Japan and EU sign free trade pact amid worries about Trump policies

We are sending a clear message that we stand against protectionism: Tusk

TOKYO, July 17, (RTRS): Japan and the European Union signed a wide-ranging free trade deal on Tuesday that both sides hope will act as a counterweight to the protectionist forces unleashed by US President Donald Trump’s trade policies.

The ambitious trade pact, which creates the world’s largest open economic area, comes amid fears that a trade war between the United States and China will diminish the role of free trade in the global economic order.

“There are rising concerns about protectionism, but I want Japan and the EU to lead the world by bearing the flag of free trade,” Prime Minister Shinzo Abe said at a news conference after the signing ceremony.

The United States this month imposed 25 percent tariffs on $34 billion of Chinese goods to lower the US trade deficit, and China quickly retaliated with an increase in tariffs on US goods.

The Japan-EU trade deal is also a sign of shifting global ties as Trump distances the United States from long-time allies like the EU, NATO and Canada.

“We are sending a clear message that we stand against protectionism. The EU and Japan remain open for cooperation,” European Council President Donald Tusk, who speaks for the 28 EU national leaders, told reporters.

The deal removes EU tariffs of 10 percent on Japanese cars and 3 percent on most car parts. It would also scrap Japanese duties of some 30 percent or more on EU cheese and 15 percent on wines, and secure access to large public tenders in Japan.

Europe’s food sector is one of the biggest winners from the deal, which should allow it to capitalise on Japanese demand for high-quality cheese, chocolates, meats and pasta.

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

However, Japan’s dairy industry is expected to lose market share to European products once tariffs of up to 40 percent on some cheese imports start coming down.

Both Japan and the EU, having seen Japanese Prime Minister Shinzo Abe (center), smiles with European Commission President Jean-Claude Juncker (right), and European Council President Donald Tusk before a meeting at Abe’s official residence in Tokyo on July 17.

Trump pull back from free trade relationships, are keen to show they remain committed to removing barriers they say hamper growth, analysts said.

A day earlier in Beijing, a China-EU summit ended with a communique affirming the commitment of both sides to the multilateral trading system.

Trump pulled the United States out of the Trans-Pacific Partnership with Japan and 10 other states on his first day in office in January 2017 and has pushed to renegotiate a free trade pact with Canada and Mexico.

Trump says he is taking a hard line on trade to protect US workers and US companies, but critics say his approach is upending the rules of multilateral global

The European Union and Japan are signing a widespread trade deal Tuesday that will eliminate nearly all tariffs, seemingly defying the worries about trade tensions set off by US President Donald Trump’s policies. (AP)

trade.

Japan and the EU account for about a third of global GDP and their trade relationship has room to grow, according to EU officials, who expect the deal to boost the EU economy by 0.8 percent and Japan’s by 0.3 percent over the long term.

Meanwhile, The European Union reached a deal on Tuesday allowing businesses to seamlessly transfer personal data between the bloc and Japan, deepening economic links as the two sides also agree a free-trade pact.

The EU and Japan concluded several years of data talks in Tokyo in the margins of a bilateral summit and the deal should come into effect towards the end

of this year, once the European Commission and the Japanese government have finalised details.

“Data is the fuel of global economy and this agreement will allow for data to travel safely between us to the benefit of both our citizens and our economies,” EU Justice Commissioner Vera Jourova said in a statement.

“By working together, we can shape the global standards for data protection and show common leadership in this important area,” she said.

The Commission said the decision would mean that personal data could flow from the European Economic Area to Japan, without needing any further safeguards or authorisations.