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Icon SurveyRules of origin survey results

During summer 2018 it was conducted a survey to improve the understanding of rules of origin.

Market Access Database

SMEs and EU-Japan EPA

The EU-Japan EPA (Economic Partnership Agreement) can make life easier for SMEs (small and medium-sized enterprises) from both sides to export and import.

Almost all tariffs have been eliminated or reduced. Import requirements have been simplified where possible, including customs procedures, rules of origin or technical regulations.

Note: You need to follow the rules of origin that the imports of goods benefit from EPA (EU exporters need to be registered in the REX system)

Information on the EU-Japan EPA

Additional information for SMEs

The EPA includes a specific chapter on SMEs (see Chapter 20 http://trade.ec.europa.eu/doclib/press/index.cfm?id=1684) which includes that the EU and Japan provide information on access to its market:

  • Japanese website for SMEs from the EU (versions in English and Japanese language)
    This website includes links to authorities on agreed trade issues and to an electronically searchable database by customs tariff code on product specific market access information for the import of goods on its market.
  • EU website for SMEs from Japan

Extra support

  • The EU-Japan Centre for Industrial Cooperation is a venture between the European Commission and the Japanese Government. It promotes industrial, trade and investment cooperation exchanging experience and know-how between EU and Japanese businesses. Activities include an EPA Helpdesk. This centre is the Japanese member of the Enterprise Europe Network.
  • The Enterprise Europe Network is the world's largest support network for SMEs. It has 3,000 experts across 600 organisations in more than 60 countries. Members include chambers of commerce and industry, technology centres, and research institutes. The EU-Japan Centre for Industrial Cooperation is the network member in Japan.
  • For EU exporters: The Market Access Database of the European Commission gives EU exporters free on-line information about import conditions in over 130 export markets, including Japan. This is a database searchable by tariff nomenclature code for product specific market access information.
  • For EU importers: The EU Trade Helpdesk is an online database searchable by tariff nomenclature code for product specific market access information on the EU single market.

EPA - Rules of origin

To benefit from Japan-EU Economic Partnership Agreement (EPA ) preferential tariff rates, your product needs to be originating in Japan or the EU. To be deemed originating, your product needs to comply with the provisions of Chapter 3 Section A ("Rules of origin") and the Product Specific Rules (Annexes 3-A, 3-B, Appendix 3-B-1). The Chapter 3 Section A includes provisions allowing more flexibility to comply with these Product Specific rules (tolerance, bilateral full cumulation, absorption rule etc..). Transport via a third country (distribution hubs) is allowed under certain conditions.

Chapter 3 Section B ("Origin procedures") of the EPA sets out the procedures to claim preferential treatment. The EPA is based on the self-certification system, therefore the EU or Japanese exporters self-certify that the product is originating by making a statement on origin in line with Chapter 3, Section A including its Annex 3-D ("Text of the statement on origin"). In the EU, exporters need to be registered in the REX system (Registered Exporter system). There is no need to be registered when the value of consignments is below EUR 6000. Moreover, the EPA gives for the first time a possibility for the importers to claim preferential tariff treatment on the basis of "importer's knowledge", which contributes to facilitation of trade for the related companies.

Statement of origin – see EPA Annex 3-D

EPA and SMEs

The Economic Partnership Agreement (EPA ) between the EU and Japan is in place to strengthen the economic relations between the two economies, a bilateral market of more than 600 million people. Small and medium-sized enterprises (SMEs) on both sides benefit from the Agreement because it facilitates exporting and importing and reduces costs.

SMEs represent 99% of all companies and provide about two thirds of jobs in the private sector and over 50% of economic output (in the EU around 56% and in Japan over 50%). Therefore both parties have agreed on a specific chapter for SMEs in the Economic Partnership Agreement to ensure that more small companies will gain from the benefits of this agreement.

The EPA facilitates SME´s access to information in Japan and in the EU and hence increases their potential to participate in bilateral business activities. The information relates to import duties which have been widely eliminated or reduced. It relates to import requirements for goods, which have been simplified wherever possible on both sides, including customs procedures, rules of origin or technical regulations. In addition, rules are established in areas such as procurement and intellectual property issues. Reduced tariffs together with the simplification of rules and provisions on investment, joint ventures and other business relationships, create business opportunities and eventually help to maintain and create jobs on both sides.

Note: The EU applies its SMEs definition on the EU market and Japan applies its SMEs definition on the Japanese market.

Summary of EPA

The Economic Partnership Agreement (EPA ) has entered into force on 1 February 2019. The negotiations on the trade agreement started in 2013 and were finalised on 8 December 2017, followed by approval procedures in the EU and Japan.

The EPA has eliminated or reduced tariffs and non-tariff measures compared to the situation with no agreement Where needed, transitional periods for tariff reductions were agreed. The EU has liberalised 99% of tariff lines and Japan 97% of tariff lines, and concessions were agreed in terms of tariff rate quotas or tariff reductions on not yet liberalised tariffs. This will save companies of both sides substantial amounts when trading goods on the bilateral market. Wherever possible, import procedures were simplified for a wide range of products. The removal of non-tariff measures in areas such as import procedures or technical regulations has opened new business opportunities. Standards and technical regulations are based on international standards to the greatest possible extent. However, the agreement will not lower safety standards or require parties to change their domestic policy choices on matters such as for example the use of hormones or genetically modified organisms.

The agreement makes it easier for companies of both Parties to provide services and offers greater mobility for company employees to perform their work on the spot. The EPA contains a number of provisions that apply horizontally to all trade in services, such as a provision to reaffirm the Parties’ right to regulate. The right of authorities remains to keep public services public and will not force governments to privatise or deregulate public services, for example in the sectors of healthcare, education and water. Specific commitments were agreed in service sectors, including postal and courier services, telecommunication, maritime transport services or financial services.

The EPA provides companies more access to public procurement contracts and opens new markets for companies of both sides.

The agreement promotes investment between the EU and Japan and reaffirms the right of each party to regulate legitimate policy objectives agreed in a non-exhaustive list. Bilateral negotiations are ongoing for concluding a potential agreement on investment protection.

The commitments on Intellectual Property Rights are reinforced and include provisions on protection of trade secrets, trademarks, copyright protection, patents, minimum common rules for regulatory test data protection for pharmaceuticals, and civil enforcement provisions.

Other relevant issues for SMEs included in the EPA are data protection and safe data transfers and sustainable development which covers amongst other issues, labour and environmental laws and corporate social responsibility.

How EPA benefits SMEs

EPA makes trade easier and lowers bilateral trade related costs. This helps SMEs with their few resources and small trade volumes to overcome the challenges of exporting and importing. So SMEs can become more competitive in bilateral exports and also on the home market, because imported inputs for their production can become cheaper.

New markets…

The EPA makes doing business easier for companies of both Parties on a bilateral market of over 600 million people, which represents almost a third of the global economy.

more easily accessible …

Tariffs for almost all products are eliminated or reduced and trade barriers are removed.

more predictable business environment …

The chapter on Good Regulatory Practices and Regulatory Cooperation commits both Parties to tackle unnecessary trade obstacles. An increased compatibility of regulations and elimination of unnecessary regulatory differences, together with a greater alignment with international standards, promote a predictable regulatory environment and support bilateral trade. Regulatory cooperation is in particular advantageous for SMEs which face high compliance costs when adapting to rules that differ from international standards.

positive effects for bilateral trade and bilateral value chains …

Lower costs of bilateral trade due to eliminated or reduced tariffs and easier trade formalities are encouraging more bilateral trade of raw materials, semi-finished and final products. This will increase bilateral value chains that enhance the competitiveness of companies on the bilateral and international markets.

open trade in services …

The EPA makes it easier for companies of both Parties to provide services and offers greater mobility for company employees.

creating investment opportunities …

The EPA strengthens the bilateral investment climate in each other’s market through better conditions for investors by the principles of non-discrimination and most-favoured-nation treatment. Companies of both sides are treated in the same way as if they were a local company. If in the future other third countries’ investors would have better investment conditions, then the same rules will be applied. In addition, provisions for transferring capital are agreed and certain requirements are abolished such as hiring a specific number of local staff. The bilateral negotiation on investment protection dispute resolution is still ongoing, which aims at a new Investment Court System.

fair market conditions.

The EPA increases competition on both markets. Therefore fair market conditions for all companies must be ensured such as the agreed commitments on competition policy, subsidies and state owned enterprises. A chapter on intellectual property rights strengthens the protection of, amongst others, trade secrets, trademarks and copyright, which safeguards business models and in-house knowledge on product characteristics. Owners of bilaterally agreed "Geographical Indications" in the agricultural, food and beverage sectors benefit from protection against counterfeiting. Data protection and a "mutual adequacy" arrangement facilitate the transfers of data for commercial exchanges with a high protection. The EPA sets principles in several areas to promote sustainable development for avoiding a potential race to the bottom on labour and environmental standards and to ensure competition. A state-to-state dispute settlement mechanism ensures that all commitments under EPA are fully observed.

Specific EPA references to SMEs

SMEs benefit from certain provisions that reinforce the general EPA benefits for SMEs:

  • Preamble: SMEs are mentioned in the context of strengthening economic, trade and investment relations, where the needs of the business communities of each Party should be considered.
  • Customs matters and trade facilitation (Chapter 4, Article 4.6): Both Parties committed to simplify their requirements and formalities for customs procedures to reduce the time and costs for traders or operators, including SMEs.
  • Electronic commerce (Chapter 8, Section F, Article 8.80): The Parties agreed a cooperation with regard to a dialogue on regulatory matters that includes sharing information on challenges for SMEs in the use of electronic commerce.
  • Intellectual property rights (Chapter 14, Section D, Article 14.52): One of the cooperation provisions to further promote trade and investment between the parties may cover areas such as intellectual property issues relevant to SMEs.
  • Transparency – transparent regulatory environment (Chapter 17, Article 17.2): SMEs are mentioned as operators for which a transparent, effective and predictable regulatory environment should be provided.
  • Good regulatory practices (Chapter 18, Section A, Sub section 2, Article 18.8): The EPA foresees carrying out, in accordance with the relevant rules and procedures, an impact assessment of major regulatory measures under preparation. Considered would be also to the extent possible and relevant, the potential social, economic and environmental impact, including on SMEs.
  • Small and medium sized enterprises (Chapter 20, Articles 20.1 to 20.4)
    Objective (Article 20.1) - The SME Chapter includes in the objective that the Parties recognise the importance of the provisions of the SME Chapter and other provisions in EPA that seek to enhance cooperation on matters of relevance to SMEs.
    Information sharing (Article 20.2) - The Parties provide a publicly accessible website with an agreed content of information. This website includes links to authorities on agreed trade related issues and to an electronically searchable database by customs tariff code which provides product specific market access information for the import of goods on its market.
    SME Contact Points (Article 20.3) - The Parties designate an "SME Contact Point" on each side. They work together to ensure that the EPA benefits SMEs.
    No dispute settlement is foreseen for this SME Chapter (Article 20.4).