The European Union and Japan have agreed terms for a free trade deal set to create the world's biggest open economic area.

The deal - the largest struck by the EU - is expected to liberalise almost all trade between the bloc and the world's third-largest economy.

EU firms already export over €58bn in goods and €28bn in services to Japan every year. The Economic Partnership Agreement will remove the vast majority of the €1 billion of duties paid annually by EU companies exporting to Japan, as well as number of long-standing regulatory barriers. It will also open up the Japanese market of 127 million consumers to key EU agricultural exports and will increase EU export opportunities in a range of other sectors.

With regards to agricultural exports from the EU, the agreement will, in particular:

• scrap duties on many cheeses such as Gouda and Cheddar (which currently are at 29.8%) as well as on wine exports (currently at 15% on average);
• allow the EU to increase its beef exports to Japan substantially, while on pork there will be duty-free trade in processed meat and almost duty-free trade for fresh meat;
• ensure the protection in Japan of more than 200-high quality European agricultural products, so called Geographical Indications (GIs) and will also ensure the protection of a selection of Japanese GIs in the EU.

The agreement also opens up services markets, in particular financial services, e-commerce, telecommunications and transport. It also:

• guarantees EU companies access to the large procurement markets of Japan in 48 large cities and removes obstacles to procurement in the economically important railway sector at national level;
• addresses specific sensitivities in the EU, for instance in the automotive sector, with transition periods before markets are opened.

The deal also includes a comprehensive chapter on trade and sustainable development, sets the highest standards of labour, safety, environmental and consumer protections; strengthens EU and Japan's actions on sustainable development and climate change and fully safeguards public services.

EU governments initially instructed the European Commission to start negotiations with Japan in 2013. On 6 July 2017 the European Union and Japan reached an agreement in principle on the main elements of the EU-Japan Economic Partnership Agreement and negotiations were finalised on 8 December 2017. It must now be ratified by EU members and the European Parliament.

A joint statement by European Commission President Jean Claude Juncker and Japanese Prime Minister Shinzo Abe said the deal had "strategic importance" beyond its economic value.

"It sends a clear signal to the world that the EU and Japan are committed to keeping the world economy working on the basis of free, open and fair markets with clear and transparent rules fully respecting and enhancing our values, fighting the temptation of protectionism," they said.