A Trade Deal Between Japan And The European Union (EU) Has Been Announced.
On 17 July, 2018 a trade deal was agreed between Japan and the European Union (EU), which, when ratified by both bodies' parliaments, would drop trading barriers between two of the world's economic powerhouses.
More than four years in the negotiation, it will be the largest trade agreement ever struck by the EU, and will create an open trade zone covering more than 600 million people.
Arguably, the move is as much a political statement as a business move. It was announced as Brexit and the policies of Donald Trump seemed to indicate some countries were moving away from multilateral blocs and free trade deals, towards more protectionist and nationalist systems. In the press release announcing the deal, the EU's commissioner for trade pointedly said the pact was a "strong signal that two of [the world's] biggest economies still believe in open trade, opposing both unilateralism and protectionism."
But whatever its intentions, the deal will have an effect on many of the world's companies and consumers. Here is what we know about it so far:
What will the trade deal between Japan and the EU accomplish?
The trade pact will lower barriers on virtually all the goods traded between Japan and the countries within the EU. Trade deals are notoriously complex things – but for those looking for a simplicity, the New York Times has interpreted the pact as designed to "increase the flow of Japanese cars to Europe and of European food to Japan."
EU products imported into Japan
- Chemical/fibre products and some agriculture products e.g. wine and hard cheese: immediate tariff elimination
- Leather, including luxury leather products and chocolate: gradual tariff elimination
- Agriculture products e.g. beef and pork: partial tariff reduction with safeguards and tariff rate quotas
Japanese products imported into the EU region
- More than 90% of car parts: immediate tariff elimination
- Automobiles: gradual tariff elimination
- Agriculture products including sake: immediate tariff elimination
Other noteworthy aspects of the deal
- The deal states that Japan will open its railway construction sector to European train manufacturers. In return, the EU has agreed to partially open its market to public transport equipment – such as trains and signalling – to Japanese manufacturers.
- The trade pact even allows products from the EU to enjoy a special status afforded to certain consumer goods in Japan, known as 'Geographical Indication', which lets consumers know that they are genuine. This allows European producers to earn a premium for the quality of their products and eliminate any imitation product in Japan.
- Official websites containing useful information will be set up for both EU member countries and Japan.
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