EU, Japan sign massive trade deal as US puts up barriers

Roman Schwartz
July 18, 2018

"Politically, it's a light in the increasing darkness of worldwide politics", European Council President Tusk said of the deal, according to The Guardian.

EU products now face an average tariff of 1.6% when they arrive in Japan, while Japanese products face tariffs of 2.9% in the European Union, according to the World Trade Organization.

European Affairs Minister Helen McEntee said trade between Ireland and Japan is worth more than €3bn a year, and will now expand further.

At the moment, European Union companies pay €1bn (£890m) of duty on products they export to Japan.

"Right now, concerns are rising over protectionism all around the world", Japanese Prime Minister Shinzo Abe was quoted as saying by The Japan Times."We are sending out a message emphasizing the importance of a trade system based on free and fair rules".

Reuters described the trade pact, which creates the world's largest open economic area that accounts for about a third of global GDP, as "ambitious", and a "sign of the shifting global ties as Trump distances the United States from long-time allies like the EU, Nato and Canada".

The signing was delayed from earlier this month because Abe cancelled going to Brussels over a disaster in south-western Japan caused by extremely heavy rainfall, with more than 200 people dying in floods and landslides.

The deal is in stark contrast to the trade messages of the US President.

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The deal removes the 10% tariff the European Union levies on importing Japanese cars and the 3% tariff on most auto parts, Reuters reported.

Japan and the European Union traded roughly €129 billion ($152 billion) of goods past year, according to EU data.

The EU - the world's biggest single market with 28 countries and 500 million people - is trying to boost alliances in the face of Mr Trump's protectionist administration.

The agreement stands in sharp contrast to trade developments in the USA, where the Trump administration has pushed forward with an array of tariffs on several nations.

Japan and the European Union also agreed on Tuesday to establish a regular dialogue on trade and economic policy, with the first meeting to be held before year's end.

Baker McKenzie partner Ross Denton said the deal signed Tuesday sends "a very strong signal to the US Administration that the European Union and Japan, two major trade partners of the US, both see the benefits of removing barriers and reducing, not increasing tariffs". The European bloc is also pursuing deals with Mexico, Australia, and Mercosur, the South American trading bloc that includes Argentina, Brazil, Paraguay and Uruguay.

Current duties of 29.8pc on hard cheeses such as gouda and cheddar (which Ireland is seeking new markets for as a result of Brexit) will be eliminated, and a duty-free quota will be established for fresh cheeses such as mozzarella. The White House has imposed tariffs on EU steel and aluminum imports and has threatened to target European cars next. Japan's growth remains heavily dependent on exports.

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