EU, Japan ink historic free trade agreement

> Ambitious deal covers about 600 million people across both markets

TOKYO: Japan and the European Union (EU) signed a wide-ranging free trade deal yesterday 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.

Prime Minister Shinzo Abe signed the trade pact with European Council President Donald Tusk, who speaks for the 28 EU national leaders, and European Commission President Jean-Claude Juncker, the bloc’s executive head.

The deal requires ratification by the European Parliament – a move expected in the coming months – and by Japanese legislators. EU officials hope it will come into effect by early 2019.

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

The signing comes at a time of heightened global trade tensions, after Trump imposed hefty tariffs on steel and aluminium imports as well as Chinese goods and launched a probe into similar car industry levies – a move that would hurt the European and Japanese industries.

“We are sending a strong signal to the world that we still believe in open trade and that protectionism is never the answer,” EU Trade Commissioner Cecilia Malmstrom said earlier this month.

The deal, which is the largest-ever negotiated by the EU, would unite around 600 million people across both markets.

Under the pact, Japan will remove tariffs on 94% of all imports from the EU, including 82% of farm and fishery products. The EU will eliminate tariffs on 99% of imports from Japan. It will abolish tariffs on Japanese cars and trucks in the eighth year and televisions in the sixth year after the implementation of the pact. – Reuters, dpa