Japan and the European Union signed a wide-ranging free trade deal on Tuesday that both sides hope will act as a counterweight to the protectionist forces unleashed by US President Donald Trump's trade policies.

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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.

Prime Minister Shinzo Abe signed the trade pact with European Council President Donald Tusk, who speaks for the 28 EU national leaders, and European Commission President Jean-Claude Juncker, the bloc's executive head.

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% and Japan's by 0.3% over the long-term.