SUBSCRIBE TO OUR FREE NEWSLETTER
PUBLISHED |

What the historic Japan FTA means for Australian exporters

What the historic Japan FTA means for Australian exporters article image

Australia this week signed a historic Economic Partnership Agreement (JAEPA) with Japan, our second-biggest trading partner with two-way trade worth over $70 billion. 

So who will be the big winners under the new deal?

The Japan-Australia Economic Partnership Agreement (JAEPA) will deliver benefits to Australian farmers, manufacturers, exporters, service providers and consumers.

Under JAEPA more than 97 percent of Australia’s exports to Japan will receive preferential access or enter duty-free.

“This is the most ambitious trade deal Japan has ever concluded with anyone and affords Australia major concessions across a range of areas, most notably services and agriculture, an area of traditional sensitivity for the Japanese,” said Minister for Trade and Investment Andrew Robb.

“JAEPA represents a strong outcome for Australian beef our biggest agricultural export to Japan, as well as for fruit, vegetables, nuts, wine, seafood, processed food and other commodities, with many tariffs eliminated on entry into force.”

Tariff-free entry

Mr Robb said the Australian Government would continue to push for additional outcomes through scheduled renegotiations for key agricultural products under JAEPA, and in other negotiating fora, including in the Trans-Pacific Partnership negotiations.

Effectively 100 per cent of Australia’s resources, energy and manufacturing exports will also benefit from tariff-free entry into Japan under the agreement.

JAEPA also guarantees access to the Japanese market for a range of services where Australia has an enviable reputation, including financial, legal, education and telecommunications services. Australian suppliers will also be guaranteed non-discriminatory access to the lucrative Japanese government procurement market.

“Australian consumers will also benefit from cheaper Japanese cars and parts, and a range of household items including white goods and electronics through the elimination of tariffs,” Mr Robb said.

“Japanese made components used in Australian production and manufacturing will also become more affordable which will aid our competitiveness. Cheaper Japanese imports improve consumer buying power and enhance our standards of living.”

Open for business

JAEPA will afford private Japanese investment in non-sensitive areas a new screening threshold of $1.078 billion, up from $248 million.

“This agreement also sends a strong signal to Japanese investors that we both welcome their capital and are open for business, which is most important given Australia is a country that has always relied on foreign investment to develop our commerce, infrastructure and standards of living,” Mr Robb said. 

JAEPA will enter into force after the completion of domestic legal and parliamentary processes by both countries, including consideration by the Joint Standing Committee on Treaties.

Second-largest trading partner

Japan is Australia’s second-largest trading partner, representing 15.5% of our total exports.

Last year, two-way goods and services trade reached $70.8 billion ($66.5 billion in goods and $4.3 billion trade in services.

At the end of 2013, Japanese investment in Australia was valued at $131 billion and Australian investment in Japan reached $50.2 billion.

JAEPA has been under negotiation since 2007, with Australian Prime Minister Tony Abbott and Japan Prime Minister Shinzo Abe finally signing the paperwork this week.

The deal still needs to go to the Australian parliament and has to be approved by Japan’s parliament for final ratification. The agreement is expected to be implemented late this year.

Australia’s booming agribusiness sector is perhaps the biggest winner under the new agreement.News_What the Japan FTA means for Australia2

The JAEPA will deliver:

  • Rapid tariff reductions for beef, Australia’s largest agricultural export to Japan worth $1.4 billion in 2013, providing a significant competitive advantage over major competitor, the United States.
  • Elimination of the 15% tariff on bottled wine over 7 years, with the tariff on bulk wine eliminated immediately. Wine exports were worth $42 million in 2013.
  • Duty-free quotas for Australian cheese, with trade worth $372 million in 2013.
  • Immediate and preferential duty-free access for the growing trade in milk protein concentrates, lactose and casein (worth $53 million) as well as new opportunities for ice-cream and frozen yoghurt exports.
  • Fast tariff elimination on the vast majority of Australia’s fruit, vegetables, nuts and juice, worth $111 million in 2013. For example tariffs on macadamia nuts (exports worth $16.2 million in 2013), and asparagus ($13.5 million) will be eliminated immediately.
  • Tariffs on lobsters, crustaceans and shellfish will be immediately eliminated and the tariff on Australia’s largest seafood export, tuna, and Atlantic salmon, will be phased out over 10 years. Australia’s seafood exports to Japan were worth $200 million in 2013.
  • Immediate duty-free and quota free access for wheat for feed and barley for feed as well as streamlined export arrangements for some Australian wheat varieties. Australia’s grains trade to Japan was worth over $770 million in 2013.
  • Immediate tariff elimination and reduced levies for high polarity (international standard) raw sugar, with Australian exports of low polarity sugar to Japan worth an estimated $235 million in 2013.

Australian resource and manufacturing exporters are also major beneficiaries.

Under the initial JAEPA, 99.7 per cent of Australia’s exports of resource, energy and manufacturing products will enter Japan duty-free.

On full implementation of JAEPA, all of Australia’s current resources, energy and manufactured goods exports will benefit from duty-free entry into Japan.

Exports of these products to Japan were worth over $42 billion in 2013.

Key points include:

  • Elimination of tariffs on entry into force for coke and semi coke of coal (worth $89 million in 2013), non-crude petroleum oils ($74 million), aluminium hydroxide ($73 million) and titanium dioxide (over $14 million).
  • Elimination of tariffs for unwrought nickel ($98 million) and ferro-manganese ($37 million).
  • Elimination of tariffs on paints ($6 million), key plastic products (around $33 million) and pearl jewellery (Japanese imports worth $13.9 million) on entry into force.

Australian services suppliers

JAEPA guarantees Australian services suppliers access to the significant and well-developed Japanese market in financial, legal, education, and telecommunications services.

JAEPA will provide Australian services exporters with the best treatment Japan has agreed with any other trading partner.

Key points:

  • Australian financial service providers guaranteed cross-border access to Japan when providing investment advice and portfolio management services.
  • Improved access to the Japanese legal services market for Australian law firms.
  • Guaranteed market access for Australian education providers to Japan’s higher education services market, including vocational and technical education. JAEPA is expected to boost the international competitiveness of the Australian TAFE sector.
  • Australian telecommunications providers to benefit from commitments on non-discriminatory treatment, regulatory transparency, competitive safeguards and fair and reasonable access to telecommunications networks and services.
  • Australian professionals (including architects, engineers and accountants) to benefit from guaranteed existing market access and visa access arrangements, including for their spouse and dependants to enter and stay in Japan.
  • Australian innovators and creative industries to enjoy high levels of intellectual property protection in Japan broadly equivalent to protections provided in Australia.
  • Japanese Investment

Mr Robb said the agreement would leverage Australia’s strengths to drive economic growth and job creation.

The full text of the agreement is available online at: www.dfat.gov.au/fta/jaepa/

Tags

Leave A Comment

Spinning icon Saving your comment, please wait...
Spinning icon Saving your comment, please wait...