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EU and Japan Seal ‘EU-Japan Economic Partnership Agreement’ Deal

The parties to the EU-Japan Economic Partnership Agreement aim to improve trade in goods and services as well as to create opportunities for investment. This agreement will further improve the position of EU exporters and investors on Japan’s large market, and, in turn, of Japanese exporters and investors in the EU.

According to the European Commission, the EU-Japan Economic Partnership Agreement goes beyond simply trade issues. It represents a significant strengthening of the partnership between the parties. Its main provisions could have an impact on Hong Kong sellers in the EU or in Japan, due to the fierce competition that the Agreement is likely to trigger. It concerns the following topics: 

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. After its full implementation, Japan will have scrapped customs duties on 97% of goods imported from the EU, with the remaining being subject to partial liberalisation through tariff rate quotas or tariff reductions.

Industrial products: There will be a full abolition of tariffs on industrial products in sectors such as chemicals, plastics, cosmetics and textiles and clothing. Tariffs on shoes will go down from 30% to 21% at entry into force of the agreement, with the rest of the duties being eliminated over 10 years. Tariffs on EU exports of leather products, e.g. handbags, will go down to zero over 10 years, as will those on products that are traditionally highly protected by Japan, such as sports shoes and ski boots.

Motor vehicles: According to the conditions of the agreement both Japan and the EU are required to fully align themselves with the same international standards on product safety and the protection of the environment. Therefore, trade in vehicles will be subject to the same requirements in both countries and these will not need to be tested and certified when exported. The text also provides for even stronger cooperation between the EU and Japan in relation to the establishment of international standards. It includes an accelerated dispute settlement between the two sides specifically for motor vehicles. Moreover, the agreement further includes a provision allowing the EU to reintroduce tariffs in the event that Japan would (re)introduce non-tariff barriers to EU exports of vehicles. Finally, hydrogen-fuelled cars compliant with EU standards will be allowed to be exported to Japan without further alterations.

Medical devices: The agreement seeks to reduce the costs of certification of European products exported to Japan. Both the parties have adopted the international standard on quality management systems (QMS).

Technical barriers to trade: The parties to the agreement seek to focus on their mutual commitment to ensure that their standards and technical regulations are based on international standards to the greatest possible extent. Reliance on international standards will be helpful for easier and less costly compliance of food products with Japanese labelling rules.

Sanitary and phytosanitary measures: The EU and Japan have agreed to simplify approval and clearance processes. The parties also seek the elimination of undue delays in import procedures, eliminating unnecessary bureaucracy. However, the intent of the agreement is not to jeopardize safety standards nor require a change in the domestic policy of the parties with regard to matters such as the use of hormones or genetically modified organisms (GMOs).

Telecommunications: The agreement includes provisions on issues such as universal service obligations, number portability, mobile roaming and confidentiality of communications in order to seek a level playing field for telecommunications services providers.

International maritime transport services: The agreement contains obligations to maintain open and non-discriminatory access to international maritime services -transport and related services- as well as access to ports and port services.

Intellectual property rights: The agreement reinforces the commitments that both sides have undertaken in the framework of the WTO. It establishes rules on the protection of trade secrets, trademarks, copyright protection, patents, minimum common rules for regulatory test data protection for pharmaceuticals, and civil enforcement provisions.

Competition: The agreement contains important principles that ensure that both sides commit themselves to maintain comprehensive competition rules and implementing these rules in a transparent and non-discriminatory manner.

As mentioned in the notice published in the Official Journal, the agreement is set to enter into force on 1 February 2019.

Content provided by Picture: HKTDC Research
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