EU inks Japan trade deal

Stanley White

The EU and Japan have signed a wide-ranging free-trade deal that both sides hope will act as a counterweight to the protectionist forces unleashed by US president Donald Trump.

The ambitious trade pact, which creates the world’s largest open economic area, comes amid fears a trade war between the US and China will diminish the role of free trade in the global economic order.

“There are rising concerns about protectionism, but I want Japan and the EU to lead the world by bearing the flag of free trade,” said Prime Minister Shinzo Abe at a news conference after the signing ceremony.

The US this month imposed 25% tariffs on $34bn (€29bn) of Chinese goods to lower the US trade deficit, and China quickly retaliated with an increase in tariffs on US goods.

The Japan-EU trade deal is also a sign of shifting global ties, as Trump distances the US from long-time allies, such as the EU, NATO, and Canada.

“We are sending a clear message that we stand against protectionism. The EU and Japan remain open for cooperation,” European Council President Donald Tusk, who speaks for the 28 EU national leaders, told reporters.

The deal removes EU tariffs of 10% on Japanese cars and 3% on most car parts. It would also scrap Japanese duties of some 30% or more on EU cheese and 15% on wines, and secure access to large public tenders in Japan.

Europe’s food sector is one of the biggest winners from the deal, which should allow it to capitalise on Japanese demand for high-quality cheese, meat, chocolates and pasta.

Japanese car and car parts makers are also expected to increase their sales to Europe, where they have lagged behind European rivals, but Japan’s dairy industry is expected to lose market share to European products once tariffs of up to 40% on some cheese imports start falling.

Japan and the EU also agreed to establish a regular dialogue on trade and economic policy, with the first meeting to be held before year’s end. The dialogue will be chaired by Japan’s trade and foreign ministers and the Commission’s vice-president for competitiveness, both sides said in a joint statement.

Both Japan and the EU, having seen Trump pull back from free-trade relationships, are keen to show they remain committed to removing barriers they say hamper growth, analysts said.

Reuters


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