The EU and Japan have taken a significant step towards agreeing a trade treaty, with representatives from both parties expected to sign the proposed deal at a Brussels summit on July 6.
Japanese Prime Minister Shinzo Abe is due to sign the agreement with EU institutional chiefs Donald Tusk and Jean-Claude Junker at a one-day summit in the EU capital. All three men will then travel to the G20 summit in Hamburg, where they will meet with US President Donald Trump. Trump is a vocal advocate of protectionist trade policies, and pulled out of a proposed agreement with Japan when he withdrew from the Trans-Pacific Partnership in January this year. Bolstered by their newly created trade treaty, the EU and Japan are expected to challenge Trump on his ‘America first’ stance over the course of the G20 summit.
On July 5, European Trade Commissioner Cecilia Malmström announced that she had come to an agreement with Japanese Foreign Minister Fumio Kishida. “We ironed out the few remaining differences in the EU-Japan trade negotiations,” she said in a tweet. “We’ve reached political agreement at ministerial level on an EU-Japan trade deal. We now recommend to leaders to confirm this at summit.”
By the time that the new treaty comes into force, it is likely that the UK will have left the EU
The agreement, which has taken four years to negotiate, will remove trade barriers and scrap tariffs on 99 percent of goods traded between the EU and the Japan. At present, the EU exports more than €58bn in goods and €28bn in services to Japan every year. The trade agreement would eliminate almost all customs duties on these goods, which currently stand at around €1bn annually. Under the terms of the new agreement, EU exports of processed food to Japan could be in line to rise by up to 180 percent.
Until now, tariffs have also hindered vehicle exports by Japanese carmakers. Import duties on Japanese cars currently stand at 10 percent, but the new trade agreement will see these barriers removed. This regulatory change may allow Japanese carmakers to make further inroads into the European car market.
The trade deal is also notable for being the first international trade agreement to include a commitment on climate change.
By the time that the new treaty comes into force, however, it is likely that the UK will have left the EU, meaning that British exporters will be unable to benefit from the new trade conditions. The deal may also discourage other EU states from leaving the union, as it highlights the economic benefits that come with EU membership.