EU seal free trade deal to promote open economy
Japan and the European Union sealed a broad agreement Thursday
on a free trade deal that they call a sign of their efforts to
promote an open economy.
After four years of talks, Prime Minister Shinzo Abe, European
Council President Donald Tusk and European Commission President
Jean-Claude Juncker reached the deal in Brussels for their markets
with nearly 640 million people and accounting for nearly a third of
the global economy.
"Amid moves of protectionism, the fact that Japan and the
European Union could demonstrate a strong political commitment to
raise the banner of free trade is an outcome to be proud of and a
robust message to the world," Abe said at a joint press conference
with Tusk and Juncker.
Referring to the agreement, Tusk said, "Although some are saying
that the time of isolationism and disintegration is coming again, we
are demonstrating that this is not the case."
Juncker said the deal "sets the standards for others, and it
shows that closing ourselves off from the world is not good for
business, nor for the global economy, nor for workers. As far as we
are concerned, there is no protection in protectionism."
The broad agreement on the eve of the Group of 20 summit in
Hamburg, Germany, was achieved after the two sides resolved thorny
issues at a meeting the previous day on tariffs on sensitive products
such as Japanese automobiles and European wine and cheese.
Juncker said they will aim to reach a final agreement in the
"next coming months" and put the pact into force in early 2019.
The two sides still need to work out a system to settle disputes
between a company and the country it is investing in.
Both Japan and the European Union are concerned about Trump's
"America First" approach to trade, as seen in the country's
withdrawal from the Trans-Pacific Partnership free trade pact and
recent suggestion of punitive tariffs on steel imports from Europe,
Japan and other countries. Japan is a member of the TPP accord.
The European Union has also seen talks stalled on a free trade
initiative with the United States, called Transatlantic Trade and
Investment Partnership, after Trump came to power.
For Japan, the deal will be its biggest trade treaty unless the
TPP including the United States takes effect. The new pact will
represent a crucial part of Abe's growth strategy to tap into growing
overseas markets to offset a drop in domestic demand in the long term
amid the country's declining population.
The pact will also show skeptics in the European Union the
benefits of staying in the bloc with access to inner and outer
markets, in the wake of Britain's decision to leave the bloc,
The Japan-EU deal is expected to spur trade and investment by
removing or lowering tariffs on a broad range of products, including
farm and industrial products, while it is also to set common trade
Over 90 percent of the products will see tariffs eliminated,
around the same level as in the TPP.
Japanese automobile and electronics manufacturers are expected
to regain competitiveness in the European market in competition with
rivals from South Korea, which has already signed a free trade pact
with the bloc, while European farmers are seeking to tap deeper into
the Japanese market for wine, cheese and meat.
Local dairy producers have been wary about the influx of
competitive European products and the Japanese government is expected
to compile measures to mitigate the negative impact on them from the
The negotiations for the Japan-EU pact were launched in 2013 but
discord over whether and when to eliminate tariffs on Japanese
automobiles and European agricultural products such as cheese and
wine has slowed progress.
Japanese Foreign Minister Fumio Kishida and EU Trade
Commissioner Cecilia Malmstrom said Wednesday following their meeting
that their leaders will give the final endorsement of the broad free
trade agreement on Thursday.
Among key areas in the agreement, Japan will set up a low-tariff
quota on European cheese. The tariff for the quota, initially 20,000
tons, will be eliminated 15 years after the pact comes into effect,
the Japanese Foreign Ministry said.
The two sides will also scrap their tariffs on wine as soon as
the pact comes into force, while duties on European chocolates and
pasta would be scrapped after 10 years, the ministry said.
The bloc will ease regulations on wine, such as those related to
sugar content and bottle size, and will immediately eliminate tariffs
on Japanese sake and green tea.
The two sides have agreed to phase out tariffs on Japanese
automobiles after seven years and on Japanese TVs after five years.