Japan and the European Union on Friday celebrated the entry into force of a free trade agreement between them, with officials from both sides hopeful about the potential business and economic opportunities available in a new marketplace of over 600 million people.
For Japan, the accord covering a third of the global economy comes in addition to the 11-member Trans-Pacific Partnership, which took effect Dec. 30. The signing of these multilateral deals is seen as an effort by member countries to stem the rise of protectionism, something that has taken on greater urgency amid the U.S.-China trade war.
“I hope the pacts will become a new growth engine for the Japanese economy,” economic revitalization minister Toshimitsu Motegi said hours after the trade deal took effect at midnight Thursday.
“To maximize its economic benefits, we will steadily carry out measures to encourage small and mid-size companies to venture overseas and to bolster the agriculture, forestry and fisheries industries,” Motegi said.
The government estimates the deal with the European Union, which was signed in July, will have an economic benefit of around ¥5.2 trillion ($48 billion) and create about 290,000 jobs, although it does not give a time frame for the expected windfall. Meanwhile, farmers are concerned that the pact, which cuts tariffs across a range of goods, will lead to cheaper European products such as cheese flooding the domestic market.
In order to promote the impact of the deal, retailers began offering wines from Europe at a cheaper price on Friday in line with the elimination of a 15 percent tariff imposed by Japan before the pact took effect.
Aeon Co. cut prices on 330 wines by an average 10 percent, while convenience store operator FamilyMart Co. plans to follow suit Saturday by reducing prices on 14 European wines by up to 17 percent.
At an Aeon store in the city of Chiba, a 47-year-old woman was taking a fresh look at European wines that she would normally only pick for special occasions.
“I may buy (European wines) regularly from now,” the woman said.
Although negotiations over the pact commenced in April 2013, it gained added impetus for Japan and the EU due to U.S. President Donald Trump’s continued pursuit of his “America First” agenda. Both parties will separately engage in bilateral trade talks this year with the United States.
“Europe and Japan are sending a message to the world about the future of open and fair trade,” European Commission President Jean-Claude Juncker said in a statement.
Juncker said the agreement will give consumers greater choice and cheaper prices but it will also “protect great European products in Japan and vice versa, such as the Austrian Tiroler Speck or Kobe Beef.”
“More than anything, our agreement shows that trade is about more than quotas and tariffs, or millions and billions. It is about values, principles and fairness,” he said.