EU, Japan Hail Free Trade Deal: 'A Message To The World'

The deal covers regions equivalent to one third of the world economy.

The leaders of the European Union and Japan on Thursday said their agreement in principle on free trade is the best antidote to the protectionism seen to be promoted by the United States.

The leaders said in a statement that the EU and Japan "demonstrate to the world - and to our citizens" that free trade remains vital to boost living standards.

Countering calls for protectionism, EU Council President Donald Tusk said that the political agreement proves that "the world doesn't need to go back 100 years back in time," when open trade was not as prevalent.

Japan's Prime Minister Shinzo Abe said "it sends a strong message to the world" and both leaders will be able to make that point when they are at Group of 20 summit of world leaders in Hamburg, Germany, on Friday.

The deal, clinched Wednesday before Abe's arrival, covers regions equivalent to one third of the world economy.

Since it was a political agreement — meaning some details have to still be filled in — the timing of the deal after four years of talks was key.

Abe and Tusk will be able to hold the deal up as evidence against any claims that major free trade deals are something of the past.

"Some are saying that the time of isolationism and disintegration is coming again, we are demonstrating that this is not the case," said Tusk.

At the Hamburg summit, U.S. President Donald Trump and his "America First" motto will be at odds with many others.

If Trump decries former U.S. deals with international partners as disasters that cost American jobs and money, the EU and Japan are already highlighting the profits from their deal — from carmakers in Japan to Champagne producers in Europe.

The deal eliminates tariffs on many goods and services so producers can compete on a more level-playing field in each other's markets. For consumers, it will mean some products will be cheaper.

EU exports of goods and services total some 87 billion euros ($99 billion) a year to Japan, which in turn exports some 82 billion euros to the 28-nation bloc.

EU Commission President Jean-Claude Juncker estimated that EU winemakers would save 134 million euros a year and leather and shoe manufacturers 174 milion euros.

Cheeses like Gouda and Cheddar face tariffs of some 30 percent to enter the Japanese market.

And the special name status of EU foods, from Tiroler Speck to Camembert cheese, Munchener beer and Polish vodka, will be protected.

That will happen only, however, once the last hurdles are cleared over the coming months. Documents needs to be legally vetted and translated into the many EU languages before the deal gets ratified by national legislatures.

The EU aims to have the deal active by the spring of 2019.

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