EU, Japan conclude political agreement on major free trade deal

EU Japan get ready for free-trade deal

Japanese Prime Minister Shinzo Abe and top European Union officials agreed on Thursday to the broad outline of a landmark trade deal, presented as a direct challenge to protectionism championed by US President Donald Trump.

"We were able to demonstrate a strong political will so that the European Union and Japan take the lead on free trade", Abe said just hours before he was due to meet US President Donald Trump at the G20 in Hamburg.

European Council President Donald Tusk, European Commission President Jean-Claude Juncker, and Japanese Prime Minister Shinzo Abe held a press conference to announce the progress, paving the way for strengthening economic and strategic ties between the partners.

Tusk said the EU-Japan deal is proof that a key argument for Brexit, which stated that it is easier to achieve trade deals outside the EU, is flawed.

Given the circumstances, both sides were concerned that a deadlock in Japan-EU EPA negotiations would see their trade strategies stagnate over the next few years.

According to the European Commission, a deal would result in the removal of nearly all customs duties between the EU and Japan, worth up to EUR1bn (USD1.1bn) a year. (Duties would come down more rapidly for some vehicle components.) That is a key concession: The Japanese automotive giants Toyota and Honda have claimed a smaller market share in Europe than in other major markets like the United States.

The EU and Japan have taken a significant step towards agreeing a trade treaty, with representatives from both parties expected to sign the proposed deal at a Brussels summit on July 6.

Non-tariff measures are also being agreed, including Japanese alignment with worldwide standards, and regulatory cooperation aimed at creating common standards.

The EU's dairy farmers are struggling with falling demand in its home nations and an ultra-competitive buying climate, which farmers say means they are paid less than the cost of production. It added the agreement "ensures the protection in Japan of more than 200 high-quality European agricultural products".

Tariffs on European exports of laminated wood used for structural purposes will also be reduced over a number of years under the deal.

The two sides are expected to work out a final version of the EPA in due course.

She argued: "Together with the EU- Canada Comprehensive Economic and Trade Agreement, today sends a powerful signal that worldwide cooperation is the way to tackle global challenges and an important stand against protectionism".

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