Japan, EU sign ambitious trade deal

Marco Green
July 18, 2018

Japan and the European Union signed a wide-ranging free-trade deal on Tuesday that both sides hope will act as a counterweight to the protectionist forces unleashed by US President Donald Trump's trade policies.

The agreement is now awaiting ratification by the European Parliament and the Japanese Diet following which it could enter into force in 2019, the European Commission said.

The Japan-EU trade deal is also a sign of shifting global ties as Trump distances the U.S. from long-time allies like the EU, NATO and Canada. According the European Commission, the deal is projected to eliminate just under $1.2 billion worth of tariffs for EU exporters and double the amount for Japanese firms.

The pact, signed in Tokyo, covers a third of the global economy, the Associated Press reports.

Prices of European wine and pork will fall for Japanese consumers, while Japanese machinery parts, tea and fish will become cheaper for Europe.

The US said it launched formal challenges at the World Trade Organization on Monday against China, the EU, Canada, Mexico and Turkey.

However, with Trump threatening to target the politically and economically more sensitive auto industry, the Commission, which conducts trade negotiations for all 28 European Union states, is hoping to at least give Trump pause for thought.

"Together we are making, by signing this agreement, a statement about the future of free and fair trade".

Japan and the European Union signed a new free trade deal on Tuesday
Japan and the European Union signed a new free trade deal on Tuesday

One of the biggest European Union exports to Japan is dairy goods, while cars are one of Japan's biggest exports.

The signing had been due to take place in Brussels on July 11, but Abe was forced to cancel his trip after torrential rains triggered flooding and landslides in Japan that killed about 220 people.

The major step toward liberalising trade was discussed in talks since 2013 but is striking in the timing of the signing, as China and the USA are embroiled in trade conflicts.

"The European Union makes it impossible for our farmers and workers and companies to do business in Europe (U.S. has a $151 billion trade deficit), and then they want us to happily defend them through North Atlantic Treaty Organisation, and nicely pay for it". That follows an earlier move by Washington to impose 25 per cent tariffs on US$34 billion of Chinese goods.

"In the current circumstances, China, Japan and Korea should stand even more firmly together, uphold the rules-based multilateral trading system, and proudly oppose protectionism and unilateral actions", Li said.

Tusk also ensured the EU's and Japan's joint support of the Iran Nuclear Deal, which Trump pulled out from earlier this year. Japan's growth continues to be heavily dependent on exports.

The foreign ministry said that by strengthening ties with the EU, Japan hopes to vitalise mutual direct investment, fight other global trends toward protectionism and enhance the stature of Japanese brands. Japan will get cheaper cheese, such as Parmesan, gouda and cheddar, as well as chocolate and biscuits. Europeans should benefit, too, from lower vehicle prices.

Other reports by Click Lancashire

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