Japan and the European Union sign biggest Open Economic Area in the World: America and Trump

Japan and the European Union sign biggest Open Economic Area in the World: America and Trump

Chika Mori and Lee Jay Walker

Modern Tokyo Times

The European Union (EU) and Japan have agreed to move ahead and open the biggest economic area in the world under free trade. At the same time, major Japanese financial institutions are increasingly focusing on expanding in the EU, to the detriment of the United Kingdom (UK). Therefore, the pact on free trade between the EU and Japan is a reminder that certain protectionist ideals in America under President Donald Trump – and the UK leaving the EU – isn’t going to stifle the EU and Japan respectively.

Unusually for Japan, the leader of this nation was extremely bullish and making a point. Prime Minister Shinzo Abe of Japan said, “Ahead of the G20 summit tomorrow, I believe Japan and the EU are demonstrating our strong political will to fly the flag for free trade against a shift toward protectionism.”

Abe further enthused during a news conference with Jean-Claude Juncker and Donald Tusk from the EU, that the deal is a “win-win.” The leader of Japan pointedly – and in reference to America – said that the agreement between the EU and Japan was “a strong message to the world.”

Reuters reports, Fears of cheaper import competition for European carmakers and Japanese dairy producers were among the thorniest issues, but officials said the two sides were driven by a shared alarm at Trump’s apparent shift away from multilateral open trading systems towards an aggressive “America First” policy.”

The free trade pact between the EU and Japan means that a third of all global GDP belongs to these two combined economies. In other words, the economic protectionism of Trump, who seeks to guard American jobs, is boosting a more confident Japan that seeks to escape a cycle of negative economic growth in recent decades. However, rather than symbolism from one side, it may be a win-win for both sides of the opposite coin because admirable aims can be found in both camps – be it the protectionist camp or the free trade pact between the EU and Japan.

Tusk, President of the European Council, said, “Although some are saying that the time of isolationism and disintegration is coming again, we are demonstrating that this is not the case.”

Minor snags remain but both sides hope that the treaty will begin to work within the economic machinery by early 2019. Of course, it remains to be seen if this new pact between the EU and Japan – or Trump’s conviction behind protectionism and bilateral trade agreements – will boost economic productivity, innovation, create more jobs, and other important areas. However, it is clear that the current leaders of the EU and Japan share a similar vision that is opposite to America under Trump in the realm of economics. Despite this, it is hoped that it will be a win-win for both sides rather than a hollow victory for either side. After all, the democracies of America, the EU, and Japan share common values that can incorporate different economic ideas based on the respective openness of all sides in the economic and political equation.

http://www.reuters.com/article/us-japan-eu-trade-idUSKBN19R17U

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