The European Union said that political agreement on trade terms would be announced on Thursday, the day before Group of 20 leaders gather in Germany.<\/b>
\nThe European Union and Japan have signaled that they plan to announce a broad agreement on trade on Thursday, a pointed challenge to President Trump, who is scheduled to attend a meeting of world leaders in Germany the next day.
The timing of the announcement \u2014 on the eve of the Group of 20 summit meeting in Hamburg \u2014 was a clear reaction to the United States\u2019 protectionist stance the last time the G-20 met. In March, during a meeting of cabinet-level officials in Baden-Baden, Germany, Steven Mnuchin, Mr. Trump\u2019s treasury secretary, refused to endorse a statement in favor of free trade.
By forging ahead with their own agreement ahead of the meeting with Mr. Trump and other heads of state, Europe and Japan threatened to isolate the United States in important industries like automobiles.
\u201cAmbitious free and fair trade deal in the making, \u201d Donald Tusk, the president of the European Union, tweeted late Monday .
The European Union followed up with a statement saying that when Europe and Japan held their own summit meeting in Brussels on Thursday, they would announce that they had reached a political agreement on a deal. That means that the two sides have agreed on the broad outlines of a pact, but have still to work out the details \u2014 often the most difficult part of making a trade agreement.
Among other things, the pact would eliminate a 10 percent duty that the European Union imposes on Japanese car imports, while removing obstacles that European carmakers face in Japan. That would be particularly significant for luxury carmakers like Mercedes, BMW and Toyota\u2019s Lexus brand, said Ferdinand Dudenh\u00f6ffer, a professor at the University of Duisburg-Essen in Germany who focuses on the auto industry.
Those vehicles suffer the most from high import duties. \u201cIt could be a chance for the high-value, premium vehicles, \u201d Mr. Dudenh\u00f6ffer said. American brands like Cadillac or Lincoln \u201cwon\u2019 t have the same advantage and will be in a worse position, \u201d he said.
The trade deal has been under negotiation for years, but talks were effectively put on hold while Japan focused on a separate deal with the United States and other Pacific Rim countries, the Trans-Pacific Partnership.
But Mr. Trump dealt that agreement a possibly fatal blow shortly after taking office this year, when he pulled the United States out of it. At the same time, trade talks between the United States and Europe have stalled.
A pact to be announced on Thursday offered both Japan and the European Union an attractive alternative.
For the European Union, \u201cthe political imperative around this agreement is intense, \u201d according to Hosuk Lee-Makiyama, the director of the European Centre for International Political Economy, a research organization in Brussels.
With Britain preparing to exit the bloc, Mr. Lee-Makiyama said, the European Union\u2019s leaders and the European Commission, its executive arm, were under pressure to show the remaining 27 states that membership still brought benefits, including gains from liberalizing trade.
\u201cWith Brexit, a huge chunk of European trade is under uncertainty, \u201d Mr. Lee-Makiyama said. \u201cThe commission is struggling for a win.\u201d
For Shinzo Abe, the Japanese prime minister, the deal also looks like a much-needed win.
Mr. Abe won office five years ago with promises to liberalize Japan\u2019s economy and make the country\u2019s industries more competitive, but critics say his efforts have fallen short. The Trans-Pacific Partnership was meant to be a centerpiece of his economic legacy, but it may now be out of reach.
Allegations of influence-peddling domestically and gaffes by members of Mr. Abe\u2019s cabinet have added to his problems. Voters in Tokyo delivered a stinging rebuke to his party in municipal elections on Sunday.
Though key issues must still be ironed out, the two sides have reached agreement on several contentious issues, including cars and cheese.
European negotiators insisted that Japan lower import duties on a range of agricultural goods, in particular dairy products, an area that Japan has staunchly protected.
In return, the Europeans offered to lower duty on vehicles from Japan, a change that could benefit carmakers like Toyota and Honda, who have so far claimed a smaller market share than in other markets like the United States.
Together, the European Union and Japan would create a trading bloc of a size to rival the North American Free Trade Agreement, now the world\u2019s largest free trade zone.
Still, history shows that political opposition can derail trade pacts even after the parties reach a broad agreement. The Obama administration was unable to conclude a trade deal with the European Union, even though both sides badly wanted to conclude one. The talks stalled largely because of opposition from the food industry and environmental activists.
The proposed deal between the European Union and Japan could founder for the same reasons. Environmental groups have expressed worry that drafts of the pact fall short on a number of issues, including curbing the illegal timber trade and tackling overfishing.
European automakers said Tuesday that they wanted assurances that the pact would truly give them access to Japan, which is notorious for tax policies and other measures that effectively exclude foreign manufacturers.
\u201cJapan should resolve the remaining nontariff measures facing E. U. vehicle exports, \u201d Erik Jonnaert, secretary general of the European Automobile Manufacturers Association, said in a statement.<\/p>\n

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