On July 17, 2018, Japan signed an Economic Partnership Agreement ("Japan-EU EPA") with the European Union ("EU"). Once the Japan-EU EPA is implemented, 99 percent of EU custom duties and 94 percent of Japanese customs duties will be eliminated. The Japanese Ministry of Foreign Affairs estimates that the Japan-EU EPA will increase Japan's real GDP by approximately 1 percent (approximately JPY5 trillion) and employment by approximately 0.5 percent (approximately 290,000 jobs). According to press reports, Japan and the EU aim to implement the Japan-EU EPA prior to the withdrawal of the United Kingdom from the EU in March 2019, and both the Diet of Japan and the European Parliament will soon begin necessary domestic ratification procedures.
Amid widening protectionist movements worldwide, the signing of the Japan-EU EPA, following the signing of the TPP11 (please see the May 2018 issue and July 2018 issue of this newsletter), demonstrates the strong commitment of the Japanese government to develop free trade systems centered on Japan. The Japan-EU EPA is expected to increase trade between Japan and the EU, and thus businesses should analyze the impact of the Japan-EU EPA on their operations.
In addition, together with the Japan-EU EPA, Japan signed a Strategic Partnership Agreement with the EU and its member countries. Under this agreement, Japan and the EU and its Member States will cooperate and coordinate on a wide range of areas, such as economic and financial policies, based on the principles of mutual respect, equal partnership, and respect for international law. The details of the cooperation will be discussed by Japan and the EU in the future, and attention should be paid to these developments.