Following the election of Donald Trump, the US swiftly withdrew from a trade agreement once seen by some as essentially a US-Japan trade deal. While the Trans-Pacific Partnership also involved ten other countries, it would have been the first trade agreement between the two allies, and would have dramatically lowered barriers to trade.
Japan’s initial answer to the US decision was to forge ahead with the TPP sans the US. But it also reached further abroad to Europe, accelerating the negotiation of a bilateral deal that has been lauded for creating the world’s largest free trade area.
Headlines from major German news outlets hailed the signing of the Japan-EU Free Trade Agreement (JEFTA) this week as a triumph of free trade, and also a forceful rebuke of the Trump administration’s protectionist trade policies.
“We are sending a clear message that we stand together against protectionism,” European Commission Council President Donald Tusk said, adding that it is “a statement about free and fair trade; we are showing that we are stronger and better off when we work together.”
From China’s perspective, bilateral trade agreements could be the path forward as the world’s largest economy lurches towards an increasingly protectionist position.
Chinese state-owned Global Times argued as much on Wednesday, suggesting that the Japan-EU deal was a model for China to follow.
In contrast to the Trans-Pacific Partnership, which didn’t include China, bilateral agreements give China more sway.
“What’s more, bilateral deals are likely to help China gain more bargaining power in negotiations that see far fewer participants than multilateral trade agreements,” the paper said.
“China must prepare to embrace the new era of regional collaboration, and we believe Beijing will be a staunch supporter of free trade. Bilateral deals will let progress on free trade continue without the participation of the US.”
Global Times also pointed out in a separate article that the world is now uniting against the US in a trade war that Washington started and is likely to lose.
“The rest of the world didn’t intend to unite against the US. But Washington put itself in an adversarial position to all others so that any of their moves would look like they are working together against the US,” the commentary argued.
“The Trump administration has started a protracted trade war that the US is bound to lose. Like previous traditional wars that it launched, Washington is confident at the beginning that it can swiftly crush opponents with its advantage in strength. But when the aggression turns into long exhausting warfare, it will be dragged into a strategic disadvantage.”