The „cars for cheese“ accord brings together economies accounting for 19% of world’s GDP, Financial Times reports.
The EU and Japan could hardly have been more bullish about the free-trade deal announced on Thursday. No wonder: between them they account for 19 per cent of global gross domestic product and 38 per cent of goods exports.
Shinzo Abe, Japan’s prime minister, hailed „the birth of the world’s largest, free, industrialised economic zone“. The European Commission welcomed „the most important bilateral trade agreement ever concluded by the EU“.
The deal, reached after four years and 18 rounds of negotiations, includes big tariff cuts, co-operation on standards and regulations and the opening up of public procurement markets. The EU estimates the accord will save it €1bn in customs duties per year and boost exports to Japan from more than €80bn to more than €100bn a year.
But much is still to play for. Businesses will be analysing what the deal means for them, while negotiators will be preparing to turn an „agreement in principle“ into a complete text.
What is the real economic impact?
Not for nothing has it been called the „cars for cheese“ deal. For the EU, the big goal was slashing Japan’s tariffs on imports of European meat, wine, and dairy products. Tokyo sought the end of EU import duties on its car sector — a rich prize since the bloc is the world’s biggest importer of road vehicles.
On both issues, the agreement is far-reaching: the EU has agreed to a gradual phase out for all tariffs on cars imported from Japan, with some safeguards against a sudden large increase in imports. In turn, Europe’s farmers will face far lower tariffs when exporting to Japan. At present, duties on food are high, ranging from 15 per cent on wine to 30-40 per cent on cheese.
