Europe And Japan Take Over US' Leadership In Trade Diplomacy With New Agreement

Most of the world's attention is seemingly fixated with potentially awkward encounters at the G-20 Summit — such as Donald Trump's meeting with Russian President Vladimir Putin, or Germany's Angela Merkel with Trump. But ahead of this meeting of the world's 20 largest economies, Japan and Europe have announced a transformative new trade agreement. Vox's Zeeshan Aleem explains what it contains and why it matters. 

The announcement was definitely rushed: Negotiators have so far refused to include whaling and logging in the talks, which has angered environmental groups. And the biggest pending issue is to ensure that investors have a way to resolve disputes arising as a result of the deal, James Kanter explains at The New York Times. But timing is everything in politics, and two big, highly globalized economies stepping up to show they will continue trade liberalization speaks volumes: free trade will carry on with or without the United States taking part. 

Style and substance

Political theather notwithstanding, this is a move of transcendence: it will rival the North America Free Trade Agreement (NAFTA) in size and scope, Aleem argues. 

In detail, the fresh Japan–EU Economic Partnership Agreement (JEEPA) will slash Japanese tariffs on beef, pork, and wine, eliminating 85% of tariffs on agricultural food products going into japan. Tariffs on European exports of textiles and clothing will also be cut. And imports in the auto industry will also see their tariffs reduced. All in all, EU exports to Japan will rise by 34% and Japan's to the EU by 29%, according to The Economist.

Moving forward, the main concern is the ratification process in Europe. But stepping up to Trump may offer the right incentive to move faster.