1 February 2019 would be a moment in history in the world’s trade economy. The free trade agreement between Japan and EU entered into force impacting on 635 million people and almost one-third of the world’s economy.
Considered the world’s largest free trade agreement, the EU-Japan Economic Partnership Agreement opens doors in almost all sectors from agriculture to industrial products, from services to procurement.
Japan is the EU’s second largest trading partner in Asia and EU businesses export €58 billion in goods and €28 billion in services to Japan every year. This is anticipated to grow by 13 per cent and Japan exports €69 billion in goods and €18 billion in services to the EU annually.
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.“
Some of the highlights of the deal includes:
- Japan will remove duties on 97% of goods imported from EU once agreement is in full implementation;
- The EU will remove 99% tariffs on imports from Japan;
- EU will eliminate duties over a 7 year period in the automotive sector;
- Duties will be removed for nearly all food and agricultural products;
- Service market will open including financial services, e-commerce, telecom and transport. This includes access to the procurement markets of 54 large Japanese cities and also in relation to railway sector at national level;
- Trade deal also addresses Paris deal commitments and also addresses sustainable develop and standards for labor, safety, the environment and consumer protection.
In relation to agriculture:
- scrap Japanese duties on many cheeses such as Gouda and Cheddar (which currently are at 29.8%) as well as on wine exports (currently at 15% on average);
- allow the EU to increase its beef exports to Japan substantially, while on pork there will be duty-free trade in processed meat and almost duty-free trade for fresh meat;
- ensure the protection in Japan of more than 200 high-quality European agricultural products, so called Geographical Indications (GIs), and the protection of a selection of Japanese GIs in the EU.
What does this mean for NewSpace?
It can only mean positive news for the NewSpace sector. The highlight in the openness in the procurement sector could mean for EU NewSpace startups whom are interested to do business in Japan and vice versa could enter the business with an understanding that trade is freer than ever. Whilst the discussions in NewSpace are ongoing and many aspects are yet to be decided on such as standards, on space debris, on insurance and also industry practices I think the declaration on the highest level has shown a commitment to do business between EU and Japan.
Written by Helen Tung
Emergent Tech Advisor/MINERVA Fellow