31-07-2025
EU-Japan Competitiveness Alliance deepens ties
LAST week saw much media reportage on the chill in relations between China and the European Union that was shown at their Beijing summit. However, less has been said about the warmth of the European-Japanese ties shown in Tokyo only 24 hours earlier.
At the 30th EU-Japan summit last Wednesday (Jul 23), attended by European Commission President Ursula von der Leyen and Japanese Prime Minister Shigeru Ishiba, the two powers launched a new Competitiveness Alliance focused on trade, green and digital innovation, plus economic security. Priorities include strengthening supply chains for raw materials and batteries, regulatory cooperation, and joint industrial efforts in hydrogen, liquefied natural gas (LNG), offshore wind and semiconductors.
The new initiative stems from the broader deepening of Japan-EU economic ties under the bilateral economic partnership agreement and other forums such as the EU-Japan Green Alliance, the Partnership on Sustainable Connectivity and Quality Infrastructure, as well as the bilateral digital partnership. EU firms already export around 70 billion euros (S$103.8 billion) in goods and 28 billion euros in services to Japan annually, and bilateral trade has increased by about 20 per cent since 2019, according to Dr von der Leyen.
There are also hopes of deeper EU trade cooperation with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership trade and investment bloc that Japan is a member of. The Japanese government was one of the strongest supporters of the UK's accession to this economic club of nations in the Americas and Asia-Pacific – which includes Singapore – and Tokyo is keen for closer EU engagement with the bloc too going forward.
As part of the new Competitiveness Alliance, Japan and Europe also agreed to intensify their collaboration against 'economic coercion' and 'unfair trade practices'. Dr von der Leyen highlighted growing geoeconomic challenges and geopolitical tensions from Ukraine to the Asia-Pacific. Europe and Japan have, potentially, significant shared weight together on this agenda, with their collective economies accounting for around a fifth of global gross domestic product and a market of about 600 million people.
The troubled international relations context also helps explain why Tokyo and Brussels announced the 2026 launch of a Defence Industry Dialogue. This will promote collaboration on advanced and dual-use technologies, with broader cooperation spanning areas including cyber, maritime and space security.
A NEWSLETTER FOR YOU
Friday, 12.30 pm ESG Insights
An exclusive weekly report on the latest environmental, social and governance issues.
Sign Up
Sign Up
This Europe-Japan bilateral defence and intelligence alliance is deepening fast, and Ishiba's predecessor, Fumio Kishida, was the first Japanese prime minister to attend a Nato leadership meeting. There is speculation too of Tokyo being invited into Western intelligence forums, such as the Five Eyes alliance of the United States, Canada, United Kingdom, Australia and New Zealand.
Yet, important as this deepening defence and security dialogue is, it is economics that has traditionally defined Japan-Europe ties. A key driver of this agenda in recent times is sustainability – where Tokyo and Brussels are both international leaders.
Both powers recognise the environmental benefits of this approach. They also want to capitalise on the surge in green investment as the world aims to hit net-zero emissions by 2050.
A pragmatic, green-led economic transition
The recent summit affirmed new cooperation under the EU-Japan Green Alliance – launched in 2021 – on the circular economy, emissions trading systems and clean technologies. This would accelerate both economies' transition towards becoming climate-neutral and resource-efficient.
One key area championed by the partnership is a pragmatic energy transition. The agenda includes the objective of trebling renewable-energy capacity globally, and doubling the global average annual rate of energy-efficiency improvements by 2030. Notably, there will be ambitious joint work on developing next-generation technologies such as perovskite solar cells and utilising hydrogen for decarbonisation.
The agreement also acknowledges post-Ukraine energy security realities. The two powers recommitted to dialogues on LNG and agreed to expand their cooperation in strengthening secure, safe and sustainable low-carbon energy supply for both EU member states and Japan.
Beyond energy, the two powers also agreed to strengthen cooperation on advancing circularity and a sustainable bioeconomy. A new working group will focus on the circular economy, while both sides reaffirmed commitments to the Kunming-Montreal Global Biodiversity Framework, including specific goals to halt and reverse forest loss and protect marine life under the UN Convention on the Law of the Sea.
Taken together, last week's summit underscored that defence is a growing driver of Europe's warming relationship with Japan. Bilateral ties continue to have a very powerful economic foundation. The shared green agenda ensures that the partnership is built for the long term, with Tokyo and Brussels poised to seize larger slices of the global wave of clean energy investment in the coming decades.
The writer is an associate at LSE IDEAS at the London School of Economics
