Effects of the EU-Japan Economic Partnership Agreement on Swedish Companies
AUTHORED BY BUSINESS SWEDISH - The Swedish Trade & Invest Council
Limited effect from removed tariffs for most Swedish companies
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 becomes provisional. However, for most product groups, especially industrial goods, custom tariffs are already generally low and no major problem for bilateral trade. Although, even low tariffs may be significant if high-frequency trading. Thus, for most of the Swedish companies trading with Japanese companies, there will be a concrete but limited positive effect of removed tariffs.
Significant effect for food products
Areas that are primarily concerned with import duties are food products, where there are currently high tariffs on many products such as cheese, meat and wine. This means an increased potential for Swedish food companies to export to Japan.
Removal of non-tariff barriers even more important
For in particular industrial goods non-tariff barriers are of greater importance. For example removal of existing barriers for foreign companies to participate in public procurement, simplified import procedures and increased cooperation in standards. Simplified procedures is not at least important for small and medium sized companies.
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. With the exception of food, these areas are well-matched with Swedish exports to Japan. Pharmaceuticals accounted for about 28% of Sweden’s exports to Japan in 2017, motor vehicles 17%, industrial machinery 10% and wood products 10%. Total Swedish exports to Japan amounted to 19.5 billion SEK 2017, corresponding to 1,5% of total Swedish export.
Increased possibilities to participate in public procurement
There has been an opening in the possibilities for foreign companies to participate in public procurement in e.g. the rail sector in Japan. However, it is still a sector where many Swedish and other European companies experience difficulties to win procurement in competition with Japanese suppliers.
Given the effects of the EPA, as well as Swedish exports to Japan, some Swedish companies particularily within the sectors mentioned above should benefit when opening up for public procurement.
Swedish companies in Japan
UD Trucks (Volvo group), Autoliv, Astra Zeneca, IKEA and H&M are the five largest Swedish subsidiaries in Japan in terms of number of employees. Together they account for approximately 77% of all the Swedish companies’ employees in Japan. Astra Zeneca, UD Trucks (Volvo group), Ericsson, Autoliv and IKEA have the highest turnover. Together they account for about 70% of Swedish companies’ sales in Japan.
Published 2018