The EU and Japan sign the Economic Partnership Agreement: new opportunities for Italian companies


On July 17, the European Union and Japan signed the Economic Partnership Agreement (EPA), an important free trade agreement aimed at strengthening trade relations between the two economies that account for 25 % of global GDP. After China, Japan is the second largest trading partner of the EU in Asia. As shown by the data provided by the European Commission, European companies export goods worth over 50 billion euros each year despite the negative trade balance of the EU (-8.2 billion euros in 2016). At the European level, exports to Japan consist of motor vehicles, mechanics, pharmaceuticals, medical and optical instruments and electronics.

Consisting of 21 chapters (plus related annexes), the agreement with Japan - as well as other agreements negotiated by the EU - is much more than just a trade agreement since it addresses issues such as public procurement, intellectual property protection, rules of origin and services.  Here follows a brief resume of the main elements covered by the agreement:

Market access: 90% of customs duties will be eliminated thanks to the agreement. The percentage will rise to 97% once the agreement is fully applied. The agricultural sector, with a value of EU exports of around € 6 billion a year, will remove 85% of the duties in force. Furthermore, tariffs on European wines and cheeses and on pork will be progressively reduced.

Services: maritime transport, telecommunications, postal services and financial services will be liberalized. The agreement also regulates the movements of people for work purposes in accordance with the terms of the GATS agreement (General Agreement on Trade in Services, the agreement on services of the WTO).

Protection of geographical indications (GI): over 200 European geographical indications will receive protection in the Japanese market. Among them, there are 44 Italian protected products including the Balsamic Vinegar of Modena, Prosecco, Asiago and Pecorino Romano cheeses.

Industrial products: with the entry into force of the agreement, many of the tariffs on European products will be eliminated. For leather goods and footwear, the current duties (around 30%) will be reduced to 21% once the agreement comes into force; subsequently the duties will be phased out within 10 years.

Public procurement: the central element of the agreement is the possibility for EU companies to participate in non-discrimination contracts for the so-called "core cities", the 48 Japanese cities with a population of between 300,000 and 500,000 people, representing 15% of the total population of Japan. The agreement also removes existing barriers to public procurement in the railway sector. In Japan, the public procurement market accounts for around 15% of GDP.

Small and medium-sized enterprises: the agreement contains a chapter dedicated to small and medium-sized enterprises (SMEs). The European Union and Japan will set up dedicated websites to provide the necessary information to SMEs interested in their respective markets. In addition, "contact points for SMEs" are envisaged with the function of helping companies to access the market.

The EU-Japan Economic Partnership Agreement should enter into force in early 2019, once the favorable vote of the Council and the European Parliament has been obtained.

Internationalisation and export