Japan and the European Union finalized a trade deal that had been agreed to in July on Friday. The agreement covers a total population of 600 million (about 8% 0f the world’s population) and a third of global GDP. Brussels called the deal the most significant ever for large agri-business in Europe, while Japan hoped the deal would further secure a large market for their export sector, including autos and other industrial goods, as well as electronics.
The agreement will reduce tariffs between the two areas as well as harmonize some regulations.Specifically, the deal will end European duties on the Japanese automobile sector and Japanese duties on European cheese, wine, and meat. While some changes will be implemented immediately, all agreed to changes will happen within fifteen years.
The deal comes on the heels of an announcement of a preliminary milestone reached in the Brexit talks and continued talk in the United States against free trade agreements. Officials in Brussels took the opportunity to differentiate its focus from the two Anglophone nations in regards to free trade. Jean-Claude Junker, E.U. Commission President, and Shinzo Abe, the Japanese Prime Minister issued a joint statement saying in part that the free trade agreement demonstrated a commitment “to keeping the world economy working on the basis of free, open and fair markets with clear and transparent rules.”
Despite the optimism, the two sides did not reach an agreement on what should happen in the case of disputes generated by a foreign investor. International arbitration in cases where foreign investors allege discriminatory behavior have often been a part of free trade agreements, but critics have pointed out that the provisions can, in practice, placed the interests of multi-national corporations above those of the local democratically elected politicians. Ostensibly, free trade agreements should, in principle, ensure that foreign and domestic corporations and investors be treated equally. That issue will be discussed in subsequent negotiations between Japan and the E.U.