Changing Lanes: Japan-EU trade agreement boosts Italian exports

At a time of increasing protectionism, the EU’s economic partnership agreement with Japan has already begun to show results for European exports

Trade deal demonstrates benefits of economic co-operation and free trade

ITALIAN EXPORTS ARE ALREADY ON THE RISE FOLLOWING THIS YEAR'S TRADE DEAL WITH JAPAN

AFTER years of negotiation, the Japan-EU Economic Partnership Agreement entered into force on February 1, 2019.

At a time of widespread protectionism, characterised primarily by the withdrawal of the US from a number of multilateral agreements such as the Trans-Pacific Partnership, the trade war between the US and China and the planned exit of the UK from the European Union, the agreement between the EU and Japan, together with the previously agreed EU-Canada Trade Agreement, has been welcomed by those who support international co-operation and free trade.

The latest trade data from MDS Transmodal for the second quarter of 2019 suggest positive results for EU exports to Japan, with Italy among the best-performing countries.

It is estimated that between April and June, EU exports to Japan  increased by about 10% compared to the corresponding period in 2018, with Italian exports estimated to have grown by over 12%.

The positive results observed by Italian exporting companies in the second quarter of 2019 were mainly driven by the product groups “Vegetables and fruit” (+9% compared to 2018), “Mineral manufactures” (+7%), “Cereals and cereal preparations” (+5%) and “Beverages” (+22%).

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The partnership agreement, described as a “mega-deal” as it covers almost 28% of the world economy, over a third of global trade and a market of around 635m people, has been labelled by some analysts as “cars for cheese”.

Under the agreement, the EU nations want to increase their exports of agricultural and food products to Japan, while in the opposite direction Japanese car companies want to export their vehicles to Europe tariff-free by 2027.

The agreement also covers services, as it provides better access to competition for public procurement for service companies.

It is worth noting that the positive results are also attributable to the appreciation of the yen against the euro, a factor that has made Italian exports more competitive.

Undoubtedly, however, the JEEPA agreement will continue to encourage positive trends for Italian exports to Japan. The potential new opportunities of the agreement will certainly be the subject of debate during an event organised by the Italy-Japan Business Group which will take place in Tokyo and Osaka next November.

First published on Lloyd's List website October 2019