As the United States takes a turn toward protectionism, the European Union and Japan are intent on demonstrating that ambitious free trade deals remain possible even without Washington’s global leadership.
EU leaders and Japanese Prime Minister Shinzo Abe are hammering out the blueprint for what is being referred to as JEFTA, or what would be the world’s largest trade agreement. Both economies together comprise a third of the world’s economic output with more than 640 million consumers combined.
The deal, which Brussels and Tokyo hope to finalize this year, would eliminate up to 99 percent of all tariff barriers between the economic heavyweights. The deal focuses most notably on reducing barriers in the automotive industry. European carmakers would have seven years to prepare for the elimination of the 20-percent tariff that Brussels currently imposes on automobile imports from Japan. In exchange, Tokyo would drop standards that make it more difficult for European carmakers to break in there.
German business is in strong support, even though it would place greater competitive pressure on the automobile industry, one of the main pillars of Europe’s largest economy.
“Free trade secures jobs and creates more progress and prosperity for all participating nations,” said Elmar Degenahrt, the head of Continental, one of the largest car parts suppliers in the world.