Brussels/Tokyo – Japan and the European Union launched the world’s largest open trade zone Friday, covering about a third of the global economy.
Largest Trade Zone
The massive deal stands as a rebuke to protectionist threats, notably from US President Donald Trump. It will cover around 635 million people.
“Europe and Japan are sending a message to the world about the future of open and fair trade,” European Commission President Jean-Claude Juncker said in a statement.
“Our agreement shows that trade is about more than quotas and tariffs, or millions and billions,” he added. “It is about values, principles and fairness.”
Those include principles on “labour, safety, climate and consumer protection,” he said.
“This agreement has it all,” said EU Trade Commissioner Cecilia Malmstrom. “It scraps tariffs and contributes to the global rulebook whilst … demonstrating to the world that we both remain convinced by the benefits of open trade.”
Paris climate deal commitments are also folded into the trade deal, she noted.
Under the pact, Japan will remove tariffs on 94 per cent of all imports from the EU, including 82 per cent of farm and fishery products.
For example, the deal scraps Japanese tariffs on Gouda and Cheddar cheese – which are close to 30 per cent – as well as on wine, which faces duties of 15 per cent on average. Beef and pork exports are also likely to rise.
For its part, the EU will eliminate tariffs on 99 per cent of imports from Japan. It will abolish tariffs on Japanese cars and trucks in the eighth year and televisions in the sixth year following the pact’s implementation – provisions especially important to Japan.
The two sides reached a political agreement in July, and ratification was finalized in December.
In late December, Japan also saw a revised Trans-Pacific Partnership (TPP) trade pact take effect after Trump withdrew the US from the deal shortly after taking office two years ago.
The deal covers more than 10 per cent of the world economy. The 11 member countries include Australia, Canada, Singapore, Japan and New Zealand.
Japan’s Economic Revitalization Minister Toshimitsu Motegi hopes the two agreements “will become a new growth engine for the Japanese economy,” he said.
The EU-Japan agreement comes amid heightened global trade tensions, after Trump imposed tariffs on steel and aluminium imports as well as Chinese goods and launched a probe into car industry levies that could hit both the EU and Japan.
Britain’s tortuous attempt to find a withdrawal deal to leave the EU and still have frictionless trade is another case in point.
In January, ahead of the EU-Japan deal’s implementation, the two sides also finalized an agreement to allow the free flow of data between their economies, with mutual recognition of each other’s data protection safeguards.
Trade groups hailed the deal.
“This agreement is the perfect example that building bridges is better than raising walls,” said Pierre Gattaz, president of BusinessEurope.
“When protectionism is on the rise, the EU and Japan show to the world, they remain open to modern and rules-based trade.”
Hiroaki Nakanishi, chairman of the Japan Business Federation, the nation’s most powerful business lobby, said the agreement “will stimulate additional growth and create jobs for both sides.”