Japan, EU seal landmark trade deal in challenge to Donald Trump

Japan and the European Union agreed on Thursday to a free trade pact, creating the world's biggest open economic area and signalling resistance to what they see as US President Donald Trump's protectionist turn.
Japan's Prime minister Shinzo Abe (centre) is welcomed by European Council President Donald Tusk (left) and EU Commission President Jean-Claude Juncker prior to a EU Japan leaders summit meeting in Brussels, Belgium, on July 6, 2017.
Japan's Prime minister Shinzo Abe (centre) is welcomed by European Council President Donald Tusk (left) and EU Commission President Jean-Claude Juncker prior to a EU Japan leaders summit meeting in Brussels, Belgium, on July 6, 2017. PHOTO: EPA

BRUSSELS (AFP) - Japanese Prime Minister Shinzo Abe and top EU officials agreed Thursday (July 6) to the broad outline of a landmark trade deal, presented as a direct challenge to protectionism championed by US President Donald Trump.

The breakthrough capped four years of talks and came on the eve of a G20 meeting in Germany at which Trump is expected to defend his protectionist stance on trade.

“Today we agreed in principle on an Economic Partnership Agreement (with Japan), the impact of which goes far beyond our shores,” European Commission chief Jean-Claude Juncker said at a joint press conference with Abe and EU President Donald Tusk in Brussels.  

The EU and Japanese economies combined account for more than a quarter of global output, making the deal one of the biggest trade pacts ever attempted.

“The EU believes in political purpose of world built on openness, cooperation and trade,” said Tusk, a former Polish prime minister.  

“(But) this accord is not just about trade but above all the shared values of our societies: democracy, rule of law and human rights,” he added.  

Cars for cheese

With the deal, the EU is seeking access to one of the world’s richest markets, while Japan hopes to jump-start an economy that has struggled to find solid growth for more than decade.  Japan is also hoping to seize an opportunity after the failure of the 12-nation Trans-Pacific Partnership (TPP), torpedoed in January by Trump.  

The “political agreement” on the trade deal covers some of the accord’s toughest aspects but leaves aside details that could still prove difficult.  At the heart of the deal is an agreement for the EU to open its market to the world-leading Japanese auto industry, with Tokyo in return scrapping barriers to EU farming products, especially dairy.  

EU official insist that the deal would be a major boon for European farmers who would gain access to a huge market that appreciates European products.

‘Corporate protectionism’

Left untouched for now are the controversial investment courts that have stoked opposition to trade deals in the EU nations, including Germany and France.  “After hard negotiations, the EU and Japan are sending a very positive signal to the world,” said Markus J. Beyrer, Director General of BusinessEurope, a Brussels-based lobby.  

“We are asking the G20 to take action against protectionism and this is a concrete example of how this could be done,” he added.  

Anti-free trade activists Thursday objected to the mooted deal, calling it a dangerous sop to multinationals.  “This trade deal, and others like it, smack of corporate protectionism at the expense of democracy and the environment,” Greenpeace trade campaigner Kees Kodde.  

Last year, the EU’s giant CETA trade deal with Canada nearly sank on such concerns when the small Belgian region of Wallonia threatened to veto it, before eventually relenting.  Most opposition is centered on so-called investment courts, a controversial measure designed to resolve disputes.  

This system has come under furious opposition in Europe and the EU is trying – so far unsuccessfully – to persuade partners to adopt a new system staffed by public officials.