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The EU And Japan Finally Signed A Free Trade Agreement! Limited Adverse Impact On Chinese Exports
- Jul 31, 2018 -

On July 17, 2018, the European Council President Tusk and the European Commission President Juncker, who is visiting Japan, signed the Japan-Europe Economic Partnership Agreement (EPA) with Japanese Prime Minister Shinzo Abe in Tokyo. According to the cooperation agreement, almost all tariffs will be canceled each other, the EU cancels the tariff on 99% of Japan's goods, and Japan cancels tariffs on about 94% of the EU's goods, which will rise to 99% in the next few years. .


Signing this agreement will create a trade zone that accounts for about one-third of the world's gross domestic product (GDP). The agreement involves major concessions from both sides, Japan will reduce high tariffs on European wine, cheese and other food, and the EU will lift tariffs on Japanese cars and auto parts. The agreement will also be subject to review by the European Parliament and the Japanese Parliament, and will take effect in about 2019.


In fact, this agreement has been discussed for five years. If Trump does not stir up the loss of trust between Japan and the European Union, it will not be so successful in signing a consensus. The EU and Japan started consultations in 2013, and in July 2017, an agreement was reached in principle.


This trade cooperation agreement can be said to largely target Trump's "US priority" trade protectionist policy. After the agreement comes into effect, 99% of Japan's products will be exempted from tariffs; 94% of European products will be tax-free immediately, and the ratio will increase to 99% annually. The progress of tax exemption between the two sides is different. The main reason is that the Japanese government insists on protecting rice.


As Japan makes concessions to EU agricultural products, it will be detrimental to American farmers. The EU's cancellation of Japanese auto tariffs is not good for the US auto industry to export to Europe.


However, if you think about it carefully, it is also a bad news for China to export to the EU. In the consideration of importing countries, Japanese products have become more price competitive. But don't worry too much, because the EU's imports from Japan are mainly in terms of auto parts and components, which may have a certain degree of impact on China's auto exports and auto parts exports.


The year of 2018 is really a turbulent year. The overall trading environment this year is not good. It is recommended that you maintain good customer relationships, customers and suppliers who do not often move around, and go abroad to move around and enhance mutual trust.