July 5, 2017

Japan, EU on Cusp of Trade Deal

 |  By: Bloomberg News

Japan and the European Union are working against the clock to remove the remaining obstacles to a trade deal that would cover more than a quarter of the global economy, as they seek to burnish their image as opponents of protectionism.

After weeks of tough negotiations in Tokyo that cap four years of talks, Japanese Foreign Minister Fumio Kishida is in Brussels for meetings with EU Trade Commissioner Cecilia Malmstrom. Both sides hope to unveil a broad agreement at a leaders’ summit on Thursday, ahead of a Group of 20 meeting in Hamburg the following day.

"We have made significant progress in negotiations, but there are still important issues to be resolved," Japanese Prime Minister Shinzo Abe, who flies to the Belgian capital Wednesday, told reporters in Tokyo this week. "It’s extremely important for Japan and the EU to fly the flag of free trade amid protectionist moves by reaching a swift outline agreement."

U.S. President Donald Trump’s rejection of multilateral trade deals, including with Europe and with a group of Asia-Pacific nations, has prompted the EU and Japan to speed up talks. But the two sides must reach a consensus on tariffs. Japanese public broadcaster NHK said Wednesday they had mostly resolved their main differences: dairy products and autos. Japan will create a low-tariff quota for European cheese and abolish levies over 15 years, while the EU will remove auto tariffs over seven years.

There is pressure from the ruling Liberal Democratic Party to maintain protective measures for home-produced cheese. The EU, the world’s largest cheese exporter, predicts the deal would result in an additional 10 billion euros ($11.4 billion) in exports of processed food, including meat and dairy products, to Japan.

Japan recently announced record imports of nonfat dry milk from the U.S. to offset tight domestic production and increased demand.