LONDON (ICIS)--The EU has agreed the largest trade deal it has ever struck with Japan, creating an open trade zone covering 600m people, the European Commission said on Tuesday.
The Economic Partnership Agreement (EPA) is expected to remove the bulk of the €1bn of duties paid by EU companies exporting to the Japan, with tariffs on industrial products in key sectors including chemicals to be fully abolished.
The deal also guarantees EU companies access to procurement markets of 48 cities across Japan, as well as railway procurement at a national level.
The agreement also harmonises safety and environmental standards for the automotive sector, meaning that vehicles will be subject to the same standards in both regions and removing the need for double testing on exports.
The automotive ruling does include a safeguard where the EU would reintroduce automotive tariffs if Japan instated non-tariff barriers for EU vehicles.
In a pointed criticism of the free trade disputes growing between the US and a number of its trading partners, EU trade commissioner Cecilia Malmstrom claimed that commitment to free trade would boost revenues for both markets.
“Together with Japan, we are sending a strong signal to the world that two of its biggest economies still believe in open trade, opposing both unilateralism and protectionism,” she said.
“What we are saying is that a trade agreement is not a zero sum game, but a win-win for the involved parties,” added Commission president Jean-Claude Juncker.
Germany-based chemicals trade group VCI hailed the agreement as an “important signal” amid the intensifying acrimony over balances of trade globally and the increasing prominence of protectionist governments.
“In times of increasing trade tensions between the US, China and the EU, it is more important than ever before for Europe to have close bonds with like-minded major industrial nations and to create perspectives for free trade,” said VCI director general Utz Tillmann.
However, the method agreed by the two regions for examining rules of origin for manufactured goods should not become a blueprint for other free trade agreements, he added.
The Chinese government announced earlier this week that it is taking legal action against the US at the World Trade Organization (WTO) forum over a mooted $200bn in new trade duties.
Pictured: Japan's Prime Minister Shinzo Abe, left, and the presidents of the EU Council Donald Tusk (centre) and the European Commission Jean-Claude Juncker
Source: European Commission