Japan, EU sign free trade deal amid worry about US protectionism

Vastavam web: Japan and the European Union signed a wide-ranging free trade deal on Tuesday that both sides hope will act as a counterweight to the protectionist forces unleashed by U.S. President Donald Trump. The ambitious trade pact, which creates the world’s largest open economic area, comes amid fears that a trade war between the United States and China will diminish the role of free trade in the global economic order.

The United States this month imposed 25 percent tariffs on $34 billion of Chinese goods to lower the U.S. trade deficit, and China quickly retaliated with an increase in tariffs on U.S. goods. The Japan-EU trade deal is also a sign of shifting global ties as Trump distances the United States from long-time allies like the EU, NATO and Canada. “We are sending a clear message that we stand against protectionism. The EU and Japan remain open for cooperation,” European Council President Donald Tusk, who speaks for the 28 EU national leaders, told.

Europe’s food sector is one of the biggest winners from the deal, which should allow it to capitalize on Japanese demand for high-quality cheese, chocolates, meats and pasta.Japanese car and car parts makers are also expected to increase their sales to Europe, where they have lagged behind European rivals. However, Japan’s dairy industry is expected to lose market share to European products once tariffs of up to 40 percent on some cheese imports start falling.

The dialogue will be chaired by Japan’s trade and foreign ministers and the European Commission’s vice-president for competitiveness, both sides said in a joint statement. Both Japan and the EU, having seen Trump pull back from free trade relationships, are keen to show they remain committed to removing barriers they say hamper growth, analysts said.“ Trade liberalization 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. A China-EU summit ended on Monday with a communique affirming the commitment of both sides to the multilateral trading system.

Trump pulled the United States out of the Trans-Pacific Partnership with Japan and 10 other states on his first day in office in January 2017 and has pushed to renegotiate a free trade pact with Canada and Mexico. Trump says he is taking a hard line on trade to protect U.S. workers and U.S. companies, but critics say his approach is upending the rules of multilateral global trade.