Representatives of the European Union and Japan have announced the near-conclusion to a trade deal that will encompass around 40% of international commerce. The far reaching agreement is to a be a signal to the world that Trump’s isolationist and “America-first” policy will not stand on a global scale, and that nations must make and maintain closer bonds.
From cars to wine and cheese the E.U.-Japan Trade Agreement sees tariffs being phased out on almost everything the two countries trade over a period of roughly seven years. The deal will help Japanese car manufacturers increase stake in the “newer” market, after properly saturating the American one. Automakers like Toyota will now be able to expand, but will be subject to stringent controls as Cecilia Malmstrom, the European Trade Commissioner, said that Europe could reinstate the tariffs if there is a very large influx of Japanese made cars that puts European car makers at risk. This however is huge news as the current 10% tariff thoroughly restricts the Japanese automakers from the Union in preference over domestic cars.
In exchange, Japan will see agricultural goods decline in price as their respective tariffs will also be cut, with hard cheese being let loose on the small island nation, while soft cheese still faces government regulation. But, the wine to go with that cheese will also forgo the tariffs, with an estimated 134 million euros saved per year by European wine makers on exports to Japan. This, in turn, will help European wine gain larger market shares in Japan, where the U.S and Austrian wine exports had a significant advantage.
As always, amongst the winners in this deal there will be losers, and the companies that are enjoying the current trend will have to find ways to adapt in order to stay competitive, while small businesses will also face stiff competition from abroad.
The deal is not yet complete, but the major hurdles have been overcome. Now, the E.U. and Japan will begin talks about cybersecurity, defense and more sensitive topics in a bid to lead the world in collective prosperity.