Over the past decade, relations between Japan and the European Union (EU) have deepened and diversified remarkably. Building upon the Economic Partnership Agreement (EPA) and the Strategic Partnership Agreement (SPA), Brussels and Tokyo have progressively expanded their cooperation from traditional trade relations to encompass areas such as green technology, digital transformation, and sustainable development.[1] Together, these agreements have provided a stable legal foundation and framework for advancing shared strategic objectives, reinforcing mutual trust, and fostering a comprehensive partnership that integrates economic, environmental, and geopolitical dimensions. For both Japan and the EU, the green transition (GX) and the digital transition (DX) are key tools for creating a longer term sustainable economic and social development in line with respective plans for carbon neutrality and the green economy transition which demands horizontal changes across industries.[2]
The EPA and SPA have since been complemented by a series of bilateral sector-specific frameworks which stipulate the growing convergence of the EU and Japan on global policy priorities. The Partnership on Sustainable Connectivity and Quality Infrastructure, concluded in 2019, has been instrumental in linking physical and digital infrastructure cooperation with strategic engagement in the Indo-Pacific region. The EU–Japan Green Alliance, signed in 2021, further strengthened the sustainability pillar of the partnership by promoting the implementation of the Paris Agreement, fostering green economic growth, and supporting the creation of sustainable jobs. More recently, the Digital Partnership of 2022 established a formal platform for collaboration on emerging technologies, data governance, and cybersecurity, which are areas increasingly vital to both geoeconomic competitiveness and geopolitical stability. Together, these initiatives represent a comprehensive framework for advancing a green, digital, and resilient international order.
Below follows a set of areas where the potential for further and deeper collaboration between Japan and the EU is significant. A key area of expansion lies in the development of smart cities and Japan’s Society 5.0 vision. These concepts encapsulate new models of urban life, where technology, sustainability, and social well-being converge. Cooperation between the EU and Japan in this field could lead to integrated approaches to urban governance, combining advanced transport, logistics, and digital infrastructure with the promotion of inclusive, data-driven public services. In parallel, the transition toward a circular economy represents another essential pillar of sustainable cooperation. Integrating circular economy principles into trade relations can help reduce environmentally harmful processes across value chains, improve resource efficiency, and enhance competitiveness. Policymakers in Brussels and Tokyo, however, must ensure that environmental standards within the EU and Japan do not lead to the outsourcing of pollution or other unsustainable practices to third countries, which undermine the broader objective of global sustainability.[3]
Green economy transition will also be tightly connected to the development of a trading scheme that considers the cost of carbon leakage. The EU Carbon Border Adjustment Mechanism (CBAM) is a European Union policy instrument designed to prevent carbon leakage and support the EU’s climate neutrality goals. It is essentially a carbon tariff system that applies to imports of certain goods produced outside the EU, ensuring that foreign producers face a carbon cost equivalent to that paid by EU industries under the EU Emissions Trading System (ETS). This is an area for further collaboration between Japan and the EU.
The establishment of common standards and the use of public procurement as a policy tool are critical levers for achieving goals for the green economy transition. Standardisation, particularly in areas such as the Internet of Things (IoT) and green technologies, can facilitate interoperability, foster innovation, and support cross-border market access. Public procurement, in turn, can stimulate demand for sustainable products and services by integrating environmental and social criteria into purchasing decisions. Together, these instruments create an enabling environment for businesses and governments to accelerate the green (GX) and digital transitions (DX).
Digitalisation offers transformative potential for achieving sustainability objectives. By enabling the dematerialisation of consumption and promoting virtual forms of mobility, digital technologies can reduce the physical footprint of economic activity and improve efficiency across sectors. Platform-based services illustrate how new business models can contribute to lower emissions and resource use when properly regulated. However, the regulatory frameworks governing these services (many of which did not exist when key EU directives were developed) must be updated to ensure that innovation aligns with sustainability goals rather than undermining them. The area of digital services must be seen as a focus area in the future upgrade of the economic partnership discussions, since this part of the economy in both Japan and EU is rapidly growing.
Effective governance of this multifaceted cooperation requires the establishment of strong, interconnected policy networks that include public institutions, private companies, and civil society actors. Studies show that such networks are essential for the emergence of a robust green economy.[4] A predictable and transparent policy environment encourages the formation of stakeholder coalitions implementing sustainable innovation strategies.[5] Enhancing coordination between European and Japanese agencies, research institutions, and industry platforms could therefore play a decisive role in turning policy commitments into tangible outcomes. These structural changes are also in line with the report The Future of European Competitiveness – A Competitiveness Strategy for Europe also known as the “Draghi Report”.
To consolidate these developments, several policy directions emerge as particularly important. First, closer integration of the EPA and SPA implementation processes would improve coherence across economic, environmental, and digital policy domains. Second, cooperation on smart cities should be strengthened through the creation of a joint EU-Japan platform for sharing best practices, supporting pilot projects, and harmonising technological standards. Third, both partners should align their circular economy strategies to avoid shifting environmental burdens beyond their borders, while promoting responsible resource use. Further collaboration in standardisation, particularly between the European Committee for Standardisation (CEN) and Japanese counterparts, would enhance compatibility in green technologies and IoT systems. Public procurement should be leveraged as a strategic instrument for green innovation, while digital transformation policies must ensure that technological change supports, rather than conflicts with, sustainability objectives. Finally, establishing EU-Japan “Green Economy Platforms” could provide an institutional framework for multi-stakeholder cooperation, connecting policymakers, industry, and academia to coordinate research, investment, and policy innovation.
In conclusion, the EU-Japan relationship has evolved into a comprehensive and forward-looking partnership grounded in shared values and mutual strategic interests. By deepening collaboration in green technologies, circular economy models, and digital transformation, the EU and Japan can reinforce their leadership in shaping a sustainable, inclusive, and rules-based international order. The integration of environmental and digital priorities into every level of bilateral cooperation will not only strengthen economic competitiveness but also serve as a model for global governance in the green and digital age.
[1] P. Ström and M. Vadi, “Europe and Japan: Embracing a Multidimensional Partnership for the future: Relations Between Europe and Japan”, Trames (Tallinn), vol. 27, no. 3, 2023, pp. 191-197; H.R. Nakamura and P. Ström, How Geoeconomics Advances Geopolitical Cooperation: The Case of EU-Japan Relations, Czech Journal of International Relations, 2025.
[2] A. Jonesand P. Ström, P. (Eds.), Research handbook on the green economy, Edward Elgar Publishing, 2024.
[3] T. Völker, Z. Kovacic, and R. Strand, “Indicator development as a site of collective imagination? The case of European Commission policies on the circular economy”, Culture and Organization, vol. 26, no. 2, 2020, pp. 103-120.
[4] B. Hermelin and H. Rämö, “Intermediary activities and agendas of regional cleantech networks in Sweden. Environment and Planning C”, Politics and Space, vol. 35, no. 1, 2017, pp.130-146.
[5] A. Rueda‐Manzanares, J.A. Aragón‐Correa, and S. Sharma, “The influence of stakeholders on the environmental strategy of service firms: The moderating effects of complexity, uncertainty and munificence”, British Journal of management, vol. 19, no. 2, 2008, pp. 185-203.