With the deal, the EU is seeking access to one of the world's richest markets, while Japan hopes to jump-start an economy that has struggled to find solid growth for more than a decade.

European Council President Donald Tusk (C), Japanese Prime Minister Shinzo Abe (L) and European Commission President Jean-Claude Juncker (R) give a press conference after an EU-Japan summit at the European Council on July 6, 2017, in Brussels.
European Council President Donald Tusk (C), Japanese Prime Minister Shinzo Abe (L) and European Commission President Jean-Claude Juncker (R) give a press conference after an EU-Japan summit at the European Council on July 6, 2017, in Brussels.

Japanese Prime Minister Shinzo Abe and top EU officials agreed on Thursday to the broad outline of a landmark trade deal, capping four years of talks and came on the eve of a G20 meeting in Germany.

"Today we agreed in principle on an Economic Partnership Agreement (with Japan), the impact of which goes far beyond our shores," European Commission chief Jean-Claude Juncker said at a joint press conference with Abe and EU President Donald Tusk in Brussels.

The EU and Japanese economies combined account for more than a quarter of global output, making the deal one of the biggest trade pacts ever.

"We were able to demonstrate a strong political will so that the EU and Japan take the lead on free trade," Abe said just hours before he was due to meet US President Donald Trump at the G20 in Hamburg.

Cars for cheese

With the deal, the EU is seeking access to one of the world's richest markets, while Japan hopes to jump-start an economy that has struggled to find solid growth for more than a decade.

Japan is also hoping to seize an opportunity after the failure of the 12-nation Trans-Pacific Partnership (TPP), torpedoed in January by Trump.

The "political agreement" on the trade deal covers some of the accord's toughest aspects but leaves aside details that could still prove difficult.

Japan's Prime Minister Shinzo Abe (R) is welcomed by European Council President Donald Tusk at the start of a EU-Japan summit in Brussels, Belgium, July 6, 2017. (Reuters)
Japan's Prime Minister Shinzo Abe (R) is welcomed by European Council President Donald Tusk at the start of a EU-Japan summit in Brussels, Belgium, July 6, 2017. (Reuters)

At the heart of the deal is an agreement for the EU to open its market to the world-leading Japanese auto industry, with Tokyo in return scrapping barriers to EU farming products, especially dairy.

European farmers on Thursday welcomed an agreement between the EU and Japan on a free trade pact which will remove tariffs on much of their bilateral trade, especially for some agricultural goods.

EU officials insist that the deal will be a major boon for European farmers who would gain access to a huge market that appreciates European products.

Producers and exporters of meat and dairy as well as wines and other specialty foods, categories which are currently highly protected in Japan, will see the biggest windfall from the tariff reductions, EU farm lobby Copa-Cogeca said in a statement

"It is good news for EU producers that this ambitious trade deal has been wrapped up," said Martin Merrild, head of Copa.

Teruyuki Daino, president of Kirin Holdings' wine business Mercian Corp, said he welcomed the potential expansion of the Japanese wine market, but added he was concerned over the impact on smaller Japanese wineries.

Megmilk Snow Brand, which currently shares market dominance with only two other manufacturers in Japan, said it was preparing for a large impact on the domestic dairy industry.

"Corporate protectionism"

Left untouched for now is the issue of controversial investment courts which have stoked opposition to trade deals in the EU nations, including Germany and France.

"After hard negotiations, the EU and Japan are sending a very positive signal to the world," said Markus J. Beyrer, Director General of BusinessEurope, a Brussels-based lobby.

"We are asking the G20 to take action against protectionism and this is a concrete example of how this could be done," he added.

Anti-free trade activists meanwhile furiously criticised the mooted deal, calling it a dangerous sop to multinationals.

"This trade deal, and others like it, smack of corporate protectionism at the expense of democracy and the environment," said Greenpeace trade campaigner Kees Kodde.

Last year, the EU's giant CETA trade deal with Canada nearly sank on such concerns when the small Belgian region of Wallonia threatened to veto it, before eventually relenting.

Most opposition is centred on the investment courts, a controversial measure designed to resolve commercial disputes.

They have come under fierce opposition in Europe and the EU is trying – so far unsuccessfully – to persuade partners to adopt a new system staffed by public officials.

Divisions within the EU over the issue could prove significant when the EU-Japan deal faces ratification in the bloc's more than 30 regional and national parliaments.

EU officials said they hoped to implement the deal in January 2019.

Source: TRTWorld and agencies