Business

AMMAN — Arab Bank Group said its net income after tax for the first half of 2018 was $436 million compared to $415 million in prior period, recording a growth of 5 per cent, according to an Arab Bank statement. 

The group’s net income before tax grew by 6.4 per cent to reach $582 million with net operating income reaching $668.5 million and recording a solid double digit growth of 13 per cent. 

Sabih Masri, chairman of the group’s board of directors described the group’s performance as “solid”. He said this solid performance confirms the group’s success in dealing with the challenging operating environment.

Nemeh Sabbagh, chief executive officer, said the strong underlying performance of the Arab Bank Group is reflected in the growth of the net operating income, achieved during the first half of the year. 

This has come as a result of core banking income generated from interest and fees, coupled with effective cost management, he said in the statement. 

Net operating income grew by 13 per cent and net interest income went up by 12 per cent as a result of yield improvements and loan growth. 

Loans grew by 3 per cent to reach $25.5 billion while customer deposits reached $33 billion, according to the statement. 

Sabbagh said the Arab Bank Group enjoys strong liquidity and robust capitalisation. 

The group’s loan-to-deposit ratio stood at 71.6 per cent, while its capital adequacy ratio calculated in accordance with Basel III regulations was 15.4 per cent. 

He added that the asset quality of the group remains high, with credit provisions held against non-performing loans exceeding 100 per cent.

LAGOS — Google launched a network of free Wi-Fi hotspots in Nigeria on Thursday, part of its effort to increase its presence in Africa's most populous nation.

The US technology firm, owned by Alphabet Inc., has partnered with Nigerian fibre cable network provider 21st Century to provide its public Wi-Fi service, Google Station, in six places in the commercial capital Lagos, including the city's airport.

Internet penetration is relatively low in Nigeria. Some 25.7 per cent of the population made use of the Internet in 2016, according to World Bank data.

The poor Internet infrastructure is a major challenge for businesses operating in the country, which is Africa's largest oil producer. Broadband services are either unreliable or unaffordable to many of Nigeria's 190 million inhabitants.

"We are rolling out the service in Lagos today but the plan is to quickly expand to other locations," Anjali Joshi, Google's vice president for product management, told Reuters in Lagos.

The company said it aimed to collaborate with Internet service providers to reach millions of Nigerians in 200 public spaces across five cities by the end of 2019.

It said it would generate cash from the service in Nigeria by placing Google adverts in the login portal. Google did not disclose the amount invested in the new Nigeria service.

The technology firm said it planned to share revenues with its partners to help them maintain and deploy the Wi-Fi service but did not disclose the expected advertising revenue split.

Nigeria is the fifth country to launch Google Station. Similar services have been launched in India, Indonesia, Mexico and Thailand.

The service is aimed at countries with rapidly expanding populations. The United Nations estimates Nigeria will be the world's third most populous nation, after China and India, by 2050. 

"A lot of people who found data to be too expensive for them to use, are using it," said Joshi. "In India, we have tens of millions of users, and close to a million in Mexico".

Africa's rapid population growth, falling data costs and heavy adoption of mobile phones has made it an attractive investment prospect for technology companies. But many do not disclose how profitable the continent's markets are, or if they make the companies money at all.

Nigerian Vice President Yemi Osinbajo welcomed efforts to improve internet connectivity in a speech at a Google conference in Lagos on Thursday.

"Access to information means that the gap in equality and exclusion are bridged," said Osinbajo who earlier this month met Google's chief executive, Sundar Pichai, at the company's Silicon Valley headquarters.

Last year, Google announced plans to train 10 million Africans in online skills within five years.

JOHANNESBURG — Chinese President Xi Jinping said there would be no winner in a global trade war, urging fellow developing powers on Wednesday to reject unilateralism in the wake of tariff threats by US President Donald Trump.

Trump's warnings have given Brazil, Russia, India, China and South Africa fresh impetus to enhance trade cooperation, and their leaders found a collective voice championing global trade as they began a three-day BRICS summit in Johannesburg.

The meeting of presidents from the trade bloc is the first since Trump's administration launched a push to rebalance trade multilateralism that Trump has deemed unfair — relationships that the United States once championed. 

"We should be resolute in rejecting unilateralism," Xi said at the opening ceremony.

"A global trade war should be rejected because there will be no winner," said Xi, who oversees the world's second-largest economy, and whose nation is dominant in the BRICS bloc.

"Unilateralism and protectionism are mounting, dealing a severe blow to multilateralism," he said. "China will continue to develop itself with its door wide open."

Xi also said the collective rise of emerging markets and developing countries "is unstoppable and will make global development more balanced". He urged the BRICS governments to observe international rules, regardless of their size.

South African President Cyril Ramaphosa called for thorough discussions at the summit on the role of trade in promoting sustainable development and inclusive growth.

"We are meeting here at a time when the multilateral trading system is facing unprecedented challenges," he said in a speech.

Worried by unilateralism  

"We are concerned by the rise in unilateral measures that are incompatible with World Trade Organisation rules and are worried about the impact of these measures, especially on developing countries."

Last week, Trump said he was ready to impose tariffs on all $500 billion of imported goods from China. But even South Africa — the continent's most industrialised economy but a tiny exporter of steel, aluminium and automobiles to the United States — is facing barriers.

South African Trade Minister Rob Davies said it was suffering collateral damage.

He said 7,000 South Africans work in jobs affected by the metals tariffs; an effort to secure an exemption from the US government was unsuccessful.

South Africa has invited the leaders of 22 additional countries to participate in this week's summit, including 19 from Africa.

As the member hardest-hit by Trump's trade moves, China is looking to diversify its trade ties to mitigate fallout.

ERBIL, Iraq — At Luxury Time, a restaurant in the Kurdish city of Erbil, there are no man-size portions.

The women-only restaurant, with its all-female staff, opened this month by 23-year-old business graduate Tara Mohammed Ihssan who was fed up of unwanted attention on nights out with friends in northern Iraq.

"If you want to go out, it is so uncomfortable because everyone is staring at you," she told Reuters.

"So I have always thought about doing something like this for me and for the rest of the girls to feel comfortable."

The restaurant's sleek, modern interior, with hanging chandeliers and colourful couches, has drawn unwanted attention, however, with some men coming to the door to see what the fuss is all about.

"I have been thinking, if it stays this way I will put security on the door," Ihssan said.

"I find it unfair as all the cafes here are just for men, why can't you accept that there is this cafe for ladies."

DUBAI — A proposed reshuffle of state assets would allow Saudi Arabia to delay the listing of national oil giant Aramco until 2020 or beyond while still spending on economic development projects, according to three sources familiar with the matter.

Late last week Aramco confirmed a Reuters report that it was working on a possible purchase of a "strategic stake" in local petrochemicals maker Saudi Basic Industries Corp. (SABIC) from the Public Investment Fund (PIF), the kingdom's top sovereign wealth fund.

The deal could inject tens of billions of dollars into the PIF, giving it resources to proceed with its plans to create jobs and diversify the economy beyond oil exports, including a $500 billion business zone in the northwest of the country.

A major goal of the planned Aramco listing — which was initially slated for the end of 2018 and could prove the biggest IPO in history — was to raise money for the PIF, making the fund an engine for transforming the Saudi economy.

A SABIC deal would allow the government to buy time for the initial public offer of shares in Aramco, according to industry and international banking sources, who declined to be named due to the sensitivity of the matter.

It could raise roughly as much money for the PIF as an Aramco IPO, while giving the government more time to reach decisions on contentious aspects of the flotation such as whether Aramco shares should be listed on a foreign market as well as in Riyadh.

"The PIF will have more cash to invest and there is no need to IPO now," one of the sources said.

Aramco declined to comment on its IPO plans, and a Saudi government official did not respond to a request for comment. 

Aramco's Chief Executive Amin Nasser said on Friday in an interview with Saudi-owned Al Arabiya TV that the SABIC acquisition was a complex deal and would need a certain timeframe to be completed, delaying the Aramco IPO.

"There is no doubt that the potential acquisition of a strategic stake in SABIC... will delay the IPO," he said.

Valuation

Final decisions on the listing rest with Saudi Arabia Crown Prince Mohammed, the sources said. 

The planned IPO is the centrepiece of an ambitious plan championed by the crown prince to diversify Saudi Arabia's economy beyond oil. When he announced the plan to sell about 5 per cent of Aramco in 2016, he predicted the sale would value the whole company at $2 trillion or more.

Since then, however, many estimates by oil and gas industry analysts have been far lower, around $1-1.5 trillion, implying the PIF would receive a $50-75 billion windfall from the IPO.

The fund owns 70 per cent of SABIC, which has a market capitalisation of $104 billion. Aramco has not said exactly how much of SABIC it might buy but two sources told Reuters on Monday that Aramco aims to become a "majority" owner; buying the PIF's entire stake could give the fund over $70 billion. 

The PIF has officially reported assets of over $220 billion but most of that is believed to be tied up in real estate or stakes in big Saudi companies, which could not be sold without undermining the local property and stock markets.

The SABIC deal would put temporary pressure on the finances of Aramco, the government's main source of revenue. But higher oil prices this year have given Riyadh more money to play with.

Investment bank Jadwa forecasts state oil revenues of $154 billion this year instead of the $131 billion budgeted by Riyadh last December.

Crown jewel 

If the Aramco IPO eventually goes ahead, at least two problems will need to be resolved, according to several sources. One is the company's valuation.

Prince Mohammed's declaration of a $2 trillion valuation created a potential political headache. If the IPO produces a valuation much below $2 trillion, the Saudi public may conclude he is selling the country's crown jewel too cheaply.

This might be finessed by selling part of the Aramco stake in a private placement, probably to deep-pocketed strategic investors in oil-consuming states such as China. A placement is being considered, one industry source said, but that would take many months to finalise.

The SABIC deal would boost Aramco's valuation giving it access to petrochemicals assets domestically and abroad, the sources said. 

The other major issue is whether some Aramco shares will be listed on a foreign exchange such as New York, London or Hong Kong. Prince Mohammed initially proposed an overseas listing to attract foreign capital and lift Saudi Arabia's profile.

But some officials oppose the idea on the grounds it would dilute the benefits to Riyadh's bourse of hosting Aramco. And an overseas exchange could impose tougher governance, disclosure requirements and legal risks for Aramco.

These risks may have strengthened the case for a Riyadh-only listing. But an IPO in Riyadh alone might have to be smaller than 5 per cent because the market's capitalisation of just $535 billion would struggle to absorb a listing of Aramco's size.

That may encourage authorities to delay listing Aramco until after Riyadh's market enters emerging market equity indexes next year, making it more liquid. Entry could attract around $30-45 billion of fresh foreign money, funds estimate.

Riyadh will join FTSE Russell's index in stages between March and December 2019, and MSCI's index between May and August 2019. One banking source said some bankers had advised Prince Mohammed to wait until the arrival of foreign funds directly benchmarked to those indexes, since the funds could be counted on to buy Aramco shares as an index component.

ABEOKUTA, Nigeria — "Come, I'll show you what a potential billion dollars looks like," said P.J. Okocha, opening the door of a small, modern house in southern Nigeria to reveal a thousand yam seedlings. 

"These thousand plants can make three million seeds," he said, with a broad smile. 

At just 34, Peter Okocha Junior — also known as P.J. — is a high achiever. 

Okocha cut his teeth in his family's shipping and logistics business, then decided to forge his own path.

He identified Nigeria's agricultural sector as one of enormous potential where he can make the most impact. Today, he is a pioneer in hydroponics.

"I always knew I wanted to invest in agriculture but I didn't know exactly what I wanted to do," he told AFP. 

"One day, I saw an agro-researcher on Twitter. I contacted him, and said, 'Hey bro, let's change the world together'."

His pitch hit home. In a few months, their company PS Nutrac was born. 

Two years later, tens of thousands of yam plants grow without soil, suspended in water in special greenhouses — a cutting-edge agricultural technique rarely seen in developing countries. 

One afternoon in June, young PS Nutrac employees were training a group of old local farmers on a new organic variety of yam. 

Farming communities have been gutted by an exodus of young people for big cities to carve out a living, said Chief Awufe Ademola, who is in his 60s and owns 3 hectares of land.

In rows before him, the old farmers sat with curved backs and calloused hands.

"With the average age of the African farmer hovering just above 60 years of age, it's imperative for the new generation to delve into farming," said Okocha.

"Nobody wants to do the conventional standing in the hot sun, and sweating and labour that comes out with that, therefore to combine it with data, technology and automatisation, it makes it more attractive."

 Food challenge 

Nigeria, which is home to more than 180 million people, is under pressure to produce more food. By 2050, it is expected to become the third most populous country in the world. 

After the discovery of oil in commercial quantities in the 1950s, Nigeria's prosperous agricultural sector suffered a precipitous decline as successive leaders and investors switched focus entirely.

Decades have passed and with the collapse of the railway network, agricultural goods now have to be transported by truck on crumbling roads. 

There are not enough storage sheds; those that exist are mostly not refrigerated; and there are few processing plants.

That means huge amounts of produce go to waste in a country so fertile it can grow everything from avocados to cashews to corn. 

For example, about 4 million tonnes of citrus fruits are produced annually, according to US Department of Agriculture figures for 2009.

But up to 60 per cent goes to waste before getting to the final consumers in urban centres. 

Meanwhile, Nigeria imports $315 million (270 million euros) of orange concentrate a year, the bulk of national consumption.

"Opportunities in agriculture are beyond the imagination," said Buffy Okeke-Ojiudu, the proud owner of a 200-hectare palm oil plantation in the southeast.

"The future billionaires in Nigeria will be people investing in agriculture, tech and renewable energy, which are sectors that can create employment, not like the oil sector," said the 34-year-old, whose grandfather was Nigeria's first minister of agriculture.

 Starting from scratch 

Making farming profitable is not easy, though. 

The main problem for businesses is access to bank loans, which attract high rates of interest compared to other countries in the region.

"Access to finance is a big issue," Okeke-Ojiudu said, adding that banks ask for large amounts of collateral and charge double-digit interest rates for agriculture ventures. 

"So today, the people who are investing in this sector are already wealthy, already connected."

Okeke-Ojiudu was educated in the United States and England. Seyi Oyenuga also spent most of his life between Chicago and Washington before coming to his father's homeland.

Three years ago, he swapped life in the construction sector to settle in Oyo, southwest Nigeria and started a farm. 

On the four-hour drive from Okocha's farm, women pound dried cassava along the road. 

Nearly all the farms surrounding the sleepy villages have been abandoned. 

 Farming revival 

But a farming revival is taking place at Oyenuga's Atman Farm, where he is busy repairing tractors to plough the cassava fields. 

"We have to use old-generation tractors because people here only know how to operate them," he said, dressed in a John Deere cap, blue gingham shirt and a keffiyeh around his neck.

Oyenuga learned everything from scratch, including how to negotiate with local leaders to acquire property deeds, to teach employees the metric system and how to use tractors. 

"We learned the hard way," he said, speaking under a relentless sun after fixing up the tractors side by side with his staff. 

This year, he hopes to plant cassava on 400 hectares — five times the area of his first harvest last year. 

It is just the start. Ultimately, he wants to cultivate 2,000 hectares within 10 years.

"It's really been exciting, I've been able to do things that I've never imagined or thought were possible," he added.

ABU DHABI — China and the United Arab Emirates signed a raft of economic agreements on Friday as President Xi Jinping held “extensive talks” in Abu Dhabi that will strengthen political ties, the UAE said.

Xi met UAE Vice President Sheikh Mohammed Bin Rashid Al Maktoum, who is also ruler of Dubai, and Abu Dhabi’s Crown Prince Sheikh Mohammed Bin Zayed Al Nahyan on the second day of a three-day visit.

“We have substantial political and economic agreement and a solid base of projects in energy and technology sectors and infrastructure,” Dubai’s ruler said in a Tweet.

“More than that, [we have] a strong political will to start a larger phase of cooperation,” he added. 

China and the UAE already agreed on oil and trade deals in the runup to Xi’s visit.

The two delegations signed more “memorandums of understanding and agreements” on Friday, UAE’s Crown Prince Mohammed said on Twitter.

This takes the total number of memoranda of understanding and deals struck this month to 13, official UAE news agency WAM said.

A strategic cooperation framework between state-owned Abu Dhabi National Oil Co. (ADNOC) and China National Petroleum Company (CNPC) was among the deals signed on Friday, ADNOC said.

The agreement “outlines opportunities for possible future collaboration across ADNOC’s upstream and downstream value chains and support for China’s growing energy needs”, ADNOC said in a statement.

ADNOC announced on Thursday it had awarded two contracts worth $1.6 billion (1.4 billion euros) to BGP Inc., a subsidiary of CNPC, for a seismic survey in the emirate.

The survey will search for oil and gas in onshore and offshore sites covering an area of 53,000 square kilometers.

Also on Thursday, the UAE’s state-owned DP World announced an agreement between the two countries to build a new trade zone in Dubai.

The project is part of China’s trillion-dollar “One Belt, One Road” infrastructure initiative, an ambitious plan to revive the ancient Silk Road trading routes with a global network of ports, roads and railways.

In a further sign of strengthening ties, Dubai-based real estate developer Emaar Properties on Wednesday announced plans to build the Middle East’s largest Chinatown in the UAE.

Abu Dhabi is the Chinese president’s first stop on a tour which also includes Senegal, Rwanda and South Africa.

LONDON — Sterling fell below $1.30 for the first time in 10 months on Thursday as the combination of weak economic data and a resurgent dollar sapped appetite for the British currency.

Weak retail sales data for June painted a picture of a struggling economy against the backdrop of stagnating wage growth, weak inflation figures and uncertainty over how Britain’s looming exit from the European Union will play out.

That is casting a shadow on well-set expectations of an interest rate rise by the Bank of England at its August 2 meeting.

The lacklustre data comes moreover at a time when the dollar has rallied more than 6 per cent against a basket of developed G-10 nations’ currencies in the last three months. Escalating trade tensions, robust US economic growth and a confident Federal Reserve have all boosted the greenback’s appeal. 

“With fundamentals weak and a big question mark on Brexit, we think sterling can fall into the low $1.20s,” said Neil Mellor, senior currency strategist at BNY Mellon in London.

Britain’s June retail sales declined 0.5 per cent, defying expectations of a 0.2 per cent increase on a monthly basis. That saw sterling extending recent falls, touching an early-September 2017 low of $1.2974 and down 0.7 per cent on the day. 

That is despite the fact that on a quarterly basis, retail sales rose the most in over a decade, up 2.1 per cent on the first three months of 2018.

Many reckon this should give the BOE some confidence about raising interest rates next month — bets on a hike remain fairly entrenched, with expectations for a 25 basis point rise now at around 70 per cent.

That’s down from nearly 80 per cent earlier this week.

“The data is not that great but we still expect the Bank of England to raise rates in August in the backdrop of a tight labour market and may signal an extended pause after that,” Credit Agricole strategist Manuel Oliveri said.

The weakening economy, messy politics and the ebbing of rate hike bets beyond August have already crushed bullish sterling bets, with short bets against the British currency the biggest since September 2017.

That marks a stunning reversal from April when long sterling bets peaked at more than three-year highs. Sterling was then around $1.43, dropping almost 10 per cent since then. 

Brexit and bears 

Most of sterling’s losses have come in recent weeks as Brexit uncertainty has grown.

After narrowly escaping defeat in parliament over her plans for leaving the EU this week, Prime Minister Theresa May has signalled she will not drop a proposal on Britain’s future relationship with the bloc.

Fears linger that the country may crash out of the EU without a trade deal in place.

“Around 1.30, sterling is nowhere near to being fully priced for a worst-case political scenario, but participation in the pound is unlikely to climb much until that worst-case scenario looks a lot more certain,” said Stephen Gallo, European head of FX strategy at BMO Financial Group.

However, the British currency’s performance looks better when measured against non-dollar currencies, suggesting much of its weakness is down to the broad-based dollar surge.

Against the euro for instance, sterling is only at a four-month low of 89.30 pence.

On a year-to-date basis, sterling is a middle-of-the-pack performer against the dollar with the Swedish crown and the Canadian dollar leading losers, according to Thomson Reuters data.

Against a trade-weighted basket of its peers , for example, sterling is at a late-November 2017 low. 

However, currency derivative markets are flashing warning lights. 

Three- and one-month risk reversals , a ratio of calls to put options, are trading at their lowest since June 2017, indicating traders are betting on more weakness. 

BRUSSELS — EU regulators hit Google with a record 4.34 billion euros ($5 billion) antitrust fine on Wednesday for using its Android mobile operating system to squeeze out rivals.

The penalty is nearly double the previous record of 2.4 billion euros which the US tech company was ordered to pay last year over its online shopping search service.

It represents just over two weeks of revenue for Google parent Alphabet Inc. and would scarcely dent its cash reserves of $102.9 billion. But it could add to a brewing trade war between Brussels and Washington.

EU antitrust chief Margrethe Vestager denied anti-US bias, saying she very much liked the United States.

“But the fact is that this has nothing to do with how I feel. Nothing whatsoever. Just as enforcing competition law, we do it in the world, but we do not do it in political context,” she said.

Google said it would appeal the fine.

“Android has created more choice for everyone, not less. A vibrant ecosystem, rapid innovation and lower prices are classic hallmarks of robust competition,” it said. 

Vestager’s boss, commission President Jean-Claude Juncker, is due to meet US President Donald Trump at the White House next Wednesday in an effort to avert threatened new tariffs on EU cars amid Trump’s complaints over the US trade deficit.

Vestager also ordered Google to halt anti-competitive practices in contractual deals with smartphone makers and telecoms providers within 90 days or face additional penalties of up to 5 per cent of parent Alphabet’s average daily worldwide turnover.

“Google has used Android as a vehicle to cement the dominance of its search engine. These practices have denied rivals the chance to innovate and compete on the merits. They have denied European consumers the benefits of effective competition in the important mobile sphere,” Vestager said.

The EU enforcer dismissed Google’s argument of competition from Apple, saying the iPhone maker was not a sufficient constraint because of its higher prices and switching costs for users.

Android, which runs about 80 per cent of the world’s smartphones according to market research firm Strategy Analytics, is the most important case out of a trio of antitrust cases against Google.

Some major Android device makers, including Samsung Electronics Co., Sony Corp., Lenovo Group Ltd. and TCL Corp., declined to comment on the EU case.

Regulatory action against tech giants like Google and Facebook with their entrenched market power may lack sting, said Polar Capital Fund Manager Ben Rogoff, who has been holding the stock since its initial public offering and is broadly neutral on Google.

“The reality is that as long as they’re delivering great utility to their consumers, consumers will still use those platforms. If they do, advertisers will be drawn to those platforms, too, because the ROIs [return on investment] are very difficult to replicate anywhere else,” he said.

The EU takedown of Google is six to eight years too late, with users paying the price, said Geoff Blaber of CCS Insight.

“Any action by the EU is akin to shutting the stable door after the horse has bolted,” he said.

“There is a significant danger of unintended consequences that penalises the consumer. This ranges from increased fragmentation and greater app inconsistency to increases in hardware cost should Google decide to change or adapt the Android business model.”

Lobbying group FairSearch, whose 2013 complaint triggered the EU investigation, welcomed the ruling, saying it could help restore competition in mobile operating systems and apps.

“This is an important step in disciplining Google’s abusive behaviour in relation to Android,” it said.

A third EU case, which has not yet concluded, involves Google’s AdSense product. Competition authorities have said Google prevented third parties using its product from displaying search advertisements from Google’s competitors.

Vestager has also ordered a series of measures against other US companies over tax practices in some EU states, notably demanding two years ago that the Irish government take back up to 13 billion euros from Apple Inc.

TOKYO — Japan and the European Union (EU) signed a wide-ranging free trade deal on Tuesday. 

Both sides hope the deal will act as a counterweight to the protectionist forces unleashed by US President Donald Trump.

The ambitious trade pact, which creates the world's largest open economic area, comes amid fears that a trade war between the United States and China will diminish the role of free trade in the global economic order.

"There are rising concerns about protectionism, but I want Japan and the EU to lead the world by bearing the flag of free trade," Prime Minister Shinzo Abe said at a news conference after the signing ceremony.

The United States this month imposed 25 per cent tariffs on $34 billion of Chinese goods to lower the US trade deficit and China quickly retaliated with an increase in tariffs on US goods.

The Japan-EU trade deal is also a sign of shifting global ties as Trump distances the United States from long-time allies like the EU, NATO and Canada.

"We are sending a clear message that we stand against protectionism. The EU and Japan remain open for cooperation," European Council President Donald Tusk, who speaks for the 28 EU national leaders, told reporters.

The deal removes EU tariffs of 10 per cent on Japanese cars and 3 per cent on most car parts. It would also scrap Japanese duties of some 30 per cent or more on EU cheese and 15 per cent on wines, and secure access to large public tenders in Japan.

Europe's food sector is one of the biggest winners from the deal, which should allow it to capitalise on Japanese demand for high-quality cheese, chocolates, meats and pasta.

Japanese car and car parts makers are also expected to increase their sales to Europe, where they have lagged behind European rivals.

However, Japan's dairy industry is expected to lose market share to European products once tariffs of up to 40 per cent on some cheese imports start falling.

Japan and the EU also agreed on Tuesday to establish a regular dialogue on trade and economic policy, with the first meeting to be held before year's end.

The dialogue will be chaired by Japan's trade and foreign ministers and the European Commission's vice president for competitiveness, both sides said in a joint statement.

Both Japan and the EU, having seen Trump pull back from free trade relationships, are keen to show they remain committed to removing barriers they say hamper growth, analysts said.

"Trade liberalisation and market openness continue to march ahead in Asia-Pacific," said Ajay Sharma, the regional head of global trade and receivables finance at banking and financial services provider HSBC.

EU accords with Singapore and with Vietnam were at the ratification stage, while deals with Indonesia, Australia and New Zealand were being negotiated, he added. 

A China-EU summit ended on Monday with a communique affirming the commitment of both sides to the multilateral trading system.

Trump pulled the United States out of the Trans-Pacific Partnership with Japan and 10 other states on his first day in office in January 2017 and has pushed to renegotiate a free trade pact with Canada and Mexico.

Trump says he is taking a hard line on trade to protect US workers and US companies, but critics say his approach is upending the rules of multilateral global trade.

Japan and the EU account for about a third of global GDP and their trade relationship has room to grow, according to EU officials, who expect the deal to boost the EU economy by 0.8 per cent and Japan's by 0.3 per cent over the long term.