The agreement will help exploit untapped potential in economic relations between the EU and Japan. Japanese cars account for only 10% of sales in Europe, while Japan accounts for only 3.7% of EU merchandise exports – half as much as in 1990 – and 1.1% of its foreign investment. The agreement will cover 30% of global GDP and 40% of world trade and will cover an area of 600 million people. The Japanese government estimates that the country`s real GDP will increase by $44 billion and create nearly 300,000 new jobs. “Everyone knows there is a general practitioner on the other side of the Atlantic. Our answer is clear. We are not social partners, but fair trade people,” said Bernd Lange, who heads the European Parliament`s trade committee. The EU also took care elsewhere in the TTIP (Transatlantic Trade and Investment Partnership) negotiations with the Us in 2016. Earlier this year, it concluded an updated trade agreement with Mexico. To address specific sensitivities in the 28-person trading bloc, the EU said tariffs on motor vehicles would be gradually reduced during a seven-year transition period before being abolished.

The EU-Japan Economic Partnership Agreement also removes several long-standing non-tariff barriers by supporting international standards for motor vehicles. The car industry secured special conditions in the EU-Japan Free Trade Agreement, which came into force on 1 February. On the other hand, high-end German brands would also benefit, as almost all cars are imported from the EU. Even if Japan abolished tariffs on finished motor vehicles in 1978, it would not be easy for Western manufacturers to obtain a decent market. The main reason for this is the complexity of regulatory barriers for the Japanese automotive market. If these barriers are removed, we will probably see more Mercedes, Audis and BMWs on Japanese roads. Nevertheless, there would be no major change, as most of the demand in Japan is favourable to urban cars and mpvs (62% of total turnover) which are two segments that are not a priority for European production. Shinzo Abe, Prime Minister of Japan “Japan and the European Union enter into trade agreements for 30 percent of global GDP” of The Japan Times has a good chance that the EPA will expand and deepen trade and economic relations between the two partners. Japan and Europe are regions with high per capita incomes, advanced industrial and service sectors and demanding consumer markets. Both sides are engaged in areas similar to future development, such as digitization, interconnectivity, robotics, mobility, life sciences and energy efficiency. On 26 June 2018, the European Council also adopted a decision on the signing and provisional implementation of a strategic partnership agreement between the EU and Japan. Both the EPA and the GSB will improve relations between the two parties in many ways.

On the one hand, the EPA focuses on economic aspects such as the abolition and reduction of tariffs and the establishment of rules promoting free trade. On the other hand, the BSG will provide the legal framework for cooperation between Japan and the EU to find solutions to common challenges such as climate change, cybersecurity, energy security, disaster management and migration. It will also help boost economic growth, create jobs and strengthen business competitiveness in both Japan and the EU. “The increase in EU car exports to South Korea was one of the factors that led to a 55% increase in EU trade with the country, from 30.6 billion euros in 2011 to 47.3 billion euros in 2015,” she added in a fact sheet detailing the new free trade agreement with Japan.