TOKYO -- Japan and the European Union on Tuesday signed a historic Economic Partnership Agreement, creating the world's largest free-trade bloc.
The deal sends a clear message against the protectionism evolving under U.S. President Donald Trump. Japan and the EU account for about 30% of the world’s gross domestic product, and 40% of global trade.
The signing ceremony was held at the Prime Minister’s Office in Tokyo, and attended by European Council President Donald Tusk and European Commission President Jean-Claude Juncker, in addition to Japanese leader Shinzo Abe.
"This is an act of enormous strategic importance for the rules-based international order, at a time when some are questioning this order," said Tusk at a news conference after the ceremony. "We are sending a clear message that we stand together against protectionism."
"Protectionism produces nothing," Abe echoed. "Japan and the EU intend to lead the world as flag bearers of free trade."
The agreement now needs to be ratified by the Japan and EU parliaments. The two sides aim to bring the deal into force by March 2019, before the U.K.'s scheduled departure from the EU. An agreement had been reached in principle in July 2017 and the details were finalized in December.
Japan and the EU will gradually reduce or immediately abolish tariffs on industrial goods such as cars. Levies on most of agricultural products will also be removed.
The deal will be "a new engine for Abenomics," said the Japanese prime minister, referring to his signature economic policy. According to his government, the EPA will push the nation’s GDP up by 1%, or 5 trillion yen ($44.5 billion), and create 290,000 jobs. The European side expects to triple agricultural shipments to Japan and boost its total exports to the country by one-third.
Japan and the EU also signed a Strategic Partnership Agreement covering a wide range of issues, such as national security and climate change.