‘Two of the world’s biggest economies are poised to prove that globalisation is not dead,’ said The FT, ‘and that the populist antipathy to free trade has not yet triumphed.’
After four years of trade talks, and several recent negotiating breakthroughs on the ‘sticky questions of cheese and car parts,’ a ‘sweeping’ EU Japan free trade agreement is expected to be completed ahead of the G20 summit in Hamburg on Friday.
European farmers are set to ‘win prized access’ to the Japanese agricultural market, while Japan’s carmakers will no longer be hampered by EU import tariffs.
“We will have full duty free access for almost all agri-food exports,” said one EU official. “Some of the transitions are longer than we would have liked, but in the end it will be fully duty free.”
Crucially for campaign groups, the EU has also said there will be no “investor-state dispute settlement” mechanism in the accord. The format has been widely criticised for allowing multinationals to ‘ride roughshod over local regulations.’
The EU Japan free trade accord is both a ‘powerful rejection’ of Donald Trump’s aggressive protectionism – on the eve of his arrival in Hamburg – and confirmation that a hard Brexit would leave some UK companies on ‘worse trade terms’ with their European neighbours than ‘Japanese competitors halfway around the world.’
The accord with the ‘fourth-largest import market in the world’ will be a boost for European farmers, cheese-makers and vintners ‘at a time when rural communities on the continent are being courted by populist forces.’
In Japan, the free trade agreement will be a victory for Prime Minister Shinzo Abe. The agreement will ‘force change on unproductive parts of the Japanese economy, particularly agriculture.’
Mr. Abe had originally hoped the US-led Trans-Pacific Partnership would fulfil this function until Donald Trump scrapped it.
In the long term, the EU Japan deal ‘may increase pressure on Mr. Trump to reconsider his anti-trade animus.’
His ‘suspicion of globalisation’ focuses mainly on China, a country he casts as ‘keen to dominate the west.’
30 years ago, the US and Europe characterised Japan in exactly the same way.
‘That Japan’s commercial hegemony never materialised, and that it is now a welcome trade partner, illustrates how badly protectionist arguments age as the global economy moves on.’
While the US and the UK, the two countries who ‘built the global liberal trading order,’ turn inward, Japan and the EU ‘must continue to lead.’
Shinzo Abe and his government must maintain good relations with the countries remaining in the TPP agreement, and Europe must look to deepen trade with other markets, such as South America and Mexico.
‘As the rest of the world comes together, the UK and the US risk being left behind – or forced to rethink their repudiation of the global order they built.’