ASIA BUSINESS WEEK DUBLINFourth EU Asia Top Economist Round Table

6 June 2014

Business Benefit of EU-Japan Economic Partnership Agreement

Jun Arima,Director General, JETRO London

Kindly sponsored by:

June 2014Jun ARIMA

Director General, JETRO London

Business Benefit of EU-Japan EPA

Japan-EU Position in the World

Population(2012) Japan+EU=9.0% Trade(2012) Japan+EU=35.8%

Source; World Bank, World Development Indicators, October 2013 Source; IMF, Direction of Trade Statistics, October 2013

Source; IMF, World Economics Outlook Database, October 2013

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GDP(2012) Japan+EU=31.4%

Japan EU Position in the World

Source: Ministry of Finance Japan 4

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Share of European vehicles in Japan Share of Japanese vehicles in the EU

(units)

Source: JADA, JAIA *Preliminary figuresSource: JAMA

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Most Japanese Vehicles in Europe are Locally Produced

EU : No.1 Investor to Japan 68 billion euro(2012)Japan: No.3 Investor to the EU 144 billion euro(2011)

Source: BOJ(calculated in arbitrated foreign exchange rate by BOJ), Eurostat

Survey of Overseas Business Activities as of 2011(FY) , METI

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UK 140,705

Germany 59,304

Netherlands 58,227

Belgium 38,226

France 25,319

Italy 21,545

Spain 12,848

Total +465,000

Employment by Japanese Companies in Europe

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Global Partnership

Shared 　 Value- Democracy- Rule of law- Human rights- Market based economy- Sustainable development

Common Challenges- Growth deceleration- Rise of emerging countries- Strains on financial markets- Fiscal constrains- Global warming

Why EPA? - Common Values and Challenges -

4th/144 in Market Size (WEF GCI 2013-2014)

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GDP Comparison Between Japan’s Region and Foreign Countries

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Robust Economic Recovery

Annual Hike 57%Highest in 41 Years

Real GDP Growth -3.0% (3Q12) +4.5%(1Q13) +3.5%(2Q13) +1.3%(3Q13) +0.3%(4Q13) 　 +4.9% (1Q14)

Private Consumption -1.9% (3Q12) +1.5% (4Q13) + 8.5% (1Q14)

Gross Fixed Capital Formation -5.3%(3Q12) +7.3%(4Q13) +12.1%(1Q14)

Corporate Performance +12% in Sales +50% in Profit (2013/2012)

Year-on-Year Bonus -3.5% (2012) +3.5% (2013)

Unemployment - 4.9% (Dec12) 3.6% (Mar14)

Investment* 120 BN yen 　　 454 BN yen(Japan→Switzerland)

378%↑

Source: Bank of Japan

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Why EPA? - Expansion of FDI - Japanese FDI to Switzerland

Japanese Auto Production in MexicoJapan

MexicoEPA

(2005)+84%

Japan-Swiss EPA

(2009)

(2008) 　 (2012)

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Why EPA? - Economic Growth -

Policy Options BaselineValues (billion €)

Conservative A-symmetricReduction of NTB

Conservative Symmetric Reduction of NTB

AmbitiousA-symmetricReduction ofNTB

AmbitiousSymmetric Reduction of NTB

GDP 17,643 +0.34% +0.75% +0.79% +1.88%

Global Export (FOB)

5,334 +1.2% +2.7% +2.8% +6.7%

GlobalImport (CIF)

5,611 +1.2% +2.8% +2.9% N/A

Exports to Japan 68 +22.6% +23.7% +32.7% N/A

Impact Assessment Report by European Commission (Aug 2012)

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Why EPA? - Japan as the Gateway to Asia Pacific Market -

Source: METI 14

Increase FTA Share from 19% to 70% by 2018

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Forming Mega FTA Triangle

Shared 　 Value- Democracy- Rule of law- Human rights- Market economy

High-level EPA/FTA among developed countries sharing common values => Rule making for global trade and investment

Elimination of high tariffs on industrial products ( e.g. automobiles: 10%, electronic devices: 14%) to improve competitive condition for Japanese products in the European market

Regulatory issues facing Japanese companies in Europe

Non-Tariff Measures(NTMs) on automobiles, chemicals, electronic devices, food safety, processed food, medical devices, pharmaceuticals etc

Government procurement(e.g. railways)

Elimination of tariffs on the main export products to Japan.

Japan’s interest EU’s interest

Japan-EU EPA/FTAEU-Japan EPA/FTA Negotiation Started in April 2013. Five rounds of negotiation to date

EU will review the progress in May/June 2014

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Japan is addressing NTMs Automobile

35 out of 47 UNECE passenger vehicle regulation adopted. 8 regulations under adoption process.

Zoning approval for automobile service shop more than doubled (14 in 2011FY to 32 in 2012FY) based on Technical Guideline

Expanded exemption of Pyrotechnic Safety Devices (Feb 2012) Adopting GTR for high pressure gas tank by June 2014

Pharmaceutical/Medical DevicesAmendment of Pharmaceutical Affairs Law (autumn 2013) to address

authorization procedures, QMS, labelling requirement etcRevision of Minimum Requirement for Biological Products (Sept 2013)Amendment of Good Clinical Practice Ordinance (Dec 2012)Applying membership in Pharmaceutical Inspection Cooperation Scheme

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Japan is addressing NTMs Food Safety

37 out of 45 internationally used food additives designated. Remaining 8 in the process of designation

Lifting import ban of cattle meat and offal in Feb 2013 (France, Netherlands) and Dec 2013 (Ireland)

Amendment of Ministerial Ordinance on Organic Food (April 2013)

European Companies in Japanese Government Procurement

Let’s Strike a Deal in 2015 ! “We confirmed the importance of an early conclusion, and 2015 is the target date for a basic agreement" - Prime Minister Shinzo Abe @Brussels 7 May 2014 -

20Source: Cabinet Office HP

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Industries Expect Early Conclusion

Thank you