The European Union and Japan will launch the world’s largest free-trade zone early next year. This will create the world’s largest open economic area. The agreement will remove EU tariffs of 10 per cent on Japanese cars and three per cent for most car parts. It will scrap Japanese duties of some 30 per cent on EU cheese and 15 per cent on wines as well as open access to public tenders in Japan.

It will also open up services markets, such as financial services, telecoms, e-commerce and transport. The two economies account for about one-third of global gross domestic product. The agreement is expected to boost the EU economy by 0.8 per cent and Japan’s by 0.3 per cent over the long term. The deal is expected to bring clear benefits to EU companies and farmers.

Japan had been part of the 12-nation Trans-Pacific Partnership but then turned focus on other potential partners after the US pulled out. The EU has also looked elsewhere after Transatlantic Trade and Investment Partnership negotiations with the US stalled in 2016.

Europe’s food sector is one of the biggest winners from the deal, which should allow it to capitalize on Japanese demand for high-quality cheese, chocolates, meats and pasta.