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Today, Japan and the European Union (EU) have signed an Economic Partnership Agreement (EPA) which will remove EU import duties on Japanese cars as well as the vast majority of tariffs on imports of European meat, wine, and dairy products.

Japan and EU Sign the Economic Partnership Agreement – One of the Largest Bilateral Trade Partnerships to Date

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<p>On July 17, 2018, Japan and the European  Union (<strong>EU</strong>) have signed an Economic  Partnership Agreement (<strong>EPA</strong>) which  will remove EU import duties on Japanese cars as well as the vast majority of  tariffs on imports of European meat, wine, and dairy products. If approved by  the Japanese Diet and European Parliament and put into force, the agreement  will open up huge market opportunities for both sides:</p><div class="row" ><div class="col-md-6 col-sm-12 col-xs-12"><ul><li >Creation  of a free trade zone covering 600 million people and a third of global GDP. </li><li >Reduction  or elimination of customs duties and tariffs that affect Japanese and EU  companies. </li><li >Providing  127 million consumers in the Japanese market with more open access to key EU  agricultural exports, and protection to over 200 traditional European regional  food and drink products in Japan.</li><li>Increase  in EU export opportunities in a range of other sectors, including the ability for  European companies to bid for public contracts in many Japanese cities.</li></ul></div><div  class="col-md-6 col-sm-12 col-xs-12"><h3 >“It could help boost Japan’s gross domestic product by about 45 billion dollars, and create nearly 300,000 jobs.”</h3><p align="right">Hiroshige Seko, <br>Minister of Economy, Trade and Industry <br> “Seko praises Japan-EU free trade deal” <br> from NHK WORLD-JAPAN</p></div></div><p><strong>What  will change for Japanese and EU companies?</strong></p><p>Trade  negotiations between the EU and Japan have been conducted since March 2013. At  the EU-Japan summit on July 6, 2017, both parties reached an agreement in  principle on the main elements of a free trade deal. Its key elements include  the following:</p><ul><li >Duty-free  export of motor cars: Japan’s main area of interest was the elimination of high  tariffs ranging from 10% to 14% on industrial products like motorcars and  electrical machinery. According to a survey by the Japan External Trade  Organization (<strong>JETRO</strong>) in 2017,  distributed to Japanese companies that run their businesses in Europe, more  than 50% of the companies responded that they expect the profit impact of the  EPA to be positively significant. Respondents in the manufacturing,  electric/electronics, and  transport  machinery (cars and motorcycles) industries, as well as chemical/oil producers,  all showed strong interest in utilizing the EPA for imports from Japan.</li><li >Temporary  movement of company personnel: The agreement includes the most advanced  provisions on movement of people for business purposes that the EU has agreed  to so far. They cover all traditional categories, such as intra-corporate  transferees, business visitors for investment purposes, contractual service  suppliers, and independent professionals, as well as newer categories, such as  short-term business visitors and investors. This will, in turn, support  investment in both directions.</li><li >Elimination  of customs duties: Tariffs on 75% of Japan’s exports to the EU, and more than  90% of the EU's exports to Japan will be eliminated following the entry into  force of the economic partnership. </li><li >Agriculture  and food products (in particular, meat, wine, and cheese): At present, duties  on food from the EU are high, ranging from 15% on wine to 30% to 40% on cheese.  With annual exports worth over EUR 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.</li><li >Geographical  indications: The EPA recognizes the special status and offers protection on the  Japanese market to more than 200 European agricultural products from a specific  geographical region, known as Geographical Indications (GIs) – for instance, Roquefort  and Aceto Balsamico di Modena.</li><li >Forestry:  Most tariffs on wood products will be dropped immediately, with some less  important tariff lines being scrapped after 10 years.</li><li>Financial  services: The agreement contains specific definitions, exceptions, and  disciplines on new financial services, self-regulating organizations, payment  and clearing systems, and transparency.</li></ul><div class="row" ><div class="col-md-6 col-sm-12 col-xs-12"><p>The EU-Japan negotiations also 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 go a  long way in facilitating the access of EU companies to the highly regulated  Japanese market, especially with regard to motor vehicles. The EPA ensures that  both Japan and the EU will fully align themselves to the same international  standards on product safety and the protection of the environment, meaning that  European cars will be subject to the same requirements in the EU and Japan, and  will not need to be tested and certified again when exported to Japan. With  Japan now committing itself to international car standards, EU exports of cars  to Japan will be significantly simplified.</p></div><div  class="col-md-6 col-sm-12 col-xs-12"><h3 >“Together we are making, by signing this agreement, a statement about free and fair trade, we are showing that we are stronger and better off when we work together.”</h3><p align="right">Jean-Claude Juncker, <br>President of the European Commission <br> “EU, Japan  sign major trade deal in 'message against protectionism'” <br>from <em>Agence  France-Presse</em></p></div></div><p>Additionally, it is  remarkable that the EPA will be a specific chapter on corporate governance, based  on the G20/OECD’s Principles on Corporate Governance and reflecting Japan’s and  the EU’s best practices and rules in this area. Both Japan and the EU commit  themselves to adhere to key principles and objectives, such as transparency and  disclosure of information on publicly listed companies, accountability of the management  towards shareholders, responsible decision-making based on an objective and  independent standpoint, effective and fair exercise of shareholders’ rights and  transparency and fairness in takeover transactions.</p><p><strong>And  what is next?</strong></p><div class="row" ><div class="col-md-6 col-sm-12 col-xs-12"><p>After today’s approval, the EPA will be sent to  the National Diet for its approval. In the EU, the European Parliament must  approve the agreement, which it is expected to vote on in autumn 2018. The aim  is for the EPA to enter into force before the end of 2019. If a deal is entered  into force before the Brexit date on March 29, 2019, the EPA could  automatically apply to Britain during a post-March 2019 transition period of  around two years. At a time when protectionist pressures are growing, the trade  agreement between Japan and the EU sends a clear signal that two of the world's  largest economies reject protectionism and are open for business and for trade  on the basis of fair rules and high standards. </p></div><div  class="col-md-6 col-sm-12 col-xs-12"><h3 >“Right now, concerns are rising over protectionism all around the world. We are sending out a message emphasizing the importance of a trade system based on free and fair rules.”</h3><p align="right">Shinzo Abe, <br>Prime  Minister of Japan <br> “Japan and  the European Union complete trade deal accounting <br>for 30 percent of world’s GDP” <br> from <em>The  Japan Times</em></p></div></div><p>There is a good  chance that the EPA will expand and deepen trade and economic relations between  the two partners. Japan and Europe are regions with a high per capita income,  highly developed industrial and service industries, and discerning consumer markets.  Both parties are committed to similar areas of future development, such as  digitization, interconnectivity, robotics, mobility, life science, and energy  efficiency.</p><p>On June 26, 2018, the  European Council also adopted a decision on the signing and provisional  application of an EU-Japan Strategic Partnership Agreement (<strong>SPA</strong>). Both the EPA and SPA will enhance  the two parties’ relations in many ways. On one hand, the EPA focuses on economic  aspects such as elimination and reduction of customs duties and establishing rules  to promote free trade. On the other hand, the SPA will provide the legal  framework for cooperation between Japan and the EU to find solutions to common  challenges, such as climate change, cybersecurity, energy security, disaster management  and migration. It will also contribute to boosting economic growth, creating  employment, and strengthening business competitiveness in both Japan and the EU.</p><p>The potential for  positive synergies and network effects is, therefore, significant.</p>

<p>Japan and EU Sign the Economic Partnership Agreement – One of the Largest Bilateral Trade Partnerships to Date</p>