Business World

Sunday 20 August 2017

EU and Japan trumpet trade deal as rebuke to a closed America

European Council president Donald Tusk Picture: AP
European Council president Donald Tusk Picture: AP

Jonathan Stearns

When European Union and Japanese leaders endorsed a preliminary free-trade agreement yesterday it was in significant measure a counter to Donald Trump's protectionist stance.

The political green light in Brussels yesterday came a day after negotiators for both sides reached a breakthrough over food and car exports, which had been sticking points since talks started in 2013.

They were resolved in time to coincide with today's G20 meeting of the leaders of the world's wealthiest countries, including Japan and the EU, in Hamburg, which the US president travelled to Europe to attend.

The trade deal with Japan is the EU's biggest to date, surpassing an accord with South Korea, and marks the 28-nation bloc's second with a fellow member of the Group of Seven leading industrialised nations following a recent pact with Canada.

It's also a big deal for Japan, which has faced resistance from its domestic agricultural sector to opening up the country to more imports.

The two-way agreement is politically important in the EU and Japan at a time when big multinational trade deals have ground to a halt.

"We in the European Union firmly believe in the political purpose of a world which is built on openness, co-operation and trade," EU President Donald Tusk told reporters in the Belgian capital during the EU- Japan summit.

"The world really doesn't need to go 100 years back in time. Quite the opposite."

Europe and Asia are stepping up co-operation and championing open markets as unease mounts over Mr Trump's "America First" policy, which has shaken the multilateral trade order. Since taking office in January, Trump has pulled the US out of a new trans-Pacific commercial accord, frozen talks on a deal with the EU, ordered the renegotiation of a long-standing pact with Canada and Mexico, and threatened to curb American imports of steel. The EU-Japan deal bolsters the free-trade credentials of Japan's Prime Minister, Shinzo Abe, and is a political triumph for German Chancellor Angela Merkel as she prepares to host the Group of 20 summit.

Donald Trump is due in Hamburg for the July 7-8 gathering after visiting Poland.

"Japan and the EU will hoist the flag of free trade high amidst protectionist trends," Abe said while standing alongside Tusk and Juncker. "This is an achievement we should be proud of, which also sends a strong message to the world."

Abe, whose political clout at home has been weakened by scandals and a heavy defeat in a Tokyo election, has faced calls within his own party to maintain protection for Japanese cheese producers. Merkel has clashed openly with Trump over trade after he labelled Germany "very bad" for its export strength, including shipments of cars to the US.

The new pact also signals a determination in European capitals to prevent the UK's planned exit from the EU from undermining the bloc's global footprint.

The two-year Brexit process began in March.

"The EU is more and more engaged globally," Tusk said.

Both sides will continue talks into the autumn and aim to produce a legal text by year-end. The goal is for the agreement to take effect provisionally in "early" 2019.

Before the final free-trade deal could take provisional effect, it would need to be approved in Europe by the European Parliament and EU governments. (Bloomberg)

Irish Independent

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