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Japan and EU form agreement against Trump’s protectionism

July 7, 2017 0 Comments

On Thursday, Japan and the European Union affirmed a preliminary free-trade agreement in the wake of U.S. President Donald Trump’s protectionist attitude during his second trip to Europe as president.

EU President Donald Tusk, European Commission chief Jean-Claude Juncker, and Japanese Prime Minister Shinzo Abe approved of the accord, which eliminates 99 percent of tariffs between the partners and expands markets for “service and public procurement,” as well as boosts regulatory cooperation.


The accord was greenlit in Brussels, a day after negotiators for both parties “reached a breakthrough” with the EU agreeing to “phase out” a 10 percent import duty on cars to Japan and the Japanese government offering to “expand access for European farm goods including cheese.”

Europe also agreed to scrap the levy on Japanese cars after seven years and Japan plans on doing away with the 30 percent duties on European hard cheese over 15 years, according to an EU official. Furthermore, Japan aims to provide duty-free access for European soft and fresh cheese “up to amounts equal to current trade levels” with the possibility of increased import quotas. The EU official spoke on the condition of anonymity, as major details of the accord have not yet been released.

The new free-trade pact also “signals a determination in European capitals… to prevent the UK’s planned exit from the EU from undermining the bloc’s global footprint.” The separation from the EU, which started in March 2017, is estimated to take two years to complete.

The accord isn’t finished yet; the EU and Japan talks will continue into fall, with the partners aiming to produce a legal text by the end of the year. The goal is for the agreement to take effect sometime in “early” 2019, according to Juncker.

The EU-Japan deal is the biggest to date for the EU, surpassing an accord with South Korea. It also marks the EU’s second deal with a “fellow member of the Group of Seven leading industrialized nations following a recent pact with Canada,” according to Automotive News.

“We in the European Union firmly believe in the political purpose of a world which is built on openness, cooperation and trade,” said Tusk to reporters at the EU-Japan summit. “The world really doesn’t need to go 100 years back in time. Quite the opposite.”

Europe and Asia are stepping up their game, co-operating and championing open markets as “unease mounts” in the face of Trump’s “America First” policy. Since becoming president in January, Trump has pulled the U.S. out of a new trans-Pacific commercial accord, called for a renegotiation of a “long-standing pact” with Mexico and Canada, and even threatened to curb American imports of steel.

The EU-Japan deal “bolsters the free-trade credentials” for Abe and is a “political triumph” for German Chancellor Angela Merkel, who is currently preparing to host the Group of 20 summit in Hamburg. Trump is scheduled to arrive in Germany for the July 7-8 meeting once he concludes his visit to Poland.

Merkel has “openly clashed” with Trump over trade, as he labelled Germany “very bad” due to its export strength, “including shipments of cars to the U.S.”

“Japan and the EU will hoist the flag of free trade high amidst protectionist trends,” said Abe, standing with Juncker and Tusk. “This is an achievement we should be proud of, which also sends a strong message to the world.”

“The EU is more and more engaged globally,” said Tusk.

The accord must must be approved by the European Parliament and the EU before it can take provisional effect.

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