Japan, European Union strike deal
Thirty years ago, as he gave what is widely considered to be the first campaign speech of his career, Donald Trump criticized one country above all for cheating the United States in trade: Japan.
On Thursday, Japan took on the mantle of the global rules-based trading system, as it sidestepped a failing trade agreement with the United States to forge a historic new pact with the EuropeanUnion.
Leaders from Japan and the European Union on Thursday announced their agreement on the broad strokes of a trade deal that will cover nearly 30 percent of the global economy, 10 percent of theworld’s population and 40 percent of global trade.
The deal crafts a trading bloc roughly the same size as that established by the North American Free Trade Agreement.
Coming on the eve of the Group of 20 meeting of global leaders in Hamburg, Germany, the announcementappearedtobe a calculated rebuke of both the United States, which has spurned global trade agreements in favor of more protectionist policies under President Trump, and Britain, which voted to leave the EuropeanUnion last year.
Shinzo Abe, the prime minister of Japan, greeted the announcement as “the birth of the world’s largest free advanced industrialized economic zone.”
“Japan and the European Union will hoist the flag of free trade high amidst protectionist trends,” Abe said.
Jean-Claude Juncker, the president of the European Commission, said the deal “shows that closing ourselves off from the world is not good for business, nor for the global economy, nor forworkers. As far aswe are concerned, there is no protection in protectionism.”
The deal will lower trade barriers for a sweeping array of products, including pork, wine, cheese andautomobiles. The pact will also protect “geographical indications” —products that derive their identity by being produced only in a specific region, like Champagne.
At a news conference Thursday, Juncker said that more than 90 percent ofEuropean exports to Japan will have freer terms of trade under the deal.
The deal will be a heavy blow to American producers of these goods, by making U.S.-made goods relatively more expensive and less competitive in the major markets of Japan and Europe.
Talks over the deal have stretched over more than four years, in part because Japan was more focused on the Trans-Pacific Partnership, a 12-country trade deal that included the United States. But after Trump’s election last year, negotiations between Japan and Europe accelerated, as the countries saw that the United States might take a new posture on trade.