Crisis Invigorates Japan-Europe Cooperation, But for How Long?

Europe could undergo a major financial adjustment phase in the next five years. Some challenges for Japan during this economically difficult and politically fragmentary phase would be 1) contraction of trade relations between Japan and the EU, 2) Japan’s increasing trade dependence on China, 3) a stronger yen hurting the Japanese export industry, 4) a greater possibility of the EU lifting its ban on arms sale to China for the purpose of preserving its defense industrial base, and 5) a diminished European military effectiveness to engage in extra-European crisis-management missions. Conversely, some of the opportunities presented to Japan are 1) the generation of stronger incentives to enhance economic ties between Japan and the EU, 2) renewed interests in cooperating on technological innovation and protection, and 3) more consultation on China policy.