eBusiness Weekly
The EU-Japan economic agreement will ultimately remove 97% of the tariffs that Japan applies to European goods and 99% of those applied by the EU. It is estimated that EU companies will save €1 billion a year in duties which they currently pay when exporting to Japan. A number of longstanding regulatory barriers, for example on car exports, will also be removed.
The agreement will open up the Japanese market of 127m consumers to key EU agricultural products and increase EU export opportunities in many other sectors such as financial services. As Japan will scrap duties on agricultural products, the Europeans stand to gain most from exports of consumer products, such as cheese, pork, and wines.
Japan’s main interest in a trade deal with Europe was to increase its auto industry exports. The EU currently imposes a 10% tariff on Japanese cars. Under the agreement, it will lower this to zero over eight years. Although cars and auto components account for about a fifth of Japan’s exports to Europe, Japanese car makers’ share of the European market is only about 10% – much lower than in the US or Asia.
Besides these improvements, the economic agreement will strengthen cooperation between Europe and Japan in a range of areas. It will reaffirm their shared commitment to sustainable development, and include for the first time a specific commitment to the Paris climate agreement.
EU firms already export more than €58 billion in goods and €28 billion in services to Japan every year. This will grow, and the strategic partnership will lead to further deepening of EU-Japan relations and engagement across a wide range of global, regional and bilateral thematic issues. It reaffirms the shared values and common principles that form the basis of EU-Japan relations, including human rights, democracy and the rule of law.
Together, the EU and Japan’s economies account for about a third of global GDP. The new trade agreement should therefore serve to bolster the global economy, as well as marking a strong commitment to multilateralism by two of the world’s biggest economies. – The Conversation
