JAKARTA (TheInsiderStories) – Japan’s Prime Minister Shinzo Abe and European Union (EU) and European Commission (EC) signed the strategic partnerships agreement (SPA) and Economic Partnership Agreement (EPA) on Tuesday (17/07), the premier office said in a press statement on July 18.
The signing agreement held on the 25th Japan-EU summit meeting between Abe with Donald Tusk, President of the European Council, and Jean-Claude Juncker, President of the European Commission, from the European Union, at the Prime Minister’s Office.
The deals comes after both Japan and the EU have faced heavy criticism from U.S’s President Donald Trump for what he perceives as unfair trade practices. The agreement’s signing also give a clear signal the both sides against the protectionism.
Japan is the EU’s second largest trading partner by volume in Asia after China. Together, the total Japan and EU’s economy account for around a quarter of global economic output.
In the bilateral goods trading relationship during 2017, Japan ran a 8.4 billion euro surplus on trade in goods while EU’s services trade surplus with Japan was 13 billion euros.
The trade agreement will eliminate 99 percent of tariffs on Japanese imports by the EU and 94 percent of tariffs on European imports by Japan. Later on, Japan will bring the amount of lifted tariffs on European goods to cover 99 percent of all traded goods as well.
For Japan, the conclusion of the agreement with Europe marks a major milestone. For Abe, the agreement is seen as a fillip to his ‘Abenomics’ set of monetary, fiscal, and structural policies.
The newly signed EU-Japan EPA is the largest bilateral trade deal ever completed, covering nearly a third of global gross domestic product. What is mentioned less, but is of importance nonetheless, is the trade pact’s role in fueling foreign direct investment (FDI).
Japan was already open and void of any regulatory investment barriers or equity caps, and a separate investment treaty is expected to follow in due course. Yet, traditional trade liberalization alone could generate FDI as well as mergers and acquisitions.
June’s Export Rises for the 19th Consecutive Months
Today, Japan’s Ministry of Finance reported the country’s exports increased for the 19th consecutive month in June 2018, despite increasing tensions in global trade. The ministry reported, Japan’s export value grew 6.7 percent in June compared to the same period last year.
Otherwise, Japanese imports rose 2.5 percent and the trade balance posted a surplus of 721.4 billion yen (US$6.4 billion). Japan’s exports have been key to the country’s economic recovery in recent years.
Despite the threat of tariffs on car and parts exports to the United States, Japan continues to advance with trade deals on other key markets such as EU.
Exports to China, Japan’s biggest trading partner, rose 11.1 percent in June compared to the same period a year earlier. While, Japan’s exports to the U.S slipped 0.9 percent and EU Union exports rose 9.3 percent.
Written by Staff Editor, Edited by Linda Silaen, Email: email@example.com