Brussels and Tokyo have created the biggest open economic area in the world, just as Washington is walking away from multilateral trade regimes.
The final text in a deal that was declared all-but-done in July was completed on Friday, giving rise to an economic area that accounts for 30% of the global GDP.
On Friday, the Japanese Prime Minister Shinzo Abe talked about a rules based economic order, only months after President Donald Trump demolished Barack Obama’s legacy Trans-Pacific Partnership deal. EU Trade Commissioner Cecilia Malmstrom talked about the “defence” of global trade on the basis of global rules.
The agreement comes as Japan exhibits 2,5% growth, that is, the strongest in a generation.
The agreement removes tariffs for Japanese cars and spare parts, while Japan opens up its public tenders to European contractors and its supermarkets to European cheese, wine, beef, and pork with guaranteed names of origin. The question of what happens with investors’ protection that arose in CEFTA negotiations has yet to be resolved.
Next stop now for the EU will be Mexico, Argentina, Brazil, Paraguay, and Uruguay, with Brussels filling the leadership vacuum on free trade.