EU, Japan Clinch Record Trade Accord in Shadow of Protectionism

(Bloomberg) -- The European Parliament approved a draft free-trade agreement with Japan, removing the last political hurdle to the entry into force of Europe’s biggest market-opening accord.

The European Union assembly’s green light on Wednesday paves the way for the pact to take provisional effect on Feb. 1. Already endorsed by EU governments and the Japanese parliament, the agreement will eliminate virtually all tariffs between the two partners, expand markets for services and public procurement, and bolster regulatory cooperation.

U.S. President Donald Trump’s protectionist tilt has given impetus to the EU-Japan accord, which marks the bloc’s second deal with a fellow member of the Group of Seven leading industrial nations following a pact with Canada.

“A strong EU-Japan partnership is more important than ever,” Cecilia Malmstrom, the EU’s chief trade negotiator, told the 28-nation Parliament before its vote in Strasbourg, France. “We need to work together and to show joint leadership.”

Read more: Japan Is Watching EU Politics and Doesn’t Like What It Sees

The agreement was sealed last year after negotiators for both sides reached a breakthrough over food and car exports, which had been sticking points since talks started in 2013. The commercial deal surpasses an EU accord with South Korea that has been the bloc’s largest to date.

EU-Japan trade in goods was worth 129.4 billion euros ($146.5 billion) last year, according to the European Commission, the bloc’s executive arm in Brussels.

Biggest Share

Japanese exports to the EU in 2017 totaled 68.9 billion euros, driven by machinery and appliances that accounted for more than 40 percent, while the bloc’s shipments to Japan amounted to 60.5 billion euros, of which chemicals and “allied” products had the biggest share at more than a fifth, according to the commission.

The free-trade deal will eliminate 99 percent of the EU’s tariffs on Japanese goods and 97 percent of Japan’s duties on the bloc’s products, according to the commission. Both sides will scrap all tariffs on industrial goods, with the EU phasing out its 10 percent duty on cars from Japan over seven years, the commission said.

©2018 Bloomberg L.P.