On the one hand the trade war in the name of protectionism, on the other a trade agreement on free trade. It's called Jefta (Japan – EU free trade agreement) and it is the largest agreement ever signed between Japan and the European Union.
With the largest bilateral trade deal EVER, today we cement Japanese-European friendship. Geographically, we are far apart. But politically and economically we could hardly be any closer. With shared values of liberal democracy, human rights and the rule of law. pic.twitter.com/ICcGTY3XI8
- Donald Tusk (@eucopresident) July 17 2018
The agreement was signed today, July 17, by the president of the EU Commission Jean-Claude Juncker and by the president of the European Council Donald Tusk on one side and by the Japanese premier Shinzo Abe.
This agreement represents “a powerful message against protectionismor,” Abe and Juncker said in a joint statement. "Today is a historic date as we celebrate the signing of an extremely ambitious trade agreement between two of the largest economies in the world", commented the two leaders.
With the signature of the Economic Partnership Agreement with Japan we are making a statement about the future of free and fair trade. The agreement puts fairness and values at its core. There is no protection in protectionism – and there is no unity where there is unilateralism. pic.twitter.com/4vMs7FcfWM
- Jean-Claude Juncker (@JunckerEU) July 17 2018
JEFTA: WHAT CHANGES?
The partnership, which will come into force in 2019, involves 600 million people, with important effects on European exports, which are already worth 58 billion in terms of goods and another 28 billion for services.
At a general level the agreement establishes the cancellation of customs duties on 97% of important products from the EU and according to the Union's estimates it should lead one billion in savings a year, even if in the immediate future it should concern only two categories of products: food and cars. Not surprisingly, the most ironic economists have already renamed it "cheese for cars".
As expected, the agreement also has many detractors, who argue that, while increasing revenues thanks to the increase in exports, the Jefta will expose European companies to greater competition, which could jeopardize their survival.
It should be underlined that, after today's signing, the agreement will have to reach the European Parliament where, in the footsteps of CETA (the EU-Canada agreement), it could encounter more than one obstacle.
EU-JAPAN AGREEMENT: WHAT IT PROVIDES
As mentioned, initially the agreement will mainly concern i foodstuffs – meat, cheese, wine and chocolate – and cars, with brands such as Toyota and Honda which, in all likelihood, should spread even more across the Old Continent.
In detail, Tokyo will cancel the tariffs on cheeses such as Gouda and Cheddar (today at 29,8%), but also those on wine, currently subject to average duties of 15%.
Tariffs on pork are also gone (processed meat and fresh meat are expected to reduce duties), while those on beef will drop from the current 38,5% to 9% over the course of 15 years. According to calculations by Brussels, exports of meat and cheese to Japan should rise by 170-180 percent in the future, for a total value of 10 billion euros.
No duties on either chemical substances, plastics, textiles and cosmetics. For footwear, on the other hand, the tax will drop from 30% to 21% immediately, to then arrive at its definitive abolition within a decade. Finally, in the same period of time, duties on leather products will be cancelled.
JEFTA: NEWS ON PROCUREMENT
European companies will be able to access the contracts of 48 Japanese municipalities inhabited by 300-500 thousand people, but also to contracts on the national railway system.
JEFTA: THE PROTECTIONS
However, not all products will be liberalised. Tokyo will recognize more than 200 products of protected origin such as Parmesan and commit to fight against bargaining or imitation. On the other side of the fence, Japan will continue to impose tariffs on rice.
