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Marchio di Ospitalità Italiana

Economic partnership agreement between Japan and the EU: in brief

Signed on July 6, the "agreement in principle" between EU and Japan has already been announced. But do you know how it can affect your business? ICCJ has prepared a brief synthesis of the major changes.

When will the agreement enter into force?

The Economic Partnership Agreement (EPA) is expected to enter into force from the early months of 2019, as many of the issues defined in the "Agreement in Principle" still need to be discussed in detail in the course of the next year.

What are the most important effects of the EPA on exports to Japan?

  • 96% of EU products imported to Japan will be liberalized within 10 or 15 years.
  • Wines will enjoy zero tariffs from the start. Currently EU wines are at a strong disadvantage against wines from other countries, such as Chile, which recently became leaders in the low-to-mid price range and dislodged Italy from the second place in volume and value of exports. This was a ​much-needed measure to guarantee the long term viability of EU wines, which currently are applied a 12.5%-15% tariff on top of a liquor tax.
  • Quotas for leather products will be abolished. Currently, products beyond a certain amount are applied a heavy tariff (30%) at the Japanese customs. From entry into force, all products will have a reduced tariff of 21%, which will be gradually lowered over a period of ten years.
  • Geographical Indications will be protected. Currently, many products such as Aceto Balsamico di Modena, Prosecco and others enjoy no formal protection in Japan. After entry into force, some 250 geographical indications will have full legal protection in the country.

How will the EPA address the issue of non-tariff/regulatory barriers to market entry in Japan?

Some issues (harmonization of medical devices, textile labellings etc.) have already been addressed and solved before the conclusion of the negotiations. From entry into force, we expect that the following problems will be solved:

  • Harmonization and sharing of technical standards. Currently, Japanese technical standards are often very different from international ones, and sometimes lack transparency.
  • Transparency in sanitary and phytosanitary measures. While the EPA does not guarantee any relaxation in rules for the import of agricultural products, we can expect more transparency and communication of what is expected to companies in order to comply to Japan regulations, which often seem to appear at the discretion of the local customs.
  • Services. The EPA opens the door to a more tight harmonization in different fields (telecommunication, finance, post, movement of personnel) which implies a leveling of the quality of services offered in the two areas.
    This is a potential revolution and could affect significantly not just the future of trade relationship but the base level of the financial and telecommunication services offered by each area.

For those who want to have a deeper understanding of the finer terms of the agreement, we recommend to refer to two official documents by the EU:

Want to discuss more about the opportunities for your business? Write us: analyst@iccj.or.jp

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