The Japan-EU Economic Partnership Agreement, the largest free-trade agreement between Japan and the EU (aka Japan-EU Free Trade Agreement or JEFTA) entered into force on 1 February.
JEFTA eliminates most custom duties and trade barriers between Japan and the EU and sets out rules enhancing mutual intellectual property protection and recognition.
JEFTA will not apply to the UK if there is a no-deal Brexit, as the UK is not an independent party to the agreement, only as part of the EU.
JEFTA creates a free-trade economic area representing almost 40% of world trade, with more than 640 million consumers and 30% of the world’s GDP. Under this agreement, almost 99% of Japan’s exports to the EU and almost 94% of EU exports to Japan – including wine and cheese – will be duty free. This represents a huge opportunity for EU companies, farmers, workers and consumers, who will start reaping the benefits of simpler and faster trade between the EU and Japan.
The European food sector will be one of the main beneficiaries of JEFTA: Japanese custom duties on hard cheeses such as Parmigiano Reggiano, Gouda and Cheddar (which are taxed at nearly 30%) will be progressively eliminated and a duty-free quota will be established for fresh cheeses such as Mozzarella. Taxes on wines (15%) and other alcoholic drinks have already been removed as of 1 February. JEFTA will also open up the trade of processed foods such as pasta, chocolates, confectionary and biscuits. Many stores in Japan have already been reported to have reduced the price of items exported from the EU such as wine and cheese. This makes it easier for Japanese consumers to access those items and is expected to help increase the consumption of European products.
JEFTA also sets out certain rules enhancing mutual intellectual property protection in Japan and the EU, including the protection of Geographical Indications (GIs).
- Protection of GIs:
European producers of distinctive regional food and drink products will not just benefit from the elimination of trade barriers. Many of their products are protected in the EU as Geographical Indications (GIs), i.e. indications that identify goods as originating in the territory of a particular country, region or locality where a given quality, reputation or other characteristic of the good is essentially attributable to its geographical origin. GIs include protected designations of origin (PDO), protected geographical indications (PGI), and geographical indications of spirit drinks and aromatised wines. With JEFTA, more than 200 European GIs will be recognised and protected in Japan (e.g. “Aceto Balsamico di Modena”, “Parmigiano Reggiano”, “Tiroler Speck”, “Camembert de Normadie”, “Gouda Holland”, “Scotch Whisky”, “Champagne”, and “Chianti”) following an examination and opposition procedure. This means that only products with this status will be allowed to be sold in Japan under the corresponding Japanese transcription. In addition, similar trade marks likely to confuse and mislead consumers, as to the quality and origin of products shall not be registered in Japan.
Likewise, more than 50 Japanese names of products and drinks will be protected in the EU, including for example “Japanese Sake”, which is particularly at risk of imitation.
During a transitional period of seven years, certain operations with European GIs products can still be carried out in Japan (e.g. grating, slicing and packaging), provided that such goods are destined for the Japanese market and not for the purpose of re-exportation.
With its 45 GIs, Italy is the European country with the highest number of GIs protected in Japan (but the list is likely to grow in the future). This may well boost the exportation of Italian food products to Japan, which ranks tenth for Italian exports. However, Italian food entrepreneur associations are complaining that not enough has been done in terms of combating “Italian sounding” names. This phenomenon essentially consists in exploiting names, colours and images that are similar to real Italian products, but have nothing to do with the original made-in-Italy quality, culture or tradition. An example is the famous “Parmigiano Reggiano”, protected as a GI, which is often imitated outside Italy under the name Parmesan and with labels that recall Italian traditions and images. In 2008 the Court of Justice of the EU clarified that the name Parmesan for cheeses that do not comply with the specification for the GI “Parmigiano Reggiano” constitutes an infringement of said GI (Case C‑132/05). However, by contrast, under JEFTA, anyone has the right to use and register a trade mark in Japan containing or consisting of the term Parmesan in respect of hard cheese.
It should also be noted that JEFTA grants only a limited protection in Japan to compound GIs (“Grana Padano”, “Gouda Holland”, etc.): protection is allowed only to the designation as a whole and not on the individual component, meaning that e.g. “Grana” and “Gouda” could be used and registered as trade marks of cheeses in Japan regardless of their geographical origin to the extent that the consumers are able to discriminate between the goods or services using the terms.
- Protection of other IP rights:
Other than GI protection, JEFTA also affords higher protection for intellectual property rights than the TRIPS Agreement (Agreement on Trade-Related Aspects of Intellectual Property Rights), which has been ratified in most countries. More specifically, JEFTA provides the protection of patents, trade marks, design rights, copyrights and their related rights, new kinds of plants, trade secrets and other confidential data, including non-public data taken from medical trials.
Among others, JEFTA extends the protection of copyright in Japan to up to 70 years after the death of the author of the copyright work. Currently, Japanese copyright law provides for protection for 50 years after an author’s death. JEFTA also clarifies the protection of medical trial data and prohibits the use of such data by others for at least 6 years. JEFTA also prohibits ratifying countries from requesting entities in other ratifying countries to disclose or transfer software source codes, which might enable entities in ratifying countries to do business within the EU and Japan, without receiving requests of disclosure and transfer of the source codes by government authorities.
Breaking down trade barriers
In terms of global trade, JEFTA is a powerful signal that cooperation, not protectionism, is the way to tackle global challenges. Despite some of the limitations described above, JEFTA is breaking down trade barriers and shaping global trading rules. This strategic partnership agreement represents an overall important result for the development of trade relations between Europe and Japan. JEFTA is expected to facilitate business and will deliver significant and tangible benefits for companies and citizens in Europe and Japan.