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The E.U.-Japan Trade Deal: What You Need to Know The E.U.-Japan Trade Deal: What You Need to Know
(about 1 hour later)
BRUSSELS — The European Union and Japan announced a broad agreement on Thursday that would lower barriers on virtually all the goods traded between them, a pointed challenge to President Trump on the eve of a summit of world leaders in Germany. BRUSSELS — The European Union and Japan announced a broad agreement on Thursday that would lower barriers on virtually all the goods traded between them, a pointed challenge to President Trump on the eve of a summit meeting of world leaders in Germany.
The agreement still needs further negotiation and approval before it can take effect, but it is aimed at giving both economies some zip after years in the doldrums.The agreement still needs further negotiation and approval before it can take effect, but it is aimed at giving both economies some zip after years in the doldrums.
It represents an act of geopolitical theater, a day before a Group of 20 summit meeting begins in Hamburg. At a meeting of G-20 finance ministers in March, Steven Mnuchin, the United States treasury secretary, pointedly declined to endorse a statement in favor of free trade. It represents an act of geopolitical theater, a day before a Group of 20 summit meeting begins in Hamburg. At a meeting of G-20 finance ministers in March, Steven Mnuchin, the United States Treasury secretary, pointedly declined to endorse a statement in favor of free trade.
Japan and the European Union stepped up negotiations after President Trump abandoned the Trans-Pacific Partnership, a wide-ranging trade agreement with Pacific Rim countries that had Japan at its core. The new agreement was a clear sign that other parts of the world will continue pursuing a liberalizing trade agenda, even without the United States. “Although some are saying that the time of isolationism and disintegration is coming again, we are demonstrating that this is not the case,” Donald Tusk, the president of the European Council, told a news conference in Brussels. “The world really doesn’t need to go a hundred years back in time. Quite the opposite. It doesn’t have to be so.”
Prime Minister Shinzo Abe of Japan held the deal up as a move “against protectionist trends.”
Japan and the European Union stepped up negotiations after President Trump abandoned the Trans-Pacific Partnership, a wide-ranging trade agreement with Pacific Rim countries that had Japan at its core. The new deal was a clear sign that other parts of the world will continue to pursue a liberalizing trade agenda, even without the United States.
Together, the European Union and Japan would constitute a trading bloc of a size to rival that created by the North American Free Trade Agreement, presently the world’s biggest free trade zone (and one that Mr. Trump wants to renegotiate).Together, the European Union and Japan would constitute a trading bloc of a size to rival that created by the North American Free Trade Agreement, presently the world’s biggest free trade zone (and one that Mr. Trump wants to renegotiate).
Here’s what you need to know about the deal:Here’s what you need to know about the deal:
The core of the agreement aims to increase the flow of Japanese cars to Europe and of European food to Japan.The core of the agreement aims to increase the flow of Japanese cars to Europe and of European food to Japan.
The Europeans are expected to scrap a 10 percent tariff on passenger cars made in Japan, probably over a period of seven years. (Duties would come down more rapidly for some car 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 Europeans are expected to scrap a 10 percent tariff on passenger cars made in Japan, probably over a period of seven years. Duties would come down more rapidly for some car components.
In return, the Japanese are expected to lower tariffs on high-value European cheeses like Camembert from France, while retaining their unusually complex regulations on dairy products. Those are key concessions: The Japanese automotive giants Toyota and Honda have claimed a smaller market share in Europe than in other major markets like the United States.
Tokyo is also likely to make it easier for foreign companies to bid for major government contracts, a move that could benefit European train makers like Siemens of Germany and Alstom of France. Even so, European officials have warned they would reimpose tariffs if too many Japanese cars entered the European market, or if Japan raised barriers on European vehicles or parts. They did not say, however, what level of Japanese imports would cause that kind of reaction.
In return, the Japanese are expected to lower duties on European cheeses like Gouda from the Netherlands, while retaining their unusually complex regulations on dairy products.
Tokyo is also likely to make it easier for European companies to bid for major government contracts, a move that could benefit train makers like Siemens of Germany and Alstom of France.
Accompanying the trade deal is a separate partnership agreement in which both sides pledge greater cooperation on issues like cybercrime and climate protection.Accompanying the trade deal is a separate partnership agreement in which both sides pledge greater cooperation on issues like cybercrime and climate protection.
Negotiators have refused to include whaling and logging in the talks, which has angered environmental groups — Greenpeace has characterized the deal as “a huge transfer of power from people to big business.”Negotiators have refused to include whaling and logging in the talks, which has angered environmental groups — Greenpeace has characterized the deal as “a huge transfer of power from people to big business.”
The European trade commissioner, Cecilia Malmstrom, responded this week by saying groups like Greenpeace would be opposed to “any trade agreement,” ostensibly a criticism of the group’s stance against trade liberalization.The European trade commissioner, Cecilia Malmstrom, responded this week by saying groups like Greenpeace would be opposed to “any trade agreement,” ostensibly a criticism of the group’s stance against trade liberalization.
On Wednesday, Ms. Malmstrom posed with the Japanese foreign minister, Fumio Kishida, holding daruma dolls, a symbol of perseverance.On Wednesday, Ms. Malmstrom posed with the Japanese foreign minister, Fumio Kishida, holding daruma dolls, a symbol of perseverance.
Even without rules on whales and wood, the deal still is the biggest bilateral trade agreement ever struck by the European Union, covering about a quarter of the global economy. Even without rules on whales and wood, the deal is the biggest bilateral trade agreement ever struck by the European Union, covering about a quarter of the global economy.
Not quite. The biggest issue that has not yet been agreed is how to ensure investors have a way to resolve disputes that arise as a result of the deal. Not quite. The biggest issue that has not yet been agreed is how to ensure that investors have a way to resolve disputes arising as a result of the deal.
The Europeans are keen to employ a court system rather than ad hoc arbitration, which has been used for decades but has been heavily criticized by European lawmakers and environmental groups as being too soft on industry interests. The Europeans want to employ a court system rather than ad hoc arbitration, which has been used for decades but has been heavily criticized by European lawmakers and environmental groups as being too soft on industry interests.
The Japanese, however, are opposed to introducing courts, arguing existing institutions are enough. The Japanese, however, argue that existing institutions are enough.
European negotiators have also failed to convince the Japanese to accept guarantees on freer flows of data, an issue that may be discussed again after this trade deal goes into force. European negotiators have also failed to persuade the Japanese to accept guarantees on freer flows of data. Both sides said they wanted to make progress on the issue by early next year.
Both sides expect the talks to be completed within months.Both sides expect the talks to be completed within months.
In June, the Japanese parliament passed a law that aims to address some of its dairy-industry protections, which may make it easier to wrap up negotiations. In June, the Japanese Parliament passed a law that aims to address some of its dairy industry protections, which may make it easier to wrap up negotiations.
The main concern, however, is the ratification process in Europe.The main concern, however, is the ratification process in Europe.
A landmark trade deal with Canada nearly came unstuck last year when Wallonia, a region of Belgium, withheld its approval until its concerns were dealt with by the country’s political leaders.A landmark trade deal with Canada nearly came unstuck last year when Wallonia, a region of Belgium, withheld its approval until its concerns were dealt with by the country’s political leaders.
What would happen if the Walloons — or another region or country — were to balk this time? European officials didn’t have an answer to that this week.What would happen if the Walloons — or another region or country — were to balk this time? European officials didn’t have an answer to that this week.