An employee displays the production date on a cheese in this arranged photograph at the Roquefort Societe dairy, part of Groupe Lactalis, in Saint-Affrique, France, on Wednesday, May 29, 2013. Roquefort cheese makers export about 420 tons a year, or 2.5 percent of their total production, to the U.S., according to Thierry Zurcher, the director of Roquefort Societe, which accounts about two thirds of the region's output. Photographer: Balint Porneczi/Bloomberg
Under the deal, Japan will scrap many tariffs on EU agricultural goods, including wine, meat and cheeses © Bloomberg

The European Parliament has approved the EU’s largest ever trade deal — a “cars for cheese” pact with Japan that will remove more than €1bn in duties for European exporters while creating an “open trade zone” covering 630m people.

EU chiefs have said the deal — which after MEPs’ vote is set to come into force on February 1 — shows the bloc’s determination to fight protectionism and create export routes for its companies. 

Under the agreement, Japan will scrap many tariffs on EU agricultural goods, including wine, meat and cheeses. Europe will remove duties on Japanese cars and car parts. Some of the most sensitive market openings will happen over years or be limited by tariff-free quotas.

Cecilia Malmstrom, the EU’s trade commissioner, told the Financial Times the deal showed both sides’ desire to reinforce relations at a time when traditional alliances were under strain.

US president Donald Trump’s decision to pull the US out of the Trans-Pacific Partnership trade talks, as well as his stance that “trade wars are good, and easy to win” had galvanised negotiations on the deal, Ms Malmstrom said. 

The pact covers trade flows across two economies that collectively account for almost one-third of the world’s gross domestic product. As well as scrapping almost all tariffs on trade in goods, the deal includes measures to remove regulatory barriers and open up public procurement markets. EU exporters pay close to €1bn in Japanese customs duties every year.

Other parts of the agreement seek to cut red tape for people moving temporarily for jobs and ensure common standards of information for shareholders of companies. 

The deal stood out because of the “size of the respective economies”, Ms Malmstrom said, adding that it had brought “side benefits”, including an agreement on data flows and a joint stance on how to reform the World Trade Organization.

The EU has painted its parliament’s endorsement of the pact as an important sign of Brussels’ credibility as a trade negotiator, after this was called into question because of a popular backlash against a deal with Canada. Tensions over that agreement, known as Ceta, culminated in 2016 in threats to block it from the Walloon regional parliament in Belgium.

MEPs approved the Japan deal on Wednesday despite objections from some members that the accord threatened labour protection standards in the EU. Ms Malmstrom denied this was the case, saying both sides retained a “clear right to regulate”.

Unlike Ceta, the Japan deal does not need to be ratified by national parliaments to take effect because it excludes issues related to investor protection, which are being tackled in a legally separate negotiation.

Ms Malmstrom said that were the UK to approve its exit deal with the EU, it would continue to get the market access benefits of the Japan deal throughout a post-Brexit transition period.

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