Asian Angle | If globalisation is dying, how do you explain the Japan-EU free trade deal?

It was a deal that took years of negotiations to settle, but a Japan-EU mega-bloc for free trade will surely silence globalisation naysayers

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From left, European Council President Donald Tusk, Japanese Prime Minister Shinzo Abe and European Commission President Jean-Claude Junker shake hands in Brussels. Photo: Kyodo

Published: 9:32am, 24 Jul 2017Updated: 9:32am, 24 Jul 2017

Globalisation was supposed to die this year. Instead, the European Union and Japan are about to create the largest free trade area in the world.

Earlier this month, at their summit meeting in Brussels, EU President Donald Tusk and Japan’s Prime Minister Shinzo Abe announced a framework agreement on an EPA (Economic Partnership Agreement) to create an economic mega-bloc between the two economies that together account for about 30 per cent of the global GDP.

The initiative is a strong message to Washington about not only Japan’s and Europe’s commitment to the principles of open economy and free trade, but also their ability to pursue those principles, and in the process influence the global economic environment.

Japan’s foreign minister Fumio Kishida before a meeting with the EU Commissioner of Trade at the EU Headquarters in Brussels. Photo: AFP Photo

Tokyo and Brussels are expected to finalise their EPA by the end of this year and to put it into force in 2019. It will need about a year to complete ratification of the agreement by member states.

The enactment of the new EPA will significantly strengthen the EU-Japan economic interdependence and provide a strong impetus for their leading industries to develop each other’s markets. Japan, first of all, will expand exports of its autos and electronic products. In 2016, transportation machinery and electronics combined accounted for more than half of Japan’s total exports to the EU. Producers of its newly emerging signature export products like sake and green tea will also benefit.