European Council President Donald Tusk (L), Japanese Prime Minister Shinzo Abe (C) and President of Commission Jean-Claude Juncker pose for a picture at the European Council on July 6, 2017 in Brussels.FRANCOIS WALSCHAERTS/AFP / Getty Images
On the eve of the Group of 20 summit in Hamburg, the European Union and Japan, figuratively speaking, raised their right arms and extended their middle fingers in the general direction of Donald Trump.
The message to the U.S. president was: Retreat all you want from global trade, we're not joining you and we don't need you, so there.
As proof, they rolled out the EU-Japan free-trade deal and duly gloated. "Ahead of the G20 summit tomorrow, I believe Japan and the EU are demonstrating our strong political will to fly the flag for free trade against a shift toward protectionism," Japanese Prime Minister Shinzo Abe said in a press conference with Donald Tusk, president of the European Council, and Jean-Claude Juncker, president of the European Commission.
If Mr. Trump was annoyed by the smirking show of bravado, he didn't show it, and why would he? The EU-Japan deal (formally known as the Japan-EU Economic Partnership Agreement, or JEEPA), is not a done deal by any stretch of the imagination. It is a low-profile negotiation that was suddenly thrust onto the front lines for no other reason than to needle Mr. Trump and isolate him.
Mr. Trump could get the last laugh. The EU-Japan agreement, whose negotiations started in 2013, is a work in progress and won't come into force until 2019, at the earliest, and probably later. The simpler Canada-Europe trade deal, known as CETA, took seven years to negotiate and could yet fail because it awaits approval in national and regional parliaments across the EU, a few of which have serious reservations about its implementation.
Koji Tsuruoka, Japan's ambassador to Britain, told the BBC that it was wildly premature to declare consensus on the EU-Japan trade talks. "It took four years and three months to lay down the structure of the deal, and you can guess how many more years we may need to finalize this," he told the BBC.
The EU-Japan deal has had little media attention in recent years, even though it's ambitious. Two-way trade between the two economic heavyweights amounts to some €125-billion a year. The Japanese want open EU access for their cars and machinery; the EU wants to boost its food and booze exports to Japan, from fresh Italian mozzarella to French wines. Some negotiators have dubbed the talks a "cars for cheese deal," though the description vastly underplays its complexity.
The deals that dominated the trade agenda instead were CETA, the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership. Mr. Trump pulled out of the TPP, which would have struck a deal among the United States, Japan and 10 other Pacific countries, and halted negotiations on the TTIP. His "America First" agenda also saw him reopen the North American free-trade agreement (NAFTA) after having threatened to scrap the whole thing.
With trade negotiations dying everywhere, the Europeans are trying hard to take over the trade leadership role from the Americans. Their pro-trade agenda has been buoyed by the election of French President Emmanuel Macron, whose pro-EU and pro-globalization agenda runs counter to Mr. Trump's view. With TTIP gone and CETA still a possible failure, the EU is desperate for the EU-Japan deal to succeed and will no doubt intensify the negotiating efforts.
But pushing hard and fast risks a shoddy deal. Mr. Trump isn't alone in his doubts about the value of free trade; the riots by the anti-globalization mob at the G20 told you as much.
Free trade has been a godsend for large companies, who can plunk their operations in countries with the lowest tax rates and labour costs. It works for some consumers, who can buy everyday items on the cheap. But the gains made by the big companies have translated into pain for many workers. In Europe and in North America, there was scant attention paid to workers who lost their jobs when the borders were flung open to all comers. Many workers can be forgiven for thinking that free trade creates as many losers as winners.
The EU-Japan trade deal should be pursued, but not at any cost. It should serve as a model for future trade deals by reinforcing environmental protection among the signatories (in this area, the EU-Japan talks are off to a good start because the deal would incorporate the Paris climate-change commitments).
It should recognize that investor-dispute tribunals that override national sovereignty and legal systems in favour of foreign companies is anti-democratic and risks stoking anti-globalization sentiment. The deal should set the highest standards for data and privacy protection standards. It should recognize that free trade is not necessarily fair trade and put in place a strategy for those workers who will lose their jobs as tariff and non-tariff barriers melt away.
Speed should not be of the essence just because the EU and Japan want to upstage Mr. Trump and reinforce his image as a deluded isolationist. Announcing that the deal was close to completion ahead of the G20 summit was a cynical move that was quickly exposed as something close to fake news. The EU-Japan deal is still a long way off, as it should be. Trade deals need an overhaul and there is no better place to start than the EU-Japan deal. If it takes another five years to get right, so what? A bad deal is worse than no deal.