The economic partnership agreement signed by Japan and the European Union during the meeting of their top leaders in Tokyo this week demonstrates their commitment to the multinational free trade system at a time when the global trade order is under threat from the unilateral protectionist actions by the administration of U.S. President Donald Trump. The Japan-EU accord, which will establish a massive free trade area accounting for 30 percent of the world's gross domestic product combined and 40 percent of global trade when it takes effect, should send Washington a clear message about the benefits of the free trade regime and the folly of a tit-for-tat trade war in which no party can emerge a winner.
It is also significant that Prime Minister Shinzo Abe, European Council President Donald Tusk and European Commission chief Jean-Claude Juncker signed a strategic partnership agreement that seeks to deepen cooperation between Japan and the EU not just on trade but in a broad range of fields such as security, climate change and space development (though specifics on such cooperation will need to await further talks). At a time when the United States under the Trump administration's "America First" agenda is rapidly abandoning its leadership roles in international affairs, Japan and the EU together should be able to push a global agenda forward.
Following domestic procedures on both sides, Japan and the EU hope to put the EPA into force by the end of next March. Tariffs on industrial goods will be either mutually eliminated or phased out, while import duties on most agricultural and fisheries products will also be subject to the cuts with the exception of rice imported by Japan. Japan will eventually eliminate tariffs on 94 percent of items imported from the EU, which in turn will end duties on 99 percent of Japanese exports to the region. The deal is expected to lower the price of European wine and cheese for consumers in Japan, while Japanese automakers hope to benefit from the elimination of a 10 percent tariff on vehicle exports to the EU market in the eighth year after the deal takes effect.