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13 Dec, 2018 13:45

EU & Japan want to turn back Trump clock by creating world's largest free-trade zone

EU & Japan want to turn back Trump clock by creating world's largest free-trade zone

As the US seeks more protectionism, the European Union and Japan have sealed a landmark free trade deal. The new free-trade zone will cover a third of global GDP and about 40 percent of global trade.

More than two-thirds of the European Parliament lawmakers greenlighted the trade agreement between Brussels and Tokyo, officially called the Economic Partnership Agreement, on Wednesday. The document aims to remove most duties on EU goods exported to Japan, which amount to €1 billion ($1,138 billion) and will come into effect on February 1.

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The agreement is to create an open trade zone covering 635 million people and almost one-third of the world's total GDP as well as 40 percent of global trade, according to European Commission statement. The agreement was already adopted by the Japanese government on Saturday.

“Our economic partnership with Japan – the biggest trade zone ever negotiated – is now very close to becoming a reality,” EU Trade Commissioner Cecilia Malmstrom said.

Most tariffs are planned to be gradually eliminated, with rates starting to reduce next year and scheduled to reach zero by the end of the transition period. For example, EU tariffs of 10 percent on Japanese cars are to fall 0.8 percent in the first year and fully reduced in 12 years. The deal will scrap Japanese duties of some 30 percent on many EU cheeses, such as Gouda and Cheddar, and 15 percent on wines as well as grant EU products open access to the Japanese market of 127 million consumers.

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The move is seen by some as a rebuke to US President Donald Trump, who has turned his back on trade deals with both to Europe and Japan, forcing them to seek other potential trade partners.

Trump rejected the Trans-Pacific Partnership, one party of which was Japan, on his first days in office. In September, the US leader also hinted that Japan might be the next target of his protectionist crusade, pushing Tokyo into trade talks with the overseas counterpart.

Meanwhile, European states were hit by Trump’s steel and aluminum tariffs, forcing Brussels to retaliate. The talks on the EU-US trade agreement, the Transatlantic Trade and Investment Partnership (TTIP), stalled even under the previous White House administration. While the deal has not been terminated, little progress has been made since Trump came into office.

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