EU-Japan trade to increase by 18%

The EU has signed up to its bilateral free trade agreement with Japan

The Economic Partnership Agreement or EPA with Japan, effectively born in 2011, was signed on July 17, 2018 by Japanese Prime Minister Shinzo Abe and European Commission President Jean-Claude Juncker and European Council President Donald Tusk in Tokyo. It still needs to be ratified by both sides, however it is almost unthinkable that it could fall apart at this stage, and it will likely come into effect in 2019.

In a nutshell, the EU has agreed to gradually remove its automotive sector tariffs in exchange for Japan reducing or removing its tariffs on various agri-food products.

The EU has granted full liberalisation of agricultural products with the exception of rice which is mutually excluded and with the exception of some processed agricultural products. Japan will gradually reduce or remove tariffs and increase quotas for goods such as wine, dairy products, meat and eggs.

In the automotive sector, there will be a phasing out of the import tariff on passenger cars. On car parts, the EU will eliminate most tariffs immediately.

The deal also ensures that both sides will eventually have no tariffs on industrial goods whatsoever, though this is actually a grander claim than it sounds, given that tariffs on most industrial goods were very low or non-existent already. The biggest impact will be felt on for sectors such as chemicals, textiles and clothing, metals, ceramics and glass.

The impact assessment asserts significant increases in GDP and in exports for both sides of the Agreement. By 2035, total bilateral trade will increase by 18% or €36bn.

Source: Transport Intelligence