EU, Japan to sign massive trade deal as USA puts up barriers

EU, Japan to sign massive trade deal as USA puts up barriers

Leaders from the European Union and Japan formally signed a new free trade pact on Tuesday, the latest in a series of moves toward trade liberalization and a direct rebuke to US President Donald Trump's recent trade protectionism.

The pact creates the world's largest open economic area amid fears that a trade war between the USA and China will diminish the role of free trade in the global economic order.

European Commission President Jean-Claude Juncker will visit President TrumpDonald John TrumpShocking summit with Putin caps off Trump's turbulent Europe trip GOP lambasts Trump over performance in Helsinki Trump stuns the world at Putin summit MORE at the White House next week, following the US leader's blistering criticism of critical North Atlantic Treaty Organisation allies and the European Union during a week-long trip to Europe.

Abe said the agreement "shows the world the unshaken political will of Japan and the European Union to lead the world as the champions of free trade at a time when protectionism has spread".

It will cover a third of the global economy and 600 million people, after it is ratified by the European Parliament.

The agreement, which European Council President Donald Tusk called "the largest bilateral trade deal ever", aims at boosting business between the two regions by eliminating tariffs on most products.

Tusk hailed the accord, saying, "This is an act of enormous strategic importance for the rules-based global order at a time when some are questioning this order".

"We are sending a clear message that we stand together against protectionism", EU Council President Donald Tusk said. "Trade liberalisation and market openness continue to march ahead in Asia-Pacific", said Ajay Sharma, the regional head of global trade and receivables finance at banking and financial services provider HSBC.

At the press conference, Tusk echoed Abe's view, stressing the significance of signing the landmark agreement when the rule-based trading system is under threat.

The EU officials and Japan will also look to present a united front against USA tariffs on steel and aluminium, which Japan has called "deplorable".

Having started negotiations on the pact in 2013, the two sides reached an agreement in principle at the previous Japan-EU summit last July and then finalized their consultations in December. Following the signing ceremony, they will seek parliamentary ratification. Japan's worldwide economic affairs ambassador, Yoichi Suzuki, previously said it was a "very high priority that the deal enter before the end of March 2019".

Under the pact, Japan will remove tariffs on 94 per cent of all imports from the European Union, including 82 per cent of farm and fishery products.

The EU will also eliminate about 99 percent of its tariffs on Japanese goods, including crucially removing levies on Japanese cars from the eighth year after the deal is implemented, and scrapping tariffs on vehicle parts immediately.

The deal comes following the launch of export tariffs against United States trading partners by President Donald Trump earlier this year. Japanese will get cheaper cheeses, such as Parmesan, gouda and cheddar, as well as chocolate and biscuits.

"It's a light in the increasing darkness of worldwide politics", Tusk said.

The signing was delayed from earlier this month because Abe cancelled going to Brussels over a disaster in south-western Japan caused by extremely heavy rainfall, with more than 200 people dying in floods and landslides.

The Japan-EU statement is meant to confirm their stance of warning against such hardline policies of the Trump administration and mutually cooperating to firmly maintain the free trade regime.

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