TOKYO, July 7 — Japan and EU have secured a new trade agreement in principle, which would open up the Japanese market to EU’s key farm exports, at a time when US President Donald Trump has taken his country on the inward looking “America First” path.
Announcing the agreement, Japanese Prime Minister Shinzo Abe said at a press conference in Brussels on July 6, “We were able to demonstrate a strong political will to the effect that Japan and the EU keep the flag of free trade flying high amid rising protectionism.
“I hope this will stimulate a debate for the early entry into force of the Trans-Pacific Partnership (TPP),” he added. President Trump pulled the U.S. out of the TPP within a day of taking office, but Abe is still pursuing.
European Commissioner President Jean-Claude Juneker told the same press conference that he hopes the Japan-EU agreement may come into force in early 2019.
That means Tokyo and Brussels have to tackle soon the politically sensitive issues such as investment disputes, which were removed off the table in the agreement this time.
Under the agreement, Japan will scrap tariffs on European wines (currently at 15%) immediately, while phasing out tariffs on hard cheeses such as Cheddar and Gouda (currently at 29.8%) over a period of 15 years, as well as pasta and chocolate following a transition period.
Moreover, Japan will create a new tariff rate quote (TRQ) of 20,000 tons for European fresh cheese such as Camembert and Mozzarella in the first year entering Japan, and increase up to 31,000 tons over 15 years. The low-tariff rate within the TRQ will be phased out over the same period.
On pork, Japan will offer EU producers the same level of market access in the TPP. The Japanese gate price tariff system imposing duties of 4.3% on the value of high-quality pork will be phased out over 10 years, while a 482 yen per kilogram duty on value of low-quality will fall to 50 yen over the same period.
In addition, Tokyo will be able to invoke safeguard measures to limit imports of European pork, if they surge rapidly.
In exchange, EU agreed to phase out tariffs on Japanese cars entering EU over seven years.