On 1 February 2019, a milestone in EU-Japanese relations came into force. The Economic Partnership Agreement (EPA) between the two players became effective and in doing so created what is now the world's biggest free trade zone, covering nearly one-third of the world's economy and 635 million people.
Japan EU trade agreement
President of the European Council Donald Tusk (left), Japanese Prime Minister Shinzō Abe (centre), and President of the European Commission Jean-Claude Juncker (right). Credit: Etienne Ansotte / European Union
The EPA removes the majority of the €1 billion of duties that are paid every year by EU companies exporting to Japan. Once fully implemented, 97% of goods imported to Japan from the European Union will have their tariffs scrapped. The agreement will also take away some long-standing non-tariff barriers, for example giving endorsement to international standards on automobiles. The EPA also breaks down barriers for EU food and beverage exporters to Japan's 127 million consumers and increases export opportunities in other sectors. It has been estimated that, once the agreement has been implemented in full, annual trade between Japan and the EU could see an increase of almost €36 billion.
The Japanese government has said that the EPA will give a real boost to the country's economy, expanding trade and investment, giving a boost to Japan's GDP of about 1% and creating 290,000 new jobs.
The text of the agreement also includes a specific agreement to the Paris Agreement on climate change, as well as containing ambitious standards on sustainable development. It also sets high standards of labour, safety, consumer and environmental protection, as well as specific elements to simplify for small and medium-sized enterprises.
President of the European Commission Jean-Claude Juncker said: "Europe and Japan are sending a message to the world about the future of open and fair trade. We are opening a new marketplace home to 635 million people and almost a third of the world's Gross Domestic Product, bringing the people of Europe and Japan closer together than ever before.
"The new agreement will give consumers greater choice and cheaper prices; it will protect great European products in Japan and vice-versa, such as the Austrian Tiroler Speck or Kobe Beef; it will give small businesses on both sides the chance to branch out to a completely new market; it will save European companies 1 billion euro in duties every year and turbo-boost the trade we already do together. More than anything, our agreement shows that trade is about more than quotas and tariffs, or millions and billions.
"It is about values, principles and fairness. It makes sure that our principles in areas such as labour, safety, climate and consumer protection are the global gold standard. This only happens when you work with the most natural of partners, separated by thousands of kilometres but united in friendship and values."
At present, EU firms export over €58 billion in goods and €28 billion in services to Japan annually. The negotiations for the EPA began in 2013 and ended on 8 December 2017. The European Parliament gave its consent to the deal in December 2018, paving the way for the Agreement to come into the force at the beginning of this month.
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