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Vladimir Putin and FSB make an offer to Donald Trump

In meeting with the senior staff of the FSB Russian President Vladimir Putin outlines the threats facing Russia and the contours of a deal that might be done with President Donald Trump.

Alexander Mercouris

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Whilst US President Donald Trump battles the US intelligence community and the US elite, the foreign leader he most wants to deal with – Russia’s President Putin – has been addressing the senior staff of the organisation he once headed, Russia’s counter-terrorism and counter-intelligence agency, the FSB.

Whilst it is all too tempting to contrast President Putin’s complete control of his government and intelligence services with President Trump’s struggle to achieve mastery over his own, that temptation should be resisted.  President Putin did not always have the undisputed mastery of his government and intelligence services that he has now.

Only in 2003, following the arrest of the once all-powerful oligarch Mikhail Khodorkovsky, and the subsequent expulsion from the government of individuals like former Prime Minister Mikhail Kasyanov and former Foreign Minister Igor Ivanov who were beholden to Khodorkovsky and the other oligarchs, did President Putin achieve the undisputed control of the Russian government and intelligence services that he has now.

The US and Russian political systems differ profoundly from each other, and the parallel between President Putin’s struggle with the oligarchs and President Trump’s current struggle with the US elite should not be pressed too far.  Nonetheless  it does show one important fact which those frustrated by some of President Trump’s recent actions need to bear in mind: mere possession of the office of President in any political system does not automatically translate into control of the government.  A President who really wants to become master of his government – as opposed to being a mere cypher for his bureaucracy – has to fight to achieve it.

However, if President Putin did not always have undisputed control of his government and intelligence services, he certainly has it now, and his meeting with the senior staff of the FSB serves to illustrate the fact.

The meeting however also illustrates two other things: (1) the pressure Russia has been under; and (2) what President Putin and the Russians actually want from US President Trump and the deal they want to make with him.

On the question of the pressure Russia has been under, during his meeting with the FSB President Putin made this quite extraordinary comment

Counterintelligence services also face greater demands today. Operational data show that foreign intelligence services’ activity in Russia has not decreased. Last year, our counterintelligence services put a stop to the work of 53 foreign intelligence officers and 386 agents.

(bold italics added)

It bears saying that over the course of the whole hysterical scandal in the US about the DNC and Podesta leaks, the fake “Trump Dossier”, and the telephone conversation between the Russian ambassador and General Flynn, not a single person has so far been arrested or charged with anything.  Yet here we have President Putin blandly saying that over the same period that this wave of hysteria and scandal has been underway in the US, the FSB in Russia has “stopped the work of 53 foreign intelligence officers and 386 agents”.

This astonishing claim (imagine the FBI announcing it had uncovered 386 foreign agents working in the US in the space of a single year) is not merely made calmly and almost in passing, with no special emphasis given to it, but it has attracted almost no publicity either from the Russian media or internationally.

President Putin’s comments on the pressure Russia has been under also highlight a further point: unlike the US and the states of the EU, Russia – with no assistance from the West –  has had to fight a homegrown Jihadi insurgency on its own soil.

It has proved remarkably successful in doing so, so that whereas when Putin became President Jihadis physically controlled large areas of Russian territory, today they barely control any, and have been reduced to a sporadically functioning but still dangerous terrorist movement.  Nonetheless, as President Putin said, there is no room for complacency or relaxation in the struggle against them

The events and circumstances I have mentioned require our security and intelligence services, especially the Federal Security Service, to concentrate their utmost attention and effort on the paramount task of fighting terrorism.

We have already seen that our intelligence services dealt some serious blows to terrorists and their accomplices. Last year’s results confirm this: the number of terrorism related crimes has decreased.

Preventive work has also brought results. The FSB and other security agencies, with the National Antiterrorist Committee acting as coordinator, prevented 45 terrorism related crimes, including 16 planned terrorist attacks. You deserve special gratitude for this.

You need to continue your active efforts to identify and block terrorist groups’ activity, eliminate their financial base, prevent the activities of their emissaries from abroad and their dangerous activity on the internet, and take into account in this work Russian and international experience in this area.

The murder of our ambassador to Turkey was a terrible crime that particularly highlighted the need to protect our citizens and missions abroad. I ask you to work together with the Foreign Ministry and the Foreign Intelligence Service to take additional measures to ensure their safety…..

Our priorities include firmly suppressing extremism. Security methods must go hand-in-hand with constant prevention work. It is essential to prevent extremism from drawing young people into its criminal networks, and to form an overall firm rejection of nationalism, xenophobia, and aggressive radicalism. In this context, of great importance is open dialogue with civil society institutions and representatives of Russia’s traditional religions.

(bold italics added)

Again one is astonishing to hear President Putin calmly say that his anti-terrorist agencies have prevented 16 planned terrorist attacks on Russian territory in one year, as this was something everyday and normal.  One is driven to ask what Western country has to face a terrorist assault on this scale?

Over and above these ‘traditional’ threats to Russia, the Russians must now also face the threat of cyber attacks, something openly talked about by former US President Obama and former US Vice-President Biden.

Putin’s comments about this to the FSB are especially interesting in that they effectively confirm – though they do not quite say – that though individual Russian agencies are responsible for ensuring their own cyber security, it is the FSB which has overall responsibility for protecting Russia’s cyber security as a whole

I would like to note that the number of cyberattacks on official information resources tripled in 2016 compared to 2015. In this context, each agency must develop its segment of the state system for detecting and preventing cyberattacks on information resources and eliminating their consequences.

Whilst these comments give a fairly clear idea of the range of the FSB’s work – showing once again that it is an internal security agency and not an agency tasked with collecting foreign intelligence – President Putin also took the opportunity of his meeting with the senior staff of the FSB to touch on foreign policy questions

The global situation has not become any more stable or better over the past year. On the contrary, many existing threats and challenges have only become more acute.

Military-political and economic rivalry between global and regional policy makers and between individual countries has increased. We see bloody conflicts continue in a number of countries in the Middle East, Asia, and Africa. International terrorist groups, essentially terrorist armies, receiving tacit and sometimes even open support from some countries, take active part in these conflicts.

At the NATO summit last July in Warsaw, Russia was declared the main threat to the alliance for the first time since 1989, and NATO officially proclaimed containing Russia its new mission. It is with this aim that NATO continues its expansion. This expansion was already underway earlier, but now they believe they have more serious reasons for doing so. They have stepped up the deployment of strategic and conventional arms beyond the national borders of the principal NATO member states.

They are provoking us constantly and are trying to draw us into confrontation. We see continued attempts to interfere in our internal affairs in a bid to destabilise the social and political situation in Russia itself.

We also see the recent serious flare-up in southeast Ukraine. This escalation pursues the clear aim of preventing the Minsk Agreements from going ahead. The current Ukrainian authorities are obviously not seeking a peaceful solution to this very complex problem and have decided to opt for the use of force instead. What is more, they speak openly about organising sabotage and terrorism, particularly in Russia. Obviously, this is a matter of great concern.

These comments highlight the Russians’ key areas of priority, and it is striking how far they differ from those Western commentators continuously attribute to them.

There is not a word here about lifting sanctions, dissolving NATO or the EU, “treating Russia as an equal to the US” on the global stage, recognising a Russian sphere of interest in Eastern Europe, “restoring the USSR”, conquering the Baltic States, or even arms control.

Instead the Russians’ stated priorities are the three which I identified in my article of 19th January 2017: (1) ending NATO expansion especially into the territories of the former USSR; (2) the West’s deployment of anti-ballistic missiles in Eastern Europe (“the deployment of strategic and conventional arms beyond the national borders of the principal NATO member states”); and (3) the West’s regime change policy, first and foremost as it pertains to Russia (“we see continued attempts to interfere in our internal affairs in a bid to destabilise the social and political situation in Russia itself”).

As I discussed in my article of 19th January 2017, it should not in theory be difficult for President Trump to agree to all these things if he wants to do a deal with Russia because none of them affect the US’s essential interests

Setting out these central Russian concerns shows how a deal between Russia and a Donald Trump administration might be possible.

None of Russia’s concerns on any one of these issues affects Western security or impinges on the US’s national interests.  Donald Trump has called NATO “obsolete” and expressed indifference about the EU’s future.  He is clearly uninterested in expanding either into the territory of the former USSR, so he has no reason to feel that he is making any serious concession by agreeing not to do so.  Similarly Donald Trump has already foresworn the whole policy of regime change.  If so then he is already in agreement with the Russians over this issue too.

The major sticking point will be arms control, with trust badly damaged as a result of Obama’s actions, and the Russians almost certainly insisting on the dismantling of the anti ballistic missile systems in Eastern Europe in return for nuclear weapons cuts.  It may not be a coincidence that it was precisely on the issue of arms control that Trump homed into in his interview with The London Times and Bild-Zeitung.

Securing however an agreement to dismantle the anti ballistic missile systems in the teeth of what is likely to be furious opposition from the Congressional leadership, much of the Republican party, and the powerful US armaments lobby, will however be a titanic challenge.

A complex and difficult negotiation lies ahead.  Even on the assumption Donald Trump succeeds in consolidating his control of the US government, it is far from clear it will succeed.  There is however one overwhelmingly point which argues in its favour: on any objective assessment what Russia wants from Donald Trump it is in the US interest for him to give.

The US loses nothing by agreeing to the things Russia wants because they in no want threaten the US’s security or that of its allies.  On the contrary it has been the pursuit of the grand geopolitical strategies of the neocons, with the policies of NATO expansion, anti ballistic missile deployment and regime that go with them, which have brought the US into an impasse.  It is in the US interest and in the interests of the US’s allies to give up on them.

Donald Trump’s comments shows that he has at least some understanding of this fact. It remains to be seen how great understanding is and whether he will be able to put into practice.

If a deal can be done on these fundamental issues, it is not difficult to see how a deal could also be done on Ukraine, the issue which many people – wrongly in my opinion – treat as the sticking point.

As it happens, it is not at all difficult to see how a deal on Ukraine could be done.  In his comments to the senior staff of the FSB President Putin made clear that Russia wants complete implementation of the Minsk Accords.  That of course is precisely what the various officials of the Trump administration – Pence, Mattis, Tillerson, Haley and of course Trump himself – also say.  Given that this is so, provided the good will were there, it should not be difficult to agree a deal on Ukraine involving the complete implementation of the Minsk Accords.

The true reason – as everyone knows – such a deal has not happened up to now is not because the Russians don’t want it.  It is because the good will has not been there on the part of the Western powers, who have instead colluded with Ukraine’s non compliance with the Minsk Accords.

Were this to change – and it would be something which would be easy to do since everyone says they want to see the Minsk Accords implemented – a breakthrough could quickly happen.

Of course it is true that Ukraine, at least in its present form, would be unlikely to survive the full implementation of the Minsk Accords.   That is why Ukraine is refusing to implement them.  That however is not something which – based on the things he has said – ought to concern President Trump.

The key point is that if President Trump genuinely wants a deal on Ukraine, the elements for it are all already there.

If the Russians – as Putin’s comments to the senior staff of the FSB show – are not actually asking for very much – and nothing which President Trump should in theory find it impossible to concede – what they are offering – as Putin’s comments to the FSB also show – is what has been flagged up for a long time: cooperation in the fight against Jihadi terrorism, the issue which President Trump says is his foreign policy priority

You must also work to take our counterterrorism cooperation with partners abroad to a new level, despite the difficulties that we see in various areas of international life. It is a priority, of course, to intensify work with our partners in organisations such as the UN, the CSTO, and the Shanghai Cooperation Organisation.

It is in our common interests to restore dialogue with the US intelligence services and with other NATO member countries. It is not our fault that these ties were broken off and are not developing. It is very clear that all responsible countries and international groups should work together on counterterrorism, because even simply exchanging information on terrorists’ financing channels and sources and on people involved in or suspected of links with terrorism can substantially improve the results of our common efforts.

Rarely in the history of international relations have the contours of a deal been easier to see: the Russians are asking Trump for what he should have no trouble giving, and in return they actually want to give him exactly the thing he says he wants.

The biggest sticking point is not Ukraine but anti-ballistic defence, though even on this issue with the necessary goodwill it should be possible to finesse some sort of agreement, probably based on the old 1970s concept of arms limitation rather than the contemporary one of arms reduction.

Whether the deal will be done is another matter.  Not only is it unclear whether Trump realises how easy the deal he wants with the Russians is, but he has to face down his many critics who don’t want a deal at all. But the outlines for a deal if he wants one are there.

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While US seeks to up the ante on pressure on the DPRK, Russia proposes easing sanctions

These proposals show the dichotomy between the philosophy of US and Russian foreign policy

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The United States last week accused the DPRK of violating refined petroleum caps imposed as a part of UN nuclear sanctions dating back to 2006, and is therefore submitting a proposal to cut all petroleum product sales to North Korea.

The Trump administration is keen on not only preserving pressure on North Korea over its nuclear arms development, but in increasing that pressure even as DPRK Chairman, Kim Jong-Un, is serially meeting with world leaders in a bid to secure North Korea’s security and potential nuclear disarmament, a major move that could deescalate tensions in the region, end the war with the South, and ease global apprehensions about the North’s nuclear arsenal.

Meanwhile, Russia is proposing to the UNSC sanctions relief in some form due to the North’s expressed commitment to nuclear disarmament in the light of recent developments.

Reuters reports:

MOSCOW/UNITED NATIONS (Reuters) – Russia’s envoy to North Korea said on Wednesday it would be logical to raise the question of easing sanctions on North Korea with the United Nations Security Council, as the United States pushes for a halt to refined petroleum exports to Pyongyang.

“The positive change on the Korean peninsula is now obvious,” said the ambassador, Alexander Matsegora, according to the RIA news agency, adding that Russia was ready to help modernize North Korea’s energy system if sanctions were lifted and if Pyongyang can find funding for the modernization.

The U.N. Security Council has unanimously boosted sanctions on North Korea since 2006 in a bid to choke off funding for Pyongyang’s nuclear and ballistic missile programs, banning exports including coal, iron, lead, textiles and seafood, and capping imports of crude oil and refined petroleum products.

China tried late last month to get the Security Council to issue a statement praising the June 12 Singapore meeting between U.S. President Donald Trump and North Korean leader Kim Jong Un and expressing its “willingness to adjust the measures on the DPRK in light of the DPRK’s compliance with the resolutions.”

North Korea’s official name is Democratic People’s Republic of Korea (DPRK).

But the United States blocked the statement on June 28 given “ongoing and very sensitive talks between the United States and the DPRK at this time,” diplomats said. The same day, U.S. Secretary of State Mike Pompeo spoke to his Chinese counterpart Wang Yi about the importance of sanctions enforcement.

U.S. Secretary of State Mike Pompeo is due to informally brief U.N. Security Council envoys along with South Korea and Japan on Friday.

Diplomats say they expect Pompeo to stress the need to maintain pressure on North Korea during his briefing on Friday.

In a tweet on Wednesday Trump said he elicited a promise from Russian President Vladimir Putin to help negotiate with North Korea but did not say how. He also said: “There is no rush, the sanctions remain!”

The United States accused North Korea last week of breaching a U.N. sanctions cap on refined petroleum by making illicit transfers between ships at sea and demanded an immediate end to all sales of the fuel.

The United States submitted the complaint to the U.N. Security Council North Korea sanctions committee, which is due to decide by Thursday whether it will tell all U.N. member states to halt all transfers of refined petroleum to Pyongyang.

Such decisions are made by consensus and some diplomats said they expected China or Russia to delay or block the move.

When asked on June 13 about whether sanctions should be loosened, Russian U.N. Ambassador Vassily Nebenzia said: “We should be thinking about steps in that direction because inevitably there is progress on the track that should be reciprocal, that should be a two-way street. The other side should see encouragement to go forward.”

The proposals of both the United States and Russia are likely to be vetoed by each other, resulting no real changes, but what it displays is the foreign policy positions of both nuclear powers towards the relative position of the DPRK and its rhetorical move towards denuclearization. The US demonstrates that its campaign of increased pressure on the North is necessary to accomplishing the goal of a denuclearized Korean peninsula, while Russia’s philosophy on the matter is to show a mutual willingness to follow through on verbal commitment with a real show of action towards an improved relationship, mirroring on the ground what is happening in politics.

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Europe divided over possible trade compromise with Trump

Even if a European proposal could score a trade cease fire, the war isn’t over

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US President Donald Trump has just lectured NATO on it member’s commitment performance and held a controversial meeting with the Russian President Vladimir Putin and is next week to receive EU Commission President Jean-Claude Juncker, with trade matters being high up on the agenda.

Juncker is expected to present Trump with a package of proposals to help smooth relations and potentially heal areas of division, particularly those surrounding Europe’s trade relationship with America. Those proposals are precisely what is cropping up as another area of divergence between some members of the EU, specifically France and Germany, just after a major contention on migration has been driving discord within the Union.

This gets down to whether Europe should offer concessions to Trump on trade while Trump is admittedly describing the Union as a ‘foe’ and has initiated a trade spat with the Union by assessing trade tariffs on steel and aluminum imports from Europe, spurring retaliatory tariff measures from the EU Commission.

France, specifically, is opposed to any sort of compromise with Trump on the matter, where Trump is perceived as an opponent to the Union and its unity, whereas Germany is economically motivated to seek an end to the trade dispute under the threat of a new round of tariffs emanating from the Trump administration, and is therefore seeking to find some sort of proposal that Trump will accept and therefore back down on his protectionism against the EU, and Germany in particular.

Politico reports:

Only a week before European Commission President Jean-Claude Juncker flies to Washington, France and Germany are divided over how much he should offer to U.S. President Donald Trump to end a deepening trade war, say European diplomats and officials.

But, they add, Germany has the upper hand. Berlin is shaping Juncker’s agenda, suggesting three offers that he could take to Trump on July 25 to resolve the dispute, according to people familiar with the plans.

The French are uneasy about the wisdom of such a conciliatory approach, however, and publicly accuse Trump of seeking to splinter and weaken the 28-member bloc, which he has called his “foe.”

Despite Paris’ reservations about giving away too much to the increasingly hostile U.S. president, the diplomats say that the European Commission’s powerful Secretary-General Martin Selmayr supports the German attempt at rapprochement, which makes it more likely that Juncker will offer some kind of trade fix next week.

“It’s clear that Juncker can’t go to Washington empty-handed,” one diplomat said. He stressed that Juncker’s proposals would be a political signal to Washington and would not be the formal beginning of negotiations, which would have to be approved by EU countries.

European ambassadors will meet on Wednesday to discuss the scope of Juncker’s offer — and indeed whether any offers should be made at all. France’s official position is that Europe must not strike any deal with a gun to its head, or with any country that has opted out of the Paris climate accord, as Trump’s America has done.

While Berlin is terrified by the prospect of 20 percent tariffs on cars and is desperate for a ceasefire deal, France has more fundamental suspicions that the time for compromise is over and that Trump simply wants to destroy EU unity. Paris is concerned that Trump’s next target is its sacred farm sector and is putting more emphasis on the importance of preserving a united political front against Washington.

Two diplomats said Berlin has a broad menu of offers that should be made to Trump: a bilateral deal to cut industrial tariffs, a plurilateral agreement to eliminate car duties worldwide, and a bigger transatlantic trade agreement including regulatory cooperation that potentially also comes with talks on increasing U.S. beef exports into Europe.

Making such generous offers is contentious when Trump crystallized his trade position toward Brussels on CBS news on Sunday: “I think the European Union is a foe, what they do to us in trade. Now, you wouldn’t think of the European Union, but they’re a foe.”

This undiplomatic bombshell came not long after he reportedly advised French President Emmanuel Macron to quit the EU to get a better trade deal than he was willing to offer the EU28.

In announcing Juncker’s visit on Tuesday, the White House said that he and Trump “will focus on improving transatlantic trade and forging a stronger economic partnership.”

Talking to the enemy

Diplomats note that a French-led camp in Brussels reckons Trump’s goals are strategic, and that he’s not after the sort of deal Germany is offering.

A French government official said that Washington quite simply wants to shift the EU off the stage: “Trump’s objective is that there are two big blocs: The United States and China. A multipower world with Europe as a strong player does not fit in.”

France’s Economy Minister Bruno Le Maire this month also issued a stark warning that Trump is seeking to drive a wedge between France and Germany — courting Paris, while simultaneously attacking Berlin’s trade surplus with the U.S. “In this globalized world, European countries must form a bloc, because what our partners or adversaries want is to divide us,” Le Maire said at an economic conference in Aix-en-Provence. “What the United States want, that’s to divide France and Germany.”

Despite these remarks from Le Maire, Anthony Gardner, former ambassador to the EU under the Barack Obama administration, said that he suspects the full magnitude of the threat has not sunk in. “Europe wake up; the U.S. wants to break up the EU,” he tweeted on Sunday. “Remember Belgium’s motto: L’union fait la force. [Unity creates strength]. Especially on trade. No side deals.”

One EU diplomat insisted that Brussels is not blind to these dangers in the run-up to Juncker’s visit.

Trump thinks that Europe is “too big to be controllable by DC, so it’s bad for America. Simple logic. And therefore the only deal that will bring the president to stop the trade war is the deal that breaks up the European market. I don’t quite think that’s the legacy Juncker is aiming for,” the diplomat said.

Europe is source of a deep frustration for Trump, as it runs a massive goods surplus with the U.S., at $147 billion in 2016. In particular, the U.S. president blames Germany’s mighty car exporters for this imbalance.

Leveling the field is not easy, however. With its market of 510 million consumers, Europe not only has the clout to stand up to the United States, but is increasingly setting global standards — particularly on food. This not only limits U.S. exports in Europe but also means that the European model is used in a broader trading ecosystem that includes Canada, Mexico and Japan.

New world order

Marietje Schaake, a liberal Dutch member of the European Parliament, observed that the U.S. trade strategy meshed with Trump’s political agenda.

“You could say there’s a new transatlantic relation emerging, of nationalists, populists and protectionists,” she said, pointing out that Trump’s meeting with Russian President Vladimir Putin has cast doubt on America’s commitment to supporting European security.

Trump’s opposition to the EU partly builds on an long-standing American discomfort about the EU’s economic policies.

“We already saw problems during the negotiations for the Transatlantic Trade and Investment Partnership, where the U.S. didn’t like EU demands such as on geographical indications [food name protections], and certainly didn’t like that we had ambitious requests in areas like public procurement,” said Pascal Kerneis, managing director of the European Services Forum and a member of the now defunct TTIP advisory group.

Kerneis said that Trump’s trade attacks are shifting the tensions to a completely new level: “He’s attacking on all fronts, hoping to break our unity, particularly between Germany and France.”

France particularly fears that Trump’s duties on Spanish olives could only be the first salvo on Europe’s whole system of farm subsidies.

EU lawmaker Schaake said that France is right to worry about a conflagration. “Once we give in in one area, he will attack at the next one,” she said. “If we allow Trump to play Europeans against each other, sector by sector, it will be a losing game.”

Even if Europe goes about capitulating to Trump’s gripes about the Union, whether it gets back to NATO defense spending or the trade deficit, the question remains whether this will satiate Trump’s political appetite and result in an improved trade perspective and politically acceptable position with Washington, and France’s concern that the matter runs deeper and has a foreign policy agenda behind it, and that caving to Trump’s pressure will only end in defeat for the EU would therefore appear reasonable.

But Germany is staring down the barrel of a possible new round of tariffs that would hurt some of their largest industries and is therefore under a lot of pressure to find a solution, or at least some sort of agreement that could deescalate the situation.

However, Germany’s recent record of resolving international issues is such that Germany is really only scoring cease fire agreements, rather than ending the real political conflicts, referring mainly to the immigration issue which recently resulted only in diffusing some inter Union tensions, but without resolving the problem itself.

In this context, Germany could promise the moon and stars to Trump, possibly avert further trade tensions, but yet fail to address the core political and trade conflicts that have already broken out. Essentially, then, such a compromise would only serve to function as damage control, while leaving Germany and the Union at a further disadvantaged political position relative to the States at the political table.

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EU and Japan ink free trade deal representing over 30% of global GDP

The free trade agreement represents a victory for free trade in the face of growing protectionism

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In a bid to preserve free trade and strengthen their trade partnership, the European Union and Japan have finished a free trade zone agreement that has been sitting in the pipeline for years.

The present global economic outlook provided the needed spur to action to get the ball rolling again and now it has finally reached the end zone and scored another point for free and open trade against the growing influence of protectionism, which has been creeping up with alarming rapidity and far reaching consequences in recent months.

Under the deal, Japan will scrap tariffs on some 94% of goods imported from Europe and the EU in turn is canning 99% of tariffs on Japanese goods.

Between the European Union and Japan, the trade deal impacts about 37% of the world’s GDP, making it one of the largest and impactful of such agreements.

The Japan Times reports:

Top European Union leaders and Prime Minister Shinzo Abe signed an economic partnership agreement Tuesday in Tokyo, a pact that will create a massive free trade zone accounting for 37 percent of the world’s trade by value.

European Council President Donald Tusk and European Commission President Jean-Claude Juncker hastily arranged their visit to Tokyo after Abe was forced to abruptly cancel plans to attend a July 11 signing ceremony in Brussels in the aftermath of flooding and mudslides in western Japan.

Japanese officials said the signing is particularly important to counter intensifying protectionism worldwide triggered by U.S. President Donald Trump.

Negotiations on the pact between Japan and the EU, which started in 2013, had stagnated for a time but regained momentum after Trump took office in January 2017.

“We are sending a clear message that we stand together against protectionism,” Tusk said at a joint news conference with Abe after they signed the agreement.

“The relationship between the EU and Japan has never been stronger. Geographically we are far apart, but politically and economically we could be hardly any closer,” Tusk said. “I’m proud today we are taking our strategic partnership to a new level.”

Tusk stressed that the EU and Japan are partners sharing the same basic values, such as liberal democracy, human rights and rule-based order.

Abe also emphasized the importance of free and fair trade.

“Right now, concerns are rising over protectionism all around the world. We are sending out a message emphasizing the importance of a trade system based on free and fair rules,” he said.

The pact will create a free trade bloc accounting for roughly 30 percent of the world’s gross domestic product. Japan and the EU hope to have the agreement, which still needs to be ratified by both parties, come into force by March.

Under the EPA, tariffs on about 99 percent of Japan’s exported goods to the EU will eventually be eliminated, while duties on 94 percent of EU’s exported items to Japan will be abolished, according to the Foreign Ministry.

The EPA will eliminate duties of 10 percent on Japan’s auto exports to the EU seven years after the pact takes effect. The current 15 percent duties on wine imports from the EU will be eliminated immediately, while those on cheese, pork and beef will be sharply cut.

In total, the EPA will push up domestic GDP by 1 percent, or ¥5 trillion a year, and create 290,000 new jobs nationwide, according to the government.

“The world is now facing raging waves of protectionism. So the signing ceremony at this time is particularly meaningful,” a senior Foreign Ministry official said earlier this month on condition of anonymity.

“The impact for Japan is big,” the official said.

Fukunari Kimura, an economics professor at Keio University, said the EU is now trying to accelerate the ratification process.

“This is a repercussion of President Trump’s policies. They will try to ratify it before Brexit in March of next year,” he said in an interview with The Japan Times last week.

But the deal has raised concerns among some domestic farmers, in particular those from Hokkaido, the country’s major dairy producer.

According to an estimate by the Hokkaido Prefectural Government, the EPA will cut national production in the agriculture, fishery and forestry industries by up to ¥114.3 billion a year, with Hokkaido accounting for 34 percent of the predicted losses.

“The sustainable development of the prefecture’s agriculture, forestry and fisheries industries is our top priority. We need to make efforts to raise our international competitiveness,” Hokkaido Gov. Harumi Takahashi said during a news conference July 10.

Japan and the EU had reached a basic agreement on the EPA in December.

Tokyo also led negotiations on the Trans-Pacific Partnership free trade pact after Trump withdrew the U.S. from the deal in January 2017.

In March, 11 countries including Japan signed the so-called TPP11, or a revised TPP pact that does not include the U.S.

“The Japan-EU EPA is another important step for Japan to strengthen its trade relationship with key trading partners, and demonstrate that trade liberalization is alive and well, even if the United States is taking a different stance,” wrote Wendy Cutler, a former acting deputy U.S. Trade Representative, in an email sent to The Japan Times last week.

“The EU deal also reduces Japanese dependence on the U.S. market and thus increases its leverage to resist unreasonable trade demands by the United States,” she wrote.

According to the Foreign Ministry, the EU, which accounts for 22 percent of the world’s GDP, was the destination for 11.4 percent of Japanese exports in 2016. In the same year, the figure for the U.S. was 20.2 percent and 17.7 percent for China.

In 2016, Japan’s exports to the EU totaled ¥8 trillion, while reciprocal trade was ¥8.2 trillion.

The deal provides tariff relief for both parties and can improve the quantity of trade between them, expand the economy and create many jobs. It also helps to further diversify their trade portfolios in order to mitigate the prospect of a single global trade partner wielding too much influence, which in turn provides a certain amount of cover from any adverse actions or demands from a single actor. In this way, current trade dependencies can be reduced and free and diversified trade is further bolstered.

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