The European Union and Japan said on Friday that they had finalized a sweeping deal that would create a free trade area covering more than a quarter of the world’s economy, pushing against rising calls for protectionism in much of the West.
Leaders of both parties to the agreement trumpeted its strategic, as well as economic, importance. That it was announced just hours after Britain and the European Union broke a deadlock to start a new round of talks over that country’s withdrawal from the bloc only heightened its symbolic impact.
The so-called economic partnership agreement, which would be one of the largest free trade deals ever, “demonstrates the powerful political will of Japan and the E.U. to continue to keep the flag of free trade waving high,” the Japanese prime minister, Shinzo Abe, and the president of the European Union’s executive arm, Jean-Claude Juncker, said in a joint statement.
The deal is subject to ratification by lawmakers in Europe as well as Japan, but Mr. Abe and Mr. Juncker said that they were confident that once in place, it would “deliver sustainable and inclusive economic growth, and spur job creation.”
“It sends a clear signal to the world that the E.U. and Japan are committed to keeping the world economy working on the basis of free, open and fair markets with clear and transparent rules fully respecting and enhancing our values, fighting the temptation of protectionism,” the leaders added.
The agreement also reaffirms its parties’ commitment to the Paris climate accord, from which the Trump administration has said it will withdraw.
Tokyo and Brussels began trade talks in 2013, and said in June that they were nearing a deal. Japan trades less with the European Union than it does with the United States or China. But completing a deal with the European Union became a more urgent priority for Tokyo after President Trump’s decision in January to withdraw the United States from another agreement, the Trans-Pacific Partnership. Japan has also pushed to revive that deal, even without the United States.
Japan had effectively paused its talks with the European Union while it focused on the larger Pacific Rim deal, which included 10 other nations along with the United States and Japan. Mr. Abe has made liberalizing trade a centerpiece of his economic agenda — a notable shift in a country that, despite its success exporting cars, electronics and other merchandise, had long shied away from trade deals.
The change of direction on trade owes partly to the waning power of Japan’s farm lobby, which has fought to keep tariffs on imported agricultural products high, impeding the country’s ability to strike agreements. Japanese negotiators still focus much of their efforts on protecting farmers, but with Japan’s rural population rapidly aging and shrinking, governments no longer see making concessions on agriculture as politically fatal.
The European Union and Japan have a combined annual economic output of around $20 trillion, and together would constitute a trading area roughly the size of the one created by the North American Free Trade Agreement. The future of Nafta, which comprises the United States, Canada and Mexico, has also been cast into doubt by tense renegotiations.
Still, while Japan and the European Union have expressed confidence over the agreement they announced on Friday, political interests are still at play. National and some regional legislatures in Europe will have a say, a process that nearly derailed a trade deal with Canada.