With the ink now drying on an economic partnership agreement between Japan and the European Union, both sides must use their alliance to set an example for the world on trade as the U.S. retreats from the international stage.
Signed Tuesday, the Japan-EU pact is poised to unite around 30% of global gross domestic product and 40% of global trade volume in a vast free trade zone -- one of the world's largest.
The pact is, moreover, a high-quality trade deal on par with the Trans-Pacific Partnership: Japan will scrap tariffs on 94% of goods coming in from Europe, while the EU will abolish tariffs on 99% of Japanese goods. The market is expected to grow for key exports from both sides, including Japanese automobiles and machinery and European wine and cheese.
On less tangible matters such as intellectual property, corporate governance and government procurement, the pact sets fair, transparent rules designed to stoke cross-border commerce. The deal thus has the potential to bring wide-ranging benefits to companies and consumers in Japan and Europe, building up both economies.
The pact comes at a pivotal moment for global trade. The U.K. is set to leave the EU at the end of March 2019, by which time Japan and the EU look to have ratified their agreement -- a wise course of action to avoid the unpredictable disruptions that parting may cause. The U.S. and China, meanwhile, are embroiled in an escalating trade war, after Beijing retaliated for tariffs that Washington imposed over alleged intellectual property violations. And American import restrictions on steel and aluminum, introduced on national security grounds, are being felt around the world.
Japan and the EU must not only guard their own interests amid the U.S.'s protectionist turn, but also take the opportunity to claim global leadership. "Japan and the EU intend to lead the world as flag-bearers of free trade," Prime Minister Shinzo Abe said after the pact was signed. European Council President Donald Tusk said the countries are "sending a clear message that we stand against protectionism." Both are laudable goals.
The time has come for the partners to use all means at their disposal to curb the spread of protectionism. On Japan's part, this includes ushering into force the "TPP-11" -- a version of the TPP reworked to function without the U.S. following America's withdrawal in January 2017 -- and accelerating negotiations on the Regional Comprehensive Economic Partnership with the Association of Southeast Asian Nations and other Asian powers, including China and India.
Nor do the responsibilities of Tokyo and Brussels stop at trade. The U.S. is retreating from a host of important international efforts, having pulled out of the Paris Agreement on climate change and a multinational deal to halt Iran's nuclear weapons development. With their economic pact as a starting point, Japan and the EU must deepen cooperation in all fields and together lend stability to the global order.