% in 2016. Its share in exports decreased more moderately, from 3.9% to 3.3%.

After a significant decrease in 2009 following the peak of €79.3 bn registered in 2007, the value of EU imports of goods from Japan recovered until 2011. It then fell again to €56.6 bn in 2014, before growing again in the last two years to hit €66.7 bn in 2016.

Exports also recovered after 2009 to reach €55.7 bn in 2012, and then slightly decreased over the following years to €53.3 bn in 2014. As with imports, exports rose again in the last two years to hit a new peak over this 10-year period at €58.1 bn in 2016.

As a result, the EU trade deficit with Japan, which had always been over €20 bn from 2006 to 2011, decreased in the following years to stand below €10bn.

 

 

EU surplus for services

In 2016, Japan was the fourth most important EU partner in services, after the United States, Switzerland and China. It accounted for 3% of total extra-EU trade in services.

EU exports of services to Japan increased by over 50% between 2010 and 2016, from €19 bn to more than €29 bn. Imports increased more moderately, from €14 bn in 2010 to €16 bn in 2016. As a result, the EU surplus in trade in services with Japan grew continuously over this time period, from €5 bn in 2010 to €13 bn last year.

 

EU became net investor in Japan

Although fluctuating from one year to the next, EU Foreign Direct Investment (FDI) in Japan increased in 2015 to €10.9 bn (compared with -€0.6 bn in 2014 and +€8.2 bn in 2013), while Japanese investment flows into the EU stood at €6.1 bn in 2015.

This meant that in 2015, the EU was a net direct investor in Japan, in contrast to the previous two years. However, the total FDI positions of the EU in Japan, which reached €88.4 bn at the end of 2015, remained significantly lower than those of Japan in the EU (€168.9 bn).