eBusiness Weekly
Emil Kirchner
Two new landmark agreements between the EU and Japan come into effect on February 1, 2019: the Economic Partnership Agreement and the Strategic Partnership Agreement. The economic agreement is the largest bilateral trade deal ever made by the EU in terms of market size and will be the largest zone of free trade created in history.
It drastically reduces tariffs between the EU and Japan, paving the way for simpler and faster trade between the two, and therefore an increase in volume. The strategic partnership commits to security cooperation on issues like nuclear proliferation, regional security, international terrorism and organised crime, cyber-security, and energy and climate security.
As Han Dorussen and I explain in our new book EU-Japan Security Cooperation: Trends and Prospects, these agreements come at a crucial time in the development of international trade and global governance. Brexit has the UK trying to redefine its relationship with the EU and potentially forge its own trade policies with the rest of the world.
Perhaps more importantly, the new EU-Japan agreements stand in direct contrast to Donald Trump’s decision to introduce an “America First” trade policy. Since being elected president in 2016, Trump has emphasised bilateral deals, erected trade barriers and undermined international institutions like the World Trade Organisation. Indeed, it was the anticipation of Trump’s nationalist policies, and especially his withdrawal from the Trans-Pacific Partnership (TPP) trade agreement, that gave renewed impetus to the EU and Japan’s lingering negotiations of the two agreements. Large trade agreements take a notoriously long time to negotiate and talks between the EU and Japan first began in 2013.
Japan and the EU – and Germany in particular – are export-driven economies and advocates of open trade. The protectionist stance of President Trump left them feeling vulnerable. So the new economic agreement is seen as strongly reaffirming the rules-based international trading system.
The concessions Japan offered to the EU on agricultural products are a blow to US farmers, who for a long time had been hoping to pry open this sealed market. The EU-Japan deal will emphasise Japan’s commitment to free trade and give a further thrust to the newly-formed multilateral trade agreement known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which rose from the ashes of the TPP after the US withdrawal.
