Japan and the EU have agreed to a trade deal that will eliminate the vast majority of both tariff and non-tariff barriers. Although the deal carries many economic benefits it has been more recently pushed in order to counter rising protectionism.
International cooperation revived
Protectionism has surged in the last year as evidenced by the Trump administration abandoning both the Trans-Pacific Partnership (TPP), a free trade agreement in which Japan was a major player, and the Transatlantic Trade and Investment Partnership (TTIP), a free trade agreement between the US and the EU.
Having been spurned by the US, Japan and the EU are now coming together to form a strategic economic alliance which will account for 28% of global GDP.
This trade agreement marks a concerted effort to combat rising protectionism. Both parties have voiced that the deal is intended to send a message that cooperation and trade liberalization remain a positive force in the world.
Japanese Prime Minister Shinzo Abe emphasized that “it is important for us to wave the flag of free trade in response to global moves toward protectionism by quickly concluding the free trade agreement with Europe”. And included among the key points of the European Commission’s report on the agreement is that the deal “would send a powerful signal that cooperation, not protectionism, is the way to tackle global challenges.”
The best deals
Japan and the EU are already mutually important trading partners. The EU exports around $98b in goods and services to Japan each year and imports around $93b in return. The deal will open up this trade further by eliminating a wide range of tariffs, such as those on agriculture and automobiles, and resolving non-tariff measures such as technical requirements and regulation.
Once fully implemented, the deal will eliminate 97% of Japanese tariffs on European goods. This includes scrapping the current 30% tariff on European cheese along with other tariffs on processed agricultural products such as pasta, chocolate and wine. The deal would also offer many European agricultural products the protection of Geographic…
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