While the USA puts up barriers for free trading, Japan and the EU sign an agreement that eliminates most bilateral tariffs.

The leaders of the European Union and Japan met in Tokyo to sign an agreement that will be the start of the creation of one of the largest liberalized trade zones in the world. And this happens as a contrast to escalating of disputes between the USA and the most of its trading partners.

The agreement signing procedure was highly ceremonial, and there is nothing to be surprised about it. The agreement market one of those moments of unity, this time, of the unity of trade.
This looks very positive and promising, especially if we consider, that the president of the USA Donald Trump has launched recently an array of punitive methods and imposed additional tariffs on products from China. He stated, that he was forced to do so, to eliminate the unfair advantages that some countries take of trading.

The trade agreement was the response to the USA policy. The agreement is meant to eliminate all tariffs between the countries, the sum of which amounts to more than 1 bln USD.

Like this, the countries are sending a clear message that they are against protectionism of any kind. These are the words of European Council President Donald Tusk during the meeting with Japanese Prime Minister Shinzo Abe and the President of European Commission Jean-Claude Juncker.

The deal opens more opportunities for selling of Japanese cars to the EU, as well as for European countries for selling their wine and dairy products. Both parties, the EU and Japan, account for about 30% of global economic input, so, the deal is going to have a huge economic influence on the world economy.

This ceremony of signing the agreement came shortly after the USA imposed sanctions on Chinese products. As well, this event took place after a meeting of the two EU leaders for a discussion of the situation in Beijing. While the USA are fighting with its former suppliers and partners, the EU pays closer attention to Japan and Mexico, which used to be longstanding trading partners of the USA. Moreover, these countries have an outstanding economic value for the EU.

The process has started. Tokyo and Brussels signed an agreement, with which they sent a strong signal in support of the global free trade zone. Further, the EU and Canada signed a trade pact. Later, the EU and Mexico signed one more deal that will prolongate the existing agreements and expand the trade scope between the parties.

Now, the EU started negotiating with the biggest trade block in Latin America – Mercosur. It includes Argentina, Paraguay, Brazil, Uruguay. The EU, if they manage to handle this challenge, might become the first outside party that gains the access to the market that is so carefully guarded by the four countries.

But even that is not all. Further, the EU started negotiations with Australia and New Zealand with the intention to expand the global trading links even more.

However, let us return to the agreement between the EU and Japan. The parties moved further than just signing an agreement. The EU and Japan agreed as well, that they recognize the trading frameworks of each other. This measure is meant to protect the data of their customers and facilitate a deeper economic integration.

The EU has been already dealing with a number of countries, within the so-called adequacy decision. Among those countries, only the USA and Canada now have limited recognition for the purposes of commerce and trade. The agreement and the trading block with Japan will allow the parties not only to trade tariffs free, but to allow them playing a more significant role in the world trading affairs.

The European Commissioner for Justice, Consumers and Gender Equality, Věra Jourová, has already stated, that with this agreement, they will be able to build new standards in the trade and show the common leadership.

The EU as well as Japan were influenced in a very negative way by tariffs imposed by Donald Trump on foreign aluminum and steel, for 10% and 25% accordingly. The EU`s response was the imposing of tariffs on American goods, such as Harley Davidson motorcycles and whiskey. Japan submitted a document as well to get the authorization to do the same with the USA goods. Considering, that the USA is a constant security ally of Japan, that was a brave measure to take.

Tokyo has got as well a notification, that Donald Trump has an intention to impose an additional tariff on Japanese cars, the major import product of the country.

Japan itself has converter to the free trade idea very recently. For many generations, the country was very reluctant to open its economy to foreign products, but Mr. Abe allowed more imported goods and made the local companies more competitive in the global scale. As well, these measures allowed Japanese companies open new markets for themselves, in different countries.

In January 2017, Donald Trump pulled out the country from the 12-nation Trans-Pacific Partnership Trade deal, and after that, it was Japan that took an initiative to complete a deal with only 11 nations represented, without the USA.

It is expected that the Japanese and the EU deal will come into force the next year, immediately after the approval of both parliaments and the governments.