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Japanese Prime Minister Shinzo Abe (C) speaks as European Commission President Jean-Claude Juncker (L) and European Council President Donald Tusk listen during  a joint press conference at Abe’s official residence in Tokyo on July 17.
Japanese Prime Minister Shinzo Abe (C) speaks as European Commission President Jean-Claude Juncker (L) and European Council President Donald Tusk listen during  a joint press conference at Abe’s official residence in Tokyo on July 17.

Japan, EU Sign Free Trade Deal to Eliminate 99% Tariffs

Japanese Prime Minister Shinzo Abe says that the EU and Japan showed an undeterred determination to lead the world as flag-bearers for free trade

Japan, EU Sign Free Trade Deal to Eliminate 99% Tariffs

Japan and the European Union signed a landmark deal on Tuesday that will eliminate nearly all tariffs on products they trade.
The ambitious pact signed in Tokyo runs counter to President Donald Trump’s moves to hike tariffs on imports from many US trading partners. It covers a third of the global economy and markets of more than 600 million people, AP reported.
“The EU and Japan showed an undeterred determination to lead the world as flag-bearers for free trade,” Japanese Prime Minister Shinzo Abe said at a joint news conference with European Council President Donald Tusk and European Commission President Jean-Claude Juncker.
Tusk praised the deal as “the largest bilateral trade deal ever”. He said the partnership is being strengthened in various other areas, including defense, climate change and human exchange, and is “sending a clear message” against protectionism.               

The leaders did not mention Trump by name, but they did little to mask what was on their minds—highlighting how Europe and Japan have been pushed closer by Trump’s actions.
The agreement was largely reached late last year. The ceremonial signing was delayed from earlier this month because Abe canceled going to Brussels over a disaster in southwestern Japan, caused by extremely heavy rainfall. More than 200 people died from flooding and landslides.

 Consumers to Benefit
The measures won’t kick in right away and still require legislative approval. But they will bring Japanese consumers lower prices for European pork, handbags and pharmaceuticals. Japanese machinery parts, tea and fish will become cheaper in Europe.
The deal eliminates about 99% of the tariffs on Japanese goods sold to the EU. About 94% of the tariffs on European exports to Japan will be lifted, rising to 99% in the future. The difference reflects exceptions on such products as rice, which enjoys strong political protection from imports in Japan.
Overall, European farmers will benefit, Juncker said, though European consumers will be able to more easily buy luscious Kobe beef and famous Yubari melons.
The EU said the trade liberalization will help raise European exports of chemicals, clothing, cosmetics and other products to Japan. Japanese will get cheaper cheeses, such as Parmesan, gouda and cheddar, as well as chocolate and biscuits.
The imported cheese could hurt sales by Japanese dairies, but Japanese consumers have historically coveted such European products.
The major step toward liberalizing trade has been discussed since 2013.

 Other Agreements
Apart from its deal with the EU, Japan is working on other trade agreements, including a far-reaching trans-Pacific deal. The partnership includes Australia, Mexico, Vietnam and other nations, although the US has withdrawn.
Abe praised the deal with the EU for helping his “Abenomics” policies, designed to wrest the economy out of stagnation despite a shrinking population and cautious spending. Japan’s growth remains heavily dependent on exports, Bloomberg reported.
Europe and Japan are rallying to bolster multilateral agreements as Trump shuns such pacts and imposes tariffs on trading partners.
Japan took a leadership role in preserving an 11-member Trans-Pacific deal after Trump pulled the US out immediately after taking office. The EU is joining with Asia’s biggest economies to defend the global trading system from attacks by Trump, who over the weekend suggested the 28-member bloc was the US’s biggest foe globally.
In Beijing on Monday, the EU agreed with China on a joint summit statement for the first time in three years as they sought to set aside differences and show support for a multilateral approach to solving world problems.
Meanwhile, Japan is also in talks with China, India and other Asian countries to create the 16-nation regional comprehensive economic partnership, which could become the world’s largest trading bloc.

 Boosting Economy on Both Sides
The Japan-EU trade agreement is expected to boost Japan’s economy by about 1%, or 5 trillion yen ($44 billion), and add roughly 290,000 jobs in the nation, according to Japan’s Ministry of Foreign Affairs.
A 10% import duty on cars from Japan will be phased out over the course of eight years after the deal takes effect, the ministry said. That contrasts with the possibility that the US president invokes national security risks to impose 25% tariffs on Japanese car imports.
European exporters to Japan will see the vast majority of €1 billion ($1.2 billion) of duties they pay annually removed, according to the European Commission.
The EU has acted against US duties on foreign metals, imposing tit-for-tat tariffs in June on €2.8 billion of imports of American goods ranging from motorcycles to orange juice. It has complained to the World Trade Organization, and it is seen ready to retaliate should the US hike tariffs on cars.

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