Yesterday, July 5, the EU Trade Commissioner Cecilia Malmström and Fumio Kishida, the Japanese foreign minister announced their consensus on a new trade deal, the Japanese-EU Economic Partnership Agreement (JEEPA).
The announcement coinciding with the G20 summit is no accident, with President Donald Trump wanting to pull out of the United States’ existing trade deals and postponing future ones. The summit, beginning tomorrow (July 7), sees 20 leaders from the world’s leading economies come together to “strengthen the resilience of the global financial system.” The summit, which started in 1999, takes place this weekend in the city of Hamburg, Germany. Negotiations began back in 2013 but at the time was not the focus of either group.
Jean-Claude Juncker, the European Commission President, has said, “Together, we are sending a strong message to the world that we stand for open and fair trade.” Possibly, a discrete signal to President Donald Trump, to show the strong power and effect trade deals have on economies and nations. Also, a possible sign to show the U.S. that their spot in leading global free trade has been taken.
European food and agriculture are set to gain full, duty-free access to Japan’s market under the deal. Tariffs will be removed from 99% of the goods traded between the European Union and Japan, although in some sectors lengthy transition periods will apply. For other European Union countries, one of the main potential gains is the opening of Japan’s food and agriculture market, until recently one of the most restrictive in the world.
Donald Tusk, President of the European Council said, “We promised to do everything in our power to conclude political and trade talks between Japan and the European Union on the eve of the G20 summit. And we did it.”
It was not an easily negotiated trade deal, however. The European Union was primarily more interested in lowering tariffs on items such as cheese, chocolate and wine, not the basic agricultural crops such as rice that were sticking points in the Trans-Pacific Partnership (TPP), a twelve country agreement from which President Trump has withdrawn the United States from but which Japan is still said to be pursuing.
It is expected the deal could potentially raise the European Union’s exports to Japan by 34% and Japan’s to the EU by 29%.
