EU-Japan Economic Partnership Agreement

Japan-EU-Agreement
An answer against trade protectionism
An ambitious trade agreement between the European Union and Japan was signed in July 2018. The negotiations began in 2013, when the EU governments commissioned the European Commission to start negotiations with the Japanese country. Negotiations have been delayed during 18 rounds, the last one was held in April 2017. On July 6, the European Union and Japan reached a principle of agreement on the main elements of the EU-Japan Economic Partnership Agreement.[1]According to some experts, the signing of this agreement not only has a commercial purpose but also implies a message and a reaction against the protectionist retreat of the US president.[2]
However, an analysis of the content of the Agreement in figures shows much more since EU companies export more than 58,000 million euros in goods and 28,000 million euros in services every year to Japan. This instrument will eliminate most of the 1,000 million euros of rights paid annually by EU companies that export to Japan, as well as a series of long-standing regulatory barriers. At the same time, this agreement will open the Japanese market of 127 million consumers to the main agricultural exports of the EU and increase the opportunities for EU exports in a range of other sectors.
 
On the one hand, regarding the EU’s agricultural exports, the Agreement affects the tariffs of many cheeses, such as Gouda and Cheddar (which currently stand at 29.8%), as well as wine exports (currently with an average of 15%). Moreover, it allows the EU to increase its exports of beef to Japan. In fact, there will be duty-free trade for processed pork and almost duty-free trade for fresh meat. It also guarantees the protection in Japan of more than 200 high quality European agricultural products (Geographical Indications, GI). A selection of Japanese GIs in the EU will also be protected.
 
In addition, it establishes transition periods before opening markets that are particularly sensitive for the EU, such as the automotive sector[3] which, as can be seen in the following image, consists of the second category of products that the EU exports to Japan, and represents 14.38% of the trade involving 9,941,226 thousand euros. Nevertheless, imports from Japan of motor vehicles amounted to 20,986,186 thousand euros (accounting for 24.38% of imports). In the following image you can see the main categories of products imported / exported between both regions:

Bilateral Commerce Japan EU

On the other hand, the Agreement opens markets of services, in particular financial services, electronic commerce, telecommunications and transport. The aim is to guarantee EU companies access to Japan’s large supply markets in 48 large cities and eliminate barriers to contracting in the rail sector of economic importance at the national level.
 
Differently from the climate of uncertainty in international trade due to protectionist waves as well as possible trade wars, the EU has opted to continue with its agenda and its focus on commercial liberalism and its commitment to its main trading partners.
 
If you are interested in the Japanese market and are thinking of exporting to the country of the rising sun, from Dos Aguas we can give you the support and the necessary guidance to the export path. Do not miss the opportunity!
 

A brief overview of the Agreement between the EU-Japan

Sources:

[1] European Commission (2018) Negotiations and agreements EU-Japan Economic Partnership Agreement. Available online (link) [Last access: 07.08.2018]
[2] Alastair Gale and Emre Peker (July 17, 2018) Japan, EU Sign Trade Deal: ‘We Stand Together Against Protectionism’. The Wall Street Journal. Available online (link) [Last access: 07.08.2018]
[3] European Commission (December 8, 2017) EU and Japan finalise Economic Partnership Agreement. Available online (link) [Last access: 07.08.2018]

Recommended reading:

Agreement between the European Union and Japan for an economic partnership (Full text)
Reports from the negotiating rounds. They are available in the following link: (link)
EU-Japan EPA – The Agreement in Principle (July 2017) (link)
 

Methodological note:

The image uses data from the International Trade Centre. EU’s data are from the 28 member countries.

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