The recently signed Japan-European Union Free Trade Agreement (JEEFTA) has been making headlines worldwide. The agreement, which was signed on July 17, 2018, is said to be the world`s largest trade deal, covering a staggering 600 million people and almost one-third of global GDP.
So, what exactly is the JEEFTA and why is it significant? Let`s break it down.
What is the JEEFTA?
The JEEFTA is a free trade agreement between Japan and the European Union. It covers a wide range of areas, including trade in goods, services, and investment. Under the agreement, both parties will eliminate tariffs on a large number of goods, open up markets for services, and increase investment opportunities.
Why is it significant?
The JEEFTA is significant for a number of reasons. Firstly, it signifies a move towards greater global economic integration. With the United States` withdrawal from the Trans-Pacific Partnership (TPP) and its ongoing trade tensions with China, the JEEFTA represents a positive step towards greater economic cooperation between nations.
Secondly, it is expected to boost trade and investment between Japan and the EU. The agreement is projected to increase Japanese exports to the EU by around 180 billion yen ($1.6 billion), and EU exports to Japan by around 160 billion yen ($1.4 billion). This is good news for businesses, particularly in Japan`s automotive and agricultural sectors.
Finally, the JEEFTA is a significant step towards a rules-based international trading system. With the rise of protectionist policies in some parts of the world, the JEEFTA represents a clear commitment to free and fair trade.
What are the potential challenges?
Despite its many benefits, the JEEFTA is not without its challenges. Critics argue that the agreement could lead to job losses in some sectors, particularly in Europe`s automotive industry. There are also concerns about the impact of the agreement on small and medium-sized enterprises (SMEs) in both Japan and the EU.
Furthermore, the agreement will need to be ratified by all 28 EU member states before it can come into force. This process could take some time, particularly given the current political climate in Europe.
Overall, the JEEFTA represents an exciting development in the world of international trade. It offers significant benefits for businesses and consumers in both Japan and the EU, and demonstrates a commitment to free and fair trade. As the world becomes increasingly interconnected, deals like the JEEFTA will play an important role in shaping the global economy for years to come.