The EU and Japan have entered into an economic agreement. This is the largest bilateral trade deal ever made by the EU in terms of market size and will be the largest zone of free trade created in history. It drastically reduces tariffs between the EU and Japan, paving the way for simpler and faster trade between the two, and therefore an increase in volume.

Japan and the EU – and Germany, in particular – are export-driven economies and advocates of open trade. So the new economic agreement is seen as strongly reaffirming the rules-based international trading system. The EU-Japan deal will emphasise on Japan’s commitment to free trade and give a further thrust to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which rose from the ashes of the TPP after the US withdrawal.

The EU-Japan economic agreement will ultimately remove 97 per cent of tariffs that Japan applies to European goods and 99 per cent of those applied by the EU. EU companies will save on duties which they currently pay when exporting to Japan. A number of longstanding regulatory barriers, for example on car exports, will also be removed. As Japan will scrap duties on agricultural products, Europeans stand to gain most from exports of consumer products, such as cheese, pork, and wines.