Japan, EU ink free trade deal amid worries about USA protectionism

Lloyd Doyle
July 18, 2018

President Trump called the European Union a trading "foe" last week, and on Tuesday European leaders replied by signing an economic partnership with Japan that will eliminate nearly all tariffs on bilateral goods.

The European Commission had also hoped the deal could come into force before Brexit.

It also provides a stark counterpoint to US President Donald Trump's aggressive "America First" protectionism, which has seen Washington impose trade tariffs on allies and rivals alike.

For consumers in the European Union and Japan, the deal means products from each other's markets will be cheaper, with duties to be scrapped on items as diverse as cheese, wine and cars.

It covers a third of the global economy and markets of more than 600 million people.

The price of European wine and pork will fall for consumers in Japan. Although the leaders didn't mention him by name, Japanese Prime Minister Shinzo Abe and European Union leaders Donald Tusk and Jean-Claude Juncker distanced themselves from Trump's tactics in a press conference following the deal.

But the benefits are dwarfed by the damage U.S. President Donald Trump could inflict with more tariffs, say on vehicle imports.

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

Juncker said the signatories of the agreement were making "a statement about free and fair trade, we are showing that we are stronger and better off when we work together".

The difference is due to exceptions such as rice, a product that's culturally and politically sensitive and has been protected for decades in Japan.

The major step toward liberalizing trade has been discussed since 2013.

The EU will eliminate tariffs on 99 per cent of imports from Japan.

"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".

Beijing has responded by imposing identical penalties on a similar amount of American imports.

Speaking during an earlier meeting in Brussels, the diplomat stressed the importance of concluding the EU-Japan deal before the Brexit transition phase because it gives Tokyo more time to strike a separate deal with Britain.

No wonder then that the International Monetary Fund on Monday estimated that annual global economic output could be half a percentage point lower than projected by 2020 if current trade policy threats - and retaliatory actions from US trading partners - come to pass. The partnership includes Australia, Mexico, Vietnam and other nations, although the USA has withdrawn. Japan's growth continues to be heavily dependent on exports. Japanese will get cheaper cheese, such as Parmesan, gouda and cheddar, as well as chocolate and biscuits. Europeans should benefit, too, from lower auto prices.

Other reports by Iphone Fresh

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