EU Abolishes Tariff on Japan-Made Cars

The European Union (EU) decided to eliminate its 10 percent tariff on passenger cars made in Japan, just to see an envisaged bilateral economic agreement (EPA) push through. The deal allows both the 28-nation bloc and the world's third largest economy to create the world's largest open economic area.

Aside from the removal of the tariff on passenger cars, the deal also scraps the three percent rate typically applied to car parts. It also eliminates the 14 percent tariff on television sets imported from Japan. The tariff exemption on the passenger cars and car parts will last seven years, while the one for television sets will last five.

The two sides are also accelerating talks on cheese and wine trade, with the EU demanding Japan to scrap tariffs of some 30 percent on EU cheese and 15 percent of wines. The bloc also wants to increase its beef and pork exports to the Asian nation while gaining access to the latter's large public tenders.

The two parties, which set the guidelines for the deal last July, said that stakeholders are now done with the legalities that would open up trade for both economies, which is set to make up about 30 percent of global output.

"Japan and the EU will join hands and build a free, fair and rule-based economic zone, which will be a model of an economic order in the international community in the 21st century,' Japanese Prime Minister Shinzo Abe told reporters.

"This is the biggest trade agreement we have ever negotiated for the European Union," EU trade chief Cecilia Malmstrom said. "It sends a powerful message in defense of open trade based on global rules."

However, some discussions concerning the trade will continue. For instance, Japan has been refusing the adoption of the investment court system the EU created to settle disputes between foreign companies and states, specifically those that cannot be handled by opaque tribunals. This matter has not yet been resolved even with the recent signing of the agreement.

"This needs further discussion at the beginning of next year, but the rest of the agreement is there," Malmstrom said, implying that this particular issue could be resolved after the deal has commenced.