Published: Wed, July 18, 2018
Finance | By Loren Pratt

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

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

"The EU and Japan remain open for cooperation", European Council President Donald Tusk, who speaks for the 28 EU national leaders, told reporters.

"In the current circumstances, China, Japan and Korea should stand even more firmly together, uphold the rules-based multilateral trading system, and proudly oppose protectionism and unilateral actions", Li said.

At a EU-Japan summit Tuesday in Tokyo, the envoys were clear that the agreement was meant to send a message about the value of trade and cooperation. But they will bring Japanese consumers lower prices for European wines, pork, handbags and pharmaceuticals.

Japan's Minister for Economic Revitalisation, Toshimitsu Motegi, said on Tuesday: "At a time when protectionist measures are gaining steam globally, the signing of the Japan-EU deal today will show the world once again our unwavering political will to promote free trade".

The agreement covers 600 million people and nearly a third of the global economy.

The signing had been due to take place in Brussels on July 11, but Abe was forced to cancel his trip after torrential rains triggered flooding and landslides in Japan that killed about 220 people. He said the partnership is being strengthened in various other areas, including defense, climate change and human exchange, and is "sending a clear message" against protectionism.

The pact - which both Japan and the European Union aim to have come into force by early next year - will abolish or reduce tariffs on industrial products and agricultural items between the two sides and sets rules on investment, which is expected to help enhance opportunities for further two-way trade and investment.

Brussels and Tokyo's agreement will eliminate almost all tariffs, attempting to allay fears set off by the US President's protectionist crackdown on global trade.

The move is in sharp contrast to the stance taken by the Trump administration in the United States, which has introduced steep import tariffs.

As with China on Monday, the European Union also insisted with Japan on the "crucial role" of maintaining the World Trade Organization (WTO) as the basis of the multilateral trading system, with a commitment to reform it.

It comes as Trump continues to unsettle allies and provoke rivals with his aggressive "America First" trade policy.

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.

Japanese vehicle and auto parts makers are also expected to increase their sales to Europe, where they have lagged behind European rivals.

Japan is Ireland's third-most important market in Asia, with €94m worth of agri-food produce exported there in 2017.

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