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    Categories: Financial Blog

European Union and Japan poised to sign trade deal following progress in talks

The European Union and Japan are expected to sign a trade deal on Thursday following Donald Trump threatening to bestow some limits to international trade.

The trade commissioner for Europe, Cecilia Malmström, declared she had come to an agreement with Fumio Kishida, Japan’s foreign minister. Malmström said in a tweet that they have “ironed out” the remaining disparity in the negotiation.

Prior to the G20 gathering in Hamburg, there will be a summit in Brussels for one day. There, the prime minister of Japan Shinzō Abe will meet the president of the European council Donald Tusk and the president of European commission Jean-Claud Juncker.

One of Germany’s planned priorities of the summit is free trade, meaning this meeting is no mere coincidence.

Daruma dolls, which are items correlated to perseverance and luck, are exchanged by Kishida and Malmström in a symbol of high hopes. These dolls are part of the culture of Zen Buddhism, whenever people make a wish, they paint one eye. Once the wish has been fulfilled the second eye is painted. Malmström and Kishida colored in the second eyes on the two dolls adorned with the flags of EU and Japan as they posed for the cameras.

Officials however may be hoping for a miracle to make it through the last obstacles.

The touchy issue of a court system to deal with disputes from investors remain open in spite of a likely agreement on Thursday.  The alternative of choice by the EU to the investor-state dispute settlement has not been accepted by Japan. This system has taken criticism from unions and activists for favoring corporations more. The EU, pressured from NGOs, nominated a new form of trade court, where judges are government-appointed instead of disputing parties.

Sources from EU did not hypothesize on the pace of the deal coming onto force, but it was certain it would take months for all the legal text to be translated, tweaked, and be agreed on by all members of the EU.

EU and Canada took three years to sign a similar agreement. The deal almost didn’t go through when the treaty was threatened to be rejected by a Belgian region. The deal between EU and Canada, now mostly in force, needs to get over the final obstacle of approval by at least 38 national and regional assemblies.

It is possible the UK will already be out of the EU by the time the treaty with Japan comes into effect.

Britain was one of the largest supporters of the negotiations with Tokyo that started in 2013. An “Important step towards liberalizing trade between two of the world’s largest economies” the trade had this to say about the talks.

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