The European Union and Japan signed a monumental trade deal in, July 2018, eliminating nearly all tariffs between the entities in one of the world’s largest free-trade deals. The pact, signed in Tokyo, covers a third of the global economy.
The agreement is in stark contrast to President Donald Trump’s trade war and alignment with Russian President Vladimir Putin. Although the leaders didn’t mention him by name, Japanese Prime Minister Shinzo Abe and EU leaders Donald Tusk and Jean-Claude Juncker distanced themselves from Trump’s tactics in a press conference following the deal.
“Politically, it’s a light in the increasing darkness of international politics,” European Council President Tusk said of the deal. “We are sending a clear message that you can count on us. We are predictable – both Japan and [the] EU – predictable and responsible and will come to the defense of a world order based on rules, freedom and transparency and common sense.”
Once passed, Japan will see lower prices on European wines, cheese, pork, handbags, and pharmaceuticals while the EU will see lower price tags on Japanese machinery parts, tea, and fish. Eventually, about 99% of tariffs on all imports will be eliminated.
Free trade = Buyers and sellers from different economies voluntarily trade without a government applying tariffs, quotas, subsidies or prohibitions on goods and services. Free trade is the opposite of trade protectionism or economic isolationism.