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Utilize the EU-Japan Economic Partnership Agreement for improved market access

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The EU-Japan Economic Partnership Agreement (EPA) will enter into force on the 1st of February 2019. It is the EU’s most comprehensive free trade agreement ever and grants improved access to the Japanese 127 million consumer market. Swedish companies should prepare to utilize benefits from the agreement. Initially, the most concrete gains are reduced import duties, but there is greatest potential in the removal of non-tariff barriers, increased standard harmonization, and more access to public procurement. In order to make full use of these benefits, continued work is required over time.

The most concrete outcome of the EU-Japan Economic Partnership Agreement (EPA) is that about 91% of import duties will be removed when the agreement enters into force. Some import tariffs will be completely removed from day one, while other import tariffs will gradually be removed e.g. over 5, 10 or 15 years. However, for most product groups, especially industrial goods, custom tariffs are already generally low and no major problem for bilateral trade. Although, the removal of even low tariffs may be significant if high frequency trading or for commodity-type products. Thus, for most of the Swedish companies trading with Japan, there will be a concrete but limited positive effect of removed tariffs.

For industrial goods, non-tariff barriers are of greater importance than import tariff reductions. For example, removal of existing barriers for foreign companies such as simplified import procedures, increased cooperation in standards and lowered threshold to participate in public procurement. Simplified import procedure is not least important for small and medium sized companies. 

The European Commission estimate that the agreement will increase EU exports to Japan by 16-24%, and specifically within processed foods up to 170-180%. According to the European Commission, the agreement will be especially beneficial for certain industry sectors; pharmaceuticals, medical devices, food & beverages, motor vehicles and transport equipment.

Outstanding issues and implementation of the agreement

It is important for companies to fully understand the agreement and to prepare for its implementation in order to reap the full benefits. While the proposed tariff reductions are outlined in the tariff schedule, it remains to see the outcome of the EPA on trade facilitation in general, specifically, non-tariff barriers and technical barriers to trade. It is likely that this will be an ongoing process and that European companies, authorities and other stakeholders need to continuously work with the agreement and monitor the process to realize removal of non-tariff barriers. One part of this is of course that Swedish companies regularly should report trade barriers when they arise, through the Embassy of Sweden, Business Sweden, industry associations or European Business Council in Japan. 

About Business Sweden Japan

Business Sweden’s office in Tokyo and the Trade Facilitation department in Stockholm monitor the EU-Japan Economic Partnership Agreement closely. We provide trade related advice to Swedish companies on a continuous basis. Contact us for more information.

More practical information can be found in the following guide

More information on the agreement from the European Commission can be found here

More information on the agreement from the Swedish National Board of Trade can be found here

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Carl Norsten

Consultant Tokyo Consultant, Tokyo
+81 3 5562 5020
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Anna Folkesson

Stockholm , Stockholm
+46 8 588 66 339