The Key Elements from the EU-Japan Trade Agreement
On February 1st a new Trade Agreement between Japan and the European Union came into force. And that’s a big deal. Literally.
The Economic Partnership Agreement, as it is called, is the largest bilateral trade agreement ever made by the EU in terms of market size. It has created the largest free trade zone in history.
The key parts of the Economic Partnership Agreement
From the official EU press release:
With regards to agricultural exports from the EU, the agreement will, in particular:
- scrap Japanese duties on many kinds of cheese 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 the protection of a selection of Japanese GIs in the EU.
The agreement also secures the opening of services markets, in particular, financial services, e-commerce, telecommunications, and transport. It furthermore:
- facilitates EU companies access to the procurement markets of 54 large Japanese cities, and removes obstacles to procurement in the economically important railway sector at a national level;
- addresses specific sensitivities in the EU, for instance in the automotive sector, with transition periods of up to 7 years before customs duties are eliminated.
The agreement also includes a comprehensive chapter on trade and sustainable development; includes specific elements to simplify for small and medium-sized businesses; sets very high standards of labor, safety, environmental and consumer protection; strengthens EU and Japan’s commitments on sustainable development and climate change and fully safeguards public services.
Concerning data protection, the EU and Japan adopted decisions on 23 January of this year to allow personal data to flow freely and safely between the two partners. They agreed to recognize each other’s data protection systems as ‘equivalent’, which will create the world’s largest area of safe data flows.
A Threat to post-Brexit UK Industry
The Guardian warns about the threat this deal posts to the UK industry after the Brexit:
Experts have warned that a new EU-Japan trade deal could pose a post-Brexit threat to British industry in the wake of Nissan’s decision to backtrack on expanding its Sunderland plant. The world’s biggest free trade deal came into force on 1 February and there are fears that Japan will stop using the UK as a manufacturing base, especially with a 0% tariff on car imports built into the EU-Japan agreement.
Key Elements of the Agreement
Elimination of customs duties –more than 90% of the EU’s exports to Japan will be duty-free at entry into force of the agreement. Japan has scrapped customs duties on 97% of goods imported from the EU (in tariff lines), with the remaining tariff lines being subject to partial liberalization through tariff rate quotas or tariff reductions. This, in turn, will save EU exporters around €1 billion in customs duties per year.
Agriculture and food products – Japan is a highly valuable export market for European farmers and food producers. With annual exports worth over €5.7 billion, Japan is already the EU’s fourth biggest market for agricultural exports. Over time around 85% of EU agri-food products (in tariff lines) will be allowed to enter Japan entirely duty-free. This corresponds to 87% of current agri-food exports by value.
Geographical Indications – the EU-Japan agreement recognizes the special status and offers protection on the Japanese market to more than 200 European agricultural products from a specific European geographical origin, known as Geographical Indications (GIs)
Industrial products – tariffs on industrial products will be fully abolished, for instance in sectors where the EU is very competitive, such as chemicals, plastics, cosmetics as well as textiles and clothing.
Non-tariff barriers – The EU-Japan negotiations addressed many non-tariff measures that had constituted a concern for EU companies, as some Japanese technical requirements and certification procedures often make it difficult to export safe European products to Japan. The agreement will make it easier for EU companies to access the highly regulated Japanese market.
You can find a full overview of the key elements of the agreement here.
The Agreement in Full
Those that want to read the full text of the agreement can find it here.