Trade doesn’t wait

Japan nears deal with EU, absent U.S. action

The 28-nation European Union and Japan are reported to be near signature of an agreement that would facilitate and encourage trade and investment. It will involve what is estimated to be a quarter of the world’s economy.

The sequence of events is as follows: President Donald Trump pulled the United States out of the 12nation Trans-Pacific Partnership, which included Japan, on Jan. 23, three days after his inauguration. Japan is the world’s thirdlargest economy. Japanese Prime Minister Shinzo Abe visited the United States, meeting with Mr. Trump Feb. 10, expecting to be able to follow up on the president’s campaign pledges to conclude new, huge trade deals for the United States once he had freed America from what he deemed to be disadvantageous international trade deals such as TPP and the North American Free Trade Agreement.

Going away from the U.S. visit empty-handed, Mr. Abe and Japan accelerated negotiations with the EU that had been underway since 2013 for a comprehensive trade and investment agreement. That accord is now described as “within reach,” to be signed prior to the G-20 Summit in Hamburg, Germany, opening July 7. It will not go into effect immediately after signature, requiring Japanese and EU member countries’ ratification, but those processes are expected to go smoothly.

The agreement will provide on both sides freer access to markets and key industries, including, for the Japanese, the ability to sell vehicles in EU countries without the current 10 percent tariff. Rules for resolving investment disputes will be eased. Both sides are expected to reiterate in the accord their commitments under the 2015 Paris climate change agreement. Mr. Trump withdrew the United States from that international agreement on June 1.

If Americans continue to agree that they subscribed to Mr. Trump’s approach to international trade when they elected him, the next step on his part should be to seek to negotiate new bilateral trade agreements with Japan, the other 10 former TPP partners and European nations in the EU. If this does not occur, American companies and banks are going to find themselves disadvantaged in European and Asian markets that are critical to the United States’ maintaining its position, vying with China for the place of the world’s largest economy.