The European Union and Japan signed a new trade accord that creates the world’s largest free-trade zone with 600 million people and a third of global GDP. EU and Japanese leaders on Tuesday hailed the economic partnership agreement as a repudiation of protectionism as US President Donald Trump imposes punitive tariffs on many of his trading partners.
The agreement, which goes into effect early next year, affects some €130 billion ($152 billion) worth of goods and services between Japan and the EU. Tariffs on most products will be reduced to zero over a number of years, saving €1 billion. The accord will bolster EU agricultural exports to Japan and Japanese auto exports to the EU.
European Council President Donald Tusk and European Commission President Jean-Claude Juncker, fresh from the EU-China summit Monday, joined Japanese Prime Minister Shinzo Abe in Tokyo to sign the agreement, also known as JEFTA. The signing was originally scheduled to be in Brussels last week, but Mr. Abe had to postpone due to Japan’s flooding disaster.
“We are sending a clear message that we stand together against protectionism,” Mr. Tusk said of the agreement. Mr. Juncker added that the two parties were making “a statement about free and fair trade; we are showing that we are stronger and better off when we work together.”
The Trump administration has imposed punitive tariffs on steel and aluminum imports from the EU and other exporters, and threatened to levy a tariff of 20 percent or more on auto imports from the EU. Several Japanese products were exempted at least temporarily from the metal import tariffs.
Negotiations for the EU-Japan bilateral trade pact began in 2013 but languished while talks for the 12-nation Trans-Pacific Partnership were underway. Only after Mr. Trump withdrew from that partnership upon taking office in 2017 did the EU-Japan talks pick up in earnest. A final agreement came quickly, and the accord was ready to sign in April.
The EU expects the pact to boost exports to Japan by €20 billion. In Germany, the Ifo Economic Research Institute forecasts it will add up to 0.7 percentage points annually to the nation’s growth rate, as well as up to 1.6 percentage points to Japan’s GDP.
In their visit earlier this week to Beijing, the EU leaders found that the US trade disputes dramatically increased their economic rapport with China, too. Mr. Tusk and Mr. Juncker signed six framework agreements with Chinese Premier Li Keqiang to further trade and investment between the two.
Ruth Berschens is Handelsblatt’s bureau chief in Brussels. Klaus Stratmann is a reporter in Berlin. Darrell Delamaide adapted this into English for Handelsblatt Global. To contact the authors: firstname.lastname@example.org and email@example.com