ARI SHAPIRO, HOST:
The Trump administration is taking a hard line with major U.S. trading partners, so those countries are looking for opportunities elsewhere. The European Union and Japan today signed a trade agreement that will eliminate virtually all tariffs on the goods they sell to each other. NPR's Jim Zarroli reports.
JIM ZARROLI, BYLINE: The agreement was five years in the making. It will form a single trading bloc of some 600 million people, one that comprises nearly 30 percent of the world's economy. Jeffrey Schott of the Peterson Institute for International Economics says the agreement...
JEFFREY SCHOTT: Opens up new opportunities for the Japanese to sell cars in Europe and for the Europeans to sell cars and cheese and wine and lots of other products in Japan.
ZARROLI: The deal comes at a time when European officials have been working to lock down trade agreements all over the world with Canada, Singapore and Vietnam. Schott says European officials started doing this because they were worried about being left out of the giant trade pact known as the Trans-Pacific Partnership, or TPP, which the Obama administration spearheaded. But President Trump has now pulled out of the TPP, and Schott says that's left Europe a big opening.
SCHOTT: The Europeans are now getting many of the benefits that the United States firms would have had in the Japanese market, and they're going to go to our European competitors.
ZARROLI: At today's signing ceremony in Tokyo, EU Council President Donald Tusk said the agreement would usher in a new era of commerce and friendship between Europe and Japan.
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DONALD TUSK: We will always be there for you because this is what friends do.
ZARROLI: And Tusk at times seemed to be making veiled references to the Trump administration, or at least to the anti-globalist sentiment now rising in many countries. He said this is an act of enormous strategic importance for the rules-based international order at a time when some are questioning this order. Christine McDaniel, senior research fellow at the Mercatus Center, sees the pact as a victory for the idea of free trade.
CHRISTINE MCDANIEL: That is a non-trivial share of the world economy sort of standing up and shaking hands on a commitment to free trade with each other. And I think that's good.
ZARROLI: But McDaniel also says the agreement should worry Americans in one way. With the Trump administration threatening to walk away from trade agreements, Europe and Asia have begun taking the lead on trade.
MCDANIEL: If they keep walking down that path, that means that the U.S. could be left out of shaping rules on issues that U.S. companies and consumers are really concerned about.
ZARROLI: In the past, the United States has used multilateral trade agreements as a chance to write global rules on issues it cared about, such as intellectual property theft and rules for resolving disputes. President Trump has made clear he wants to pursue another approach on trade, and that's left a void that other countries are rushing to fill. Jim Zarroli, NPR News.
(SOUNDBITE OF TOSHIKO AKIYOSHI'S "INVENTION D-MINOR") Transcript provided by NPR, Copyright NPR.