By Company Registrations Worldwide, 26th Nov 2019
The new Economic Partnership Agreement (EPA) between the EU and Japan is the world’s biggest bilateral trade deal. The EU-Japan trade deal came into force on 1st February 2019 creating what is now the largest open-trade zone in the world, covering 600 million people, it represents 30% of global GDP and 40% of global trade. The agreement has christened the ‘cars-for-cheese trade deal’ because of the opportunities for Japanese carmakers and European farmers. With duties greatly reduced on both Japanese and European imports, there are opportunities for small businesses and medium-sized exporters across many industries to benefit.
The Economic Partnership Agreement is estimated to cut duties for European exporters by €1 billion per year. This creates an opportunity for small businesses in Europe who will now have greater access to the market in Japan. It is speculated that this deal could boost European exports by up to 24% over the next ten to fifteen years.
How can Small and medium-sized businesses benefit from the EU-Japan Trade Deal?
Across Europe, there are currently more than 64,000 direct EU exporters to Japan and approximately 88% of them are small and medium-sized businesses. The EPA trade deal creates many opportunities for small businesses to benefit. But doing business and investing in Japan can be a challenge for businesses who fail to prepare and understand the vast differences in Japanese society and its economy. For European businesses to thrive in the Japanese market it is important to gain an understanding of the trade deal and the Japanese business culture. Steps need to be taken before attempting to reach local customers or engage in long-term projects with Japanese clients.
There are two main challenges that EU businesses face when attempting to enter the Japanese market:
- Time – It will take time, in some cases it can take years to make a deal (not just weeks or months).
- Relationships -It’s important to build human relationships with Japanese people and establish trust before talking about business.
EU-Japan Centre for Industrial Cooperation
In an effort to make industry and trade relationships between the regions easier, Japan and the EU have established bilateral dialogues and joint initiatives. The jointly established EU-Japan Centre for Industrial Cooperation provides businesses with information and guidance on key items such as tech transfer, intellectual property and cooperation between the regions. EU-Japan Centre has various programs including webinars and workshops so European businesses can become aware of the agreement works and what is required from them to benefit from it. There is also a helpdesk at the centre to guide and inform businesspeople.
In summary, the Economic Partnership Agreement will bring opportunities for small businesses in the EU by providing easier access to the Japanese market. To ensure success, appropriate steps and preparations must be made. The EU-Japan Centre for Industrial Cooperation has been set up to assist business people to understand how to trade, invest and establish business connections between the two regions.
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