The European Union(EU) and Japan signed an agreement on tariff reduction on Tuesday. According to the deal, 99 percent of the tariffs on Japanese exports to the EU will be eliminated. And as to European exports to Japan, about 94 percent of the duties will be exempted right now and 99 percent in coming 15 years or so.
At present, the trade volume (goods and services combined) between the EU and Japan stands at about € 86 billion, with the main Japanese exports to the EU auto, and major EU products to Japan daily consumer goods. The deal, once comes into effect, will allow Japanese buy wine, pork and other daily consumer goods imported from the EU at significantly lower prices, and EU consumers to enjoy Japanese auto, auto accessories, tea and fish that are favorably cheaper.
The EU-Japan free trade area has a population of 600 million, accounting for 8.6 percent of the global population, and almost one-third of the global GDP. This agreement, which is scheduled to come into effect in March 2019, will give birth to a free trade area whose trade scale will exceed that of the North America Free Trade Agreement, put it straight, the new FTZ will be the world’s largest.
This deal serves the interest of both parties in that after Brexit, the EU is seeking out paths to more markets, and Japan also hopes to find more job creators to boost solid development since its growth is heavily export-driven. The deal is expected to increase Japan’s GDP by 1 percent and create around 290, 000 jobs.
Negotiation on such an agreement was initiated in 2013, the two sides had invested huge efforts over the course of 5 years. It is said that big advancements were materialized in 2017 after Donald Trump was elected US president. To make things worse, US withdrew from the Trans -Pacific Partnership Agreement (TPP) in November 2017 and has been waging trade wars successively on many fronts in the whole world, among others, a tariff of 25 percent on steel and 10 per cent on aluminum imports from Canada. A tariff of 25 percent on $50 billion worth of Chinese goods.
The deal finalizes at a time of escalating trade tensions triggered by Trump administration on many fronts, it serves as only a show of the furtherance of bilateral relations between the EU and Japan, but also a win-win solution towards the bright future of free and fair trade, sending a clear message that confronting trade protectionism on a global scale, the global community would make concerted efforts in safeguarding liberalization and fighting against protectionism.