Japan, EU conclude trade deal; aiming to take effect early 2019

TOKYO, Dec. 10 — Japan and the EU have finalized a free trade agreement, by separating contentious issues such as foreign investors’ protections and data flows from the deal.

Japanese Prime Minister Shinzo Abe and Jean-Claude Juncker, the European Commission president, stressed the strategic importance of the deal in a Dec. 8 joint statement.

“Amid widening protectionist movements,” they said, the deal “demonstrates to the world the firm political will of Japan and the EU to keep the flag of free trade waving high and powerfully advance free trade.”

They added: “With the finalization of the negotiations, the path is now clear to complete the internal procedures leading to the signature, ratification and full implementation of the agreement.”

Both will continue to negotiate the so-called investor state dispute settlement (ISDS) provision outside of the deal, requiring lengthy national ratification procedures of each of the EU’s 28 member states.

The Japan-EU trade agreement, which focuses market access on good such as cheese and cars, makes it easy for the EU to ratify the trade agreement through the European Parliament and Council in Brussels.

It will likely enter into force in early 2019.

Once the agreement is fully implemented, Japan will scrap import tariffs on 82 percent of agriculture and food products imported from the EU. All industrial imports will be allowed to enter Japan entirely duty-free.

Despite tariff cuts on other agriculture products, rice is excluded from the agreement and is not subject to any tariff reduction.

Japan also maintains an articulated import scheme for pork, which includes both an ad valorem duty and a specific duty, but will reduce the tariff considerably.

At the same time, Japan is opening its markets for certain sensitive processed dairy products through tariff rate quotas (TRQs) or tariff reductions.

It also expects a rise of European processed products such as pasta, chocolates, cocoa powder, candies, biscuits and starch derivatives.

“This agreement represents the most significant and far-reaching deal ever concluded by the EU in agri-food trade,” said the EU Agriculture Commissioner Phil Hogan.

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