Europe and Japan near trade deal as US takes protectionist path

  • economic union
- HIROKO TABUCHI, JACK EWING

Jun 25, 2017-

The European Union and Japan are close to sealing one of the largest trade agreements ever, a deal that could further isolate the United States as President Trump forges a protectionist path.

The deal, which brings together two giants encompassing a quarter of the world’s economy, would be a potent symbol of free trade during a time of populist backlash over globalisation.

The agreement would give both parties better access to core industries like cars and machinery, while laying down new rules for resolving investment disputes and removing structural barriers to trade, according to a partial draft of the agreement obtained by The New York Times.

The deal, which is expected to be signed in the coming weeks, also reaffirms the two powers’ commitment to the Paris climate accord, abandoned by the Trump administration this month.

The negotiations have hinged on some everyday—and quintessentially European—items.

Europe is seeking a rollback in Japan’s high tariffs on food imports, which include 30 percent on imported cheese, 10 percent on chocolate and 9 percent on canned tomatoes. Japan is pushing Europe to eliminate a 10 percent tariff on Japanese automobiles. Final changes to tariffs were being laid out in appendixes and were not in the partial draft.

The draft deal showed a softer stance on environmental issues, such as illegal timber and overfishing, compared with other recent trade negotiations like a stalled Pan-Asian pact that involved the United States and Japan. The approach has raised concerns that a retreat from the trade arena by the United States—which under President Barack Obama was a champion of environmental causes—is damping the willingness of other countries to tackle contentious topics.

The European Union-Japan trade talks, which began in 2013, could still hit last-minute stumbling blocks. Any deal must still be ratified by national and some regional parliaments across the European Union and by the Japanese Legislature. 

In the current trade environment, political interests can easily override economic advantages. A major trade deal between Canada and the European Union was almost derailed by a group of dairy farmers in the Wallonia region of Belgium. 

The partial draft of the deal between the European Union and Japan was first obtained by the environmental group Greenpeace, which shared the document with The Times, the German public broadcaster ARD and the Süddeutsche Zeitung newspaper.

The Japanese Foreign Ministry said in a statement that “a broad agreement is within reach.” Foreign Minister Fumio Kishida is preparing to work out the final details with Cecilia Malmstrom, the European trade commissioner, and a deal could be announced as early as next week, according to the Japanese public broadcaster NHK. The European Commission would not comment on the document. In an emailed statement, the commission said, “The negotiators are now in permanent contact at all levels to conclude an agreement as soon as possible.”

 “It puts the US on the back foot,” said Joshua P. Meltzer, a senior fellow at the Brookings Institution and a former senior trade negotiator for Australia. Under Mr. Obama, he said, American businesses were on their way to improving their positions in the Asian and European markets. “But now, the EU is managing to move more quickly,” he said, with substantial benefits. European farmers, for example, could gain better access to the lucrative Japanese market. “It shows the world doesn’t stand still,” he added.

 “In the current international environment, an ambitious EU-Japan deal would send a powerful signal to the rest of the world that two of the largest economies are resisting protectionism and that openness to trade and investment remains one of the best tools to harness and shape globalisation and create more economic growth and jobs,” the statement said.

The rest of the world is moving ahead with trade alliances as the Trump administration pushes a nationalistic “America first” agenda. 

Published: 25-06-2017 10:11

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