The EU Japan Economic Partnership Agreement1 (the "EPA"), comes into force today, 1 February 2019. The EPA covers almost one third of the world's total GDP, removing 99% of the tariffs applied on €1 billion of goods the EU exports to Japan.2
In addition to reducing or abolishing tariffs, the EPA addresses a number of non-tariff barriers to EU-Japan trade. Key facets of the EPA of particular relevance to key EU-Japan trade sectors include:
- EU companies can participate on an equal footing with Japanese companies in public procurement tenders in 54 'core' Japanese cities;
- Commitment to ensuring that their standards and technical regulations are aligned with international standards;
- Mutual recognition of data protection systems allowing for a free flow of data;
- European agricultural products benefitting from Protected Geographic Indication in the EU will be protected and recognised by Japan. This extends to Scottish Farmed Salmon, Aceto Balsamico di Modena, Prosecco, Scotch Whisky, Blue Stilton cheese and West Country Farmhouse Cheddar cheese;
- Cars will be subject to the same international standards on product safety and environmental protection in both the EU and Japan, removing the need to obtain new tests or certification when exporting vehicles to Japan from the EU;
- Targeted dispute settlement in relation to motor vehicles will be introduced; and
- Harmonised rules for the export of beer creating equality of tax treatment.
Negotiations are ongoing for a potential agreement on the protection of investments between the EU and Japan. Specifically, the EU is seeking to implement its proposal on the Investment Court System in its trade relations. The purpose of the system is to adjudicate disputes between investors and states where its jurisdiction has been accepted under bilateral treaties.
Brexit and the EPA
The EU and the UK have agreed that the UK will be treated as an EU member during any agreed transition period for the purposes of international agreements between the EU and third countries. However, the continued application of EU agreements to the UK will require the consent of the relevant third country.
Some existing trade partners3 have verbally indicated that, in principle, they agree with this approach. In a joint statement with the UK published on 10 January 2019, Japan confirmed its support for the continued application of the EPA in the UK during a transition period.4
Whether the remainder of the third countries with whom the EU has negotiated a trade agreement will consent to the roll-over of their agreements during the transition period remains to be seen. What is clear is that with Brexit day looming, businesses require certainty as regards the rules governing the UK's international trading relationships.
For ease of reference, the HMRC Customs Information Paper dedicated to the EPA has been made available.
Bernardine Adkins, partner and head of EU, Trade & Competition, is frequently called upon by news channels, including the BBC, for expert commentary on the negotiation process of free trade agreements and the overall trade landscape. Please contact Bernardine or the team to discuss how your business can maximise the advantages presented by the EPA and other free trade agreements.
Footnotes
2 European Council press release dated 21 December 2018
3 Including Australia, Canada, Singapore and New Zealand. A full list of the countries that have made public statements in favour of the 'roll-over' approach is contained in a letter from the Department for International Trade, available at: Data.parliament
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