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EU signs biggest ever trade deal and attacks Donald Trump

James Crisp
Shinzo Abe, Japan's prime minister, with Jean-Claude Juncker (left) and Donald Tusk.  - Bloomberg

The European Union on Tuesday signed an agreement with Japan that will create the world’s largest free trade zone before attacking Donald Trump for triggering possible trade wars with his protectionist “America First” policy.

The Japan-EU Free Trade Agreement will eliminate nearly all tariffs between the bloc and the world’s third biggest economy. The EU will abolish tariffs on Japanese cars in return for Tokyo eliminating tariffs on European cheese and wine.

It will cover a third of the global economy and 600 million people, after it is ratified by the European Parliament.

In an unmistakable swipe at Mr Trump, Donald Tusk, the President of the European Council, said: “We are putting in place the largest bilateral trade deal ever. This is an act of enormous strategic importance for the rules based international order at a time when some are questioning this order.”

The deal is meant as a chastening rebuke to the US, which on Tuesday escalated its trade disputes with the EU by filing WTO complaints against the bloc’s retaliatory tariffs on US products which followed American tariffs on steel and aluminium imports.

The EU argues that those tariffs, which Mr Trump has justified on spurious grounds on national security, break WTO rules.

From bourbon to motorcycles: the iconic US products hit by the EU's retaliatory tariffs

The US is proposing 10pc tariffs on a $200bn (£152bn) list of Chinese goods. That follows an earlier move by Washington to impose 25pc tariffs on $34bn of Chinese goods. Beijing has responded by imposing identical penalties on a similar amount of American imports.

“While protectionism is spreading in the world, Japan and the European Union will take the lead as flag bearers for free trade,” Shinzo Abe said at the Tokyo signing ceremony, alongside Mr Tusk and Jean-Claude Juncker, the President of the European Commission.

Mr Tusk claimed the agreement was “a light in the increasing darkness of international politics”.

“We are sending a clear message. You can count on us, we are predictable, both Japan and the EU, predictable, responsible and will continue defending a world order based on rules, on freedom, on transparency and common sense.

“I am absolutely sure you know what I mean,” Mr Tusk said before criticising tariff wars as “irresponsibility”.

On Monday in a visit to Beijing, Mr Tusk had warned world leaders “not to start trade wars which turned into hot conflicts so often in our history”.

The trade war has begun, but how much can China really retaliate?

Mr Juncker, who Mr Trump has described as “a killer”, said the EU needed “reliable partners”.  Mr Juncker is expected to meet Mr Trump for talks in the near future.

“There is no protection in protectionism and there is no unity where there is unilateralism,” Mr Juncker said.

US-EU relations are at a low point amid concerns over Mr Trump's commitment to the world order established after the Second World War and his friendly overtures towards Vladimir Putin.

As well as the trade dispute, Mr Trump’s decisions to pull out of the Paris Agreement on climate change and Iran nuclear deal and threaten Nato over defence spending targets have cost him friends in Brussels.

Before meeting Mr Putin in Helsinki, Mr Trump said the EU was one of his "foes".