An economic partnership agreement between Japan and the European Union came into force on Friday, creating a huge free trade area with a total population of about 640 million people and accounting for about 30 percent of the world's gross domestic product.
As trade tensions between the United States and China continue to negatively impact the global economy, the landmark Japan-EU agreement demonstrates to the world the importance of free trade.
This major economic partnership agreement came into effect on the heels of the Trans-Pacific Partnership that came into force among 11 nations, including Japan, Australia and Canada, in December. The Japanese government estimates these two trade deals will lift the nation's real gross domestic product by about 2.5 percent (about 13 trillion yen) and create about 750,000 new jobs.
Japan and the European Union are each preparing to launch full-scale negotiations on trade deals with the United States and hope their EPA will give them a stronger hand in those talks.
The Japan-EU trade deal means that U.S. exports of agricultural products and other goods to Japan will be at a disadvantage compared with EU goods due to tariffs and other reasons. The Japanese government wants to use the EU deal and the TPP to its advantage in trade negotiations with the administration of U.S. President Donald Trump.
The government also plans to accelerate negotiations on a Regional Comprehensive Economic Partnership in East Asia that would encompass 16 nations including China, South Korea and members of the Association of Southeast Asian Nations. The government hopes to conclude this agreement this year.
Under the Japan-EU EPA, Japan will ultimately scrap tariffs on about 94 percent of its imports from the EU, and the EU will eliminate tariffs on about 99 percent of its imports from Japan. Japan immediately axed tariffs on wine imported from Europe. Major supermarkets and other stores across Japan lowered the prices of French and other wine from Friday and will bolster sales of foods produced in Europe by setting up sections dedicated to these products.
In addition to goods and products, the Japan-EU agreement will also strengthen ties in a wide array of fields including services and intellectual property. The deal also prohibits levying tariffs on the transmission of electronic data and states both sides will protect "geographical indications" that state the intellectual property rights of agricultural products.
Furthermore, Japan and the European Union consider the level of protection given to personal information by Tokyo and Brussels to be the same, so they allow both sides to take personal information across borders. In 2018, the European Union implemented the General Data Protection Regulation, which strengthened its protection of personal information. The EPA will make it easier for companies with operations in Japan and Europe to handle customer and other data.
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