EU Trade Commissioner: Insights on the EPA and vision
AUTHOR
Cecilia Malmström
Trade Commissioner
European Commission
I’m delighted to welcome you to the 1st EU-Japan EPA Forum conference in Copenhagen on the benefits for your business of the Economic Partnership Agreement between the EU and Japan.
Today we’re here to talk about business, but it’s important to remember that this deal stands for so much more. It sends a clear signal to the world that the EU and Japan – two of the world’s major economies – are coming together for a system of open and fair trade based on rules. This strategic alliance is one of the largest and most far-reaching economic agreements that either the EU or Japan has ever concluded.
This enormous economic zone covers 600 million people and approximately a third of global GDP. It will open up significant trade and investment opportunities, and will strengthen both of our economies.
This all happens at an important point in time. The future of the multilateral trading system has been brought into question in recent years, with a growing climate of protectionism. In the face of this, the EU and Japan are ready to stand shoulder-to- shoulder in defence of open global trade.
he world is changing and we have a choice. We can ignore globalisation and let it take its course, or we can shape it. We have chosen the latter – Europe and Japan will deepen our economic relationship, but not at the expense of our values.
Climate change, regulatory standards and complex supply chains are global challenges that need global solutions. Japan and the EU have similar views on many of these issues. We are both committed to the Paris Agreement on Climate Change and have high standards in areas like consumer safety.
The EU and Japan concluded this agreement in July of last year, after four years of negotiations. On the economic front, the EU-Japan agreement delivers huge opportunity for businesses in the EU and Japan. Japan is the EU’s sixth biggest export market, with over eighty billion euro of goods and services going to Japan every year. 600,000 jobs in the EU are linked to exports to Japan. And Japanese companies in the EU employ more than half a million people.
Japan is the fourth biggest economy in the world, with a big appetite for EU products and services, but very considerable untapped potential remains. Denmark, in particular, has a lot to gain. It is one of the few EU countries that has a trade surplus with Japan – and yet it currently exports the same amount to Japan, with a population of 127 million, as it does to Belgium, with a population of only 11 million.
The agreement will help Danish and other European businesses to seize those opportunities opening up in Japan. As you read this, Danish pork, dairy and pharmaceuticals are crossing the ocean on their way to Japanese consumers. We look forward to seeing these exports grow, but also in other sectors like green tech.
“600,000 jobs in the EU are linked to exports to Japan. And Japanese companies in the EU employ more than half a million people.”
How will the agreement do this? In at least four ways:
by scrapping Japanese customs tariffs;
by removing other barriers to exporting goods which EU firms face;
by opening up Japan’s services market;
by enabling European firms to bid for public tenders in Japan.
First, Japanese customs duties. The agreement removes these on more than 90 percent of the EU’s exports. Doing so will save EU exporters a billion euros every year.
85 percent of the EU’s food and drink exports will now enter Japan duty free. Japan is already the EU’s fourth biggest market for agricultural exports. With the agreement, market access conditions for pork will be greatly improved –a high priority for Denmark throughout the negotiations.
The same will apply to export conditions of cheese and dairy products. There’s good news also for our producers of wine, on which Japanese tariffs will be scrapped immediately. Beer will also benefit, as it can now be exported as beer and not as “alcoholic soft drinks” which meant a different tax level.
In addition, more than 200 traditional European food and drinks that have a geographical indication (GI) will be protected in law from imitations: from Denmark’s very own Danablu, to Aceto Balsamico di Modena from Italy, and Manchego cheese from Spain. These products will be given the same level of protection in Japan as they enjoy in the EU today.
Second, non-tariff barriers. The agreement removes obstacles that have so far made access to Japan challenging for many European exporters – from cars to medical devices. Japan will now align its technical requirements and procedures and certify their products according to international standards. This will create a more predictable regulatory environment for EU products exported to Japan.
That means that European car exports will be subject to the same international certification requirements as at home, and will not need to be tested and certified once again in Japan. So even hydrogen-fuelled cars approved in the EU can be marketed in Japan without further alterations.
Removal of non-tariff barriers will also be positive for exports of our pharma, cosmetics and chemical products. These high-value exports will benefit from quicker approval procedures for new products, based on international standards and predictable and transparent processes.
Third, services. Today the EU exports almost 30 billion euros worth of services to Japan each year. EU services exports now stand to rise significantly because the Economic Partnership Agreement opens up the Japanese market in industries of particular interest to the EU. These include:
Postal and courier services - there will now be a level- playing field between EU suppliers of postal and courier services and their Japanese competitors.
Telecommunications - EU telecommunications companies will now be able to supply their services in the Japanese market and compete on equal terms with their Japanese competitors. Consumers will also benefit from clearer rules on number portability, and transparency in mobile roaming charges.
Financial services - the agreement sets out common rules on financial services, self-regulating organisations, payment and clearing systems, and transparency.
The agreement also has the most advanced provisions on movement of people for business purposes that the EU has ever negotiated. EU companies will be able to transfer key staff members to Japan more easily. European business people will be able to travel more easily to Japan for business trips. This will allow business people to seek investment and improve the conditions under which they provide professional services. The EU and Japan have also agreed to allow spouses and children to accompany professionals posted in the other country. This will, in turn, not only support investment in both directions but also make life easier for business people with families who want to work with Japanese partners.
Fourth, government procurement. EU companies will soon be on an equal footing with Japanese companies to bid for procurement tenders in both Japan’s central and local governments. This means access to tenders in 48 Japanese cities with between 300,000 to half a million inhabitants. This is a brand new opportunity – everything from railways to hospitals to electricity distribution will be open to EU companies’ bids.
Small and Medium Sized enterprises (SMEs) are the backbone of the EU economy. They represent 99 percent of all businesses and create 85 percent of new jobs in the EU. This is why we have included provisions in the agreement to help them benefit better from this agreement. Simplified and streamlined export requirements and customs procedures will make it much easier to export to and import from Japan. The deal will also make access to information much easier, not least through the creation of a dedicated contact point for queries from smaller companies.
The Economic Partnership Agreement will unlock a major market for EU businesses like yours. Soon, it will be your turn to open the door and take advantage of its benefits. We count on you to help raise awareness in the Danish business community of the unique opportunities it offers.
Published 2018