Japan and the EU Fight Back for the Liberal Order

It took 18 months but the liberal order is finally shaking off its Trump-induced torpor. Compared to the doom and gloom surrounding the NATO and Helsinki summits, with longtime allies fearing that the tempestuous U.S. president has broken through his cordon of “adult” advisors to cause serious damage to the Western alliance, the scene in Tokyo on July 17^th could not have been more different. Prime Minister Shinzo Abe of Japan, European Commission President Jean-Claude Juncker, and European Council President Donald Tusk were all smiles as they signed the Japan-EU Economic Partnership Agreement (JEEPA). Years in the making, the agreement could not have been better timed; it is a decisive riposte to the recent U.S. decision to impose tariffs on European and Japanese steel and aluminum.

An agreement to lower Japanese tariff and non-tariff barriers on EU agricultural exports in exchange for reduced EU tariffs on Japanese auto exports, JEEPA was signed in conjunction with an agreement that signaled Japan’s acceptance of European data protection regulations and a new strategic partnership agreement. In sum, the two sides – which account for 30 percent of global GDP – made clear their desire to ensure that Western countries still take the lead in setting global rules for trade in goods, services, and data. As Abe put it, “Japan and the EU will continue to wave the banner of free trade high.”

But concurrent with the self-congratulation of the signing ceremonies was a frank acknowledgement of the tensions between the signers and the United States. The normally buttoned-down center-right Japanese daily Yomiuri Shimbun stated that “together with TPP, [the agreement] will be an effective check against the U.S.” Coming from such an establishment voice, this prosaic aside had the force of a blaring klaxon. It is not normal to see editorial pages in Japan – the United States’ most important Asian security partner – calling for “checking” its only treaty ally.

Abe and his European counterparts know that they must increase their leverage if they are to deal with President Donald Trump on a more even keel. Projected to add tens of billions of dollars to the bottom lines of both sides by the time it is fully implemented in 2035, JEEPA gives Japan and the EU ammunition when locked in discussions with the Trump administration about U.S. national-security tariffs.

To borrow a Japanese saying, the United States will be left kaya no soto (outside the mosquito net), watching European firms reap the benefits of the opening of Japan’s agricultural sector. This opening could have been to the benefit of U.S. companies and consumers had the Trump administration not been so myopic as to withdraw from the Trans-Pacific Partnership.

The adoption of JEEPA reflects the hollowness of Trump’s trade strategy. While the United States has expected that its threats of tariffs and non-tariff barriers would bring its partners to the negotiating table, the EU and Japan have dug in their heels, sometimes even adopting elements of the president’s playbook. President Emmanuel Macron of France, for example, has reminded Trump that his refusal to negotiate under threat is taken straight from the pages of The Art of the Deal. Japan’s government has repeatedly dodged and ducked under the Trump administration’s ultimate goal in their bilateral “free, fair, and reciprocal” trade talks: a bilateral free trade agreement. A few days ago, Chief Cabinet Secretary Yoshihide Suga described this as being against Japan’s national interest.

Meanwhile, negotiations between the EU and the United States have temporarily quelled the budding trade war with an agreement to hold bilateral discussions on the current steel and aluminum tariffs as well as on chemical goods and industrial regulations. This truce sits at the mercy of a Trump twitter tirade, though – like all administration promises. Moreover, the agreement seems to mirror largely the outline of the Transatlantic Trade and Investment Partnership. It is impossible to justify the institutional damage wrought by the America First trade policy if the result is to return meekly to Obama-era trade negotiations. Solving an artificial crisis is not tantamount to victory.

It is now clear that, as the United States withdraws from the stage, its allies are beginning to do their part to bolster the liberal order. JEEPA demonstrates that the supreme irony of Trump’s America First foreign policy – the institution-smashing vehicle of the country’s far-right nationalist coterie – is that it has stimulated an immune response in the very institutions it was designed to infect.

But while atlanticists may take heart in the enrichment of the economic and political relationships among the United States’ allies, damage is still being done. U.S. consumers and companies will be left out of the free trade windfall, and the political relationships underpinning the United States’ most important trade and defense relationships have begun to fray. In Tokyo, Foreign Minister Heiko Maas of Germany recently called for a German-Japanese united front to “set boundaries against the message set by Trump.” This sort of cooperation can be seen in the security realm as well, as the EU and Japan begin intensified defense industrial and military-military cooperation.

Even as the United States’ allies give the liberal order a shot in the arm, they do so not to reinforce U.S. power, but to balance against it. This trend portends ill for the country’s political, military, and trade leadership in the years to come.