Rules of Origin

New rules of origin have been agreed which remove previous restrictions contained in the earlier agreement. This will allow more products to receive preferential tariffs in Japan, benefitting certain sectors. For food producers, UK companies will continue to use EU inputs for exports to Japan for some agri-food products. UK processors and manufacturers will also be able to use EU inputs in their products. CEPA looks to ensure cooperation between the customs authorities of the two countries in Rules of Origin and customs matters. As a result, the agreement makes sure that goods are not held in customs any longer than necessary.

Lower tariffs

Certain sectors and products will be supported by lower tariffs. Many of these will be introduced on a gradual basis, some of which will ultimately be tariff-free. Food and drink companies will be affected positively by these changes and a new quota scheme is also being worked on by both governments. Significantly, this will ease the paperwork requirements when exporting these products to Japan. Reduced tariffs have also been agreed for some Japanese popular products to be imported into the UK. High standards of food safety and animal welfare will be maintained.

Improved market access

A five-year review of how certain products are treated was included in the EU agreement. With CEPA, this will be extended to cover all agricultural products.
Small and Medium-sized Enterprises (SME’s)
A key positive for SME’s exporting to Japan, is that the agreement will make it easier for them to be able to ship their goods. Customs provisions minimise administration procedures and costs. There is a specific chapter included in the agreement making it easier for SME’s to access information to make exporting to Japan more achievable. CEPA includes a SME website where information can be accessed to allow more SME’s to export to Japan. Customs provisions lessen administrative procedures and help control costs. Dispute procedures have also been simplified.

Food Safety and Sustainable agriculture

Japan’s food safety rules will now be available in English, simplifying the procedure for our exporters. The Japanese approval process will also be much faster. CEPA also includes measures to cooperate on improving the environment for foods and agriculture in both countries.

The manufacturing sector
There will now be reduced tariffs on some items used in cars. This will enable UK manufacturers to enjoy lower costs of production. The agreement also includes an automotive section allowing for regulatory alignment and reduction of non-tariff barriers. There is also a new UK Japan Mutual recognition Agreement. This allows simplification of the process of proving products meet safety and other regulatory standards. This will facilitate the easing of doing business in Japan for companies in the Medicine, electrical products, and telecommunications equipment sectors.

Digital and Data

The agreement includes provisions that exceed the original EU/Japan free trade agreement. It also improves on the existing regulations contained within CPTPP. CEPA accepts that the UK and Japan have trusted regulatory systems that can work together rather than have regulations imposed upon them. This will both encourage and make it easier for UK tech businesses to export to Japan and will encourage inward investment to the UK from the many digital companies within Japan. The agreement avoids unnecessary restrictions on the free flow of data, allowing transfer and collection of data between both countries to be less complex than the earlier agreement.

Individual’s data protection is also a key part of the agreement. Commercial messages must be clearly identifiable to protect consumers.

Financial Services

Financial services were the top services export to Japan in 2019. As part of the agreement, UK companies supplying financial services to Japan do not have to store their financial data in Japan. Licence applications will also be made less complicated.

Creative Industry

Online infringement of Intellectual Property in CEPA is an improvement on the previous agreement. Piracy of music and films are included in the agreement. The new regulations will lessen the scale of counterfeiting.

Fashion

CEPA has resulted in reduced tariffs on many items, and includes simplified rules on single process when garments are worked upon in the UK. Customs provisions have also been negotiated which will lessen costs and admin requirements. Customs procedures will be simpler. An added benefit of the agreement is that design law has been simplified making applications less time consuming and cheaper. There will also be reduced tariffs on some Japanese clothing imports.

Services

This agreement goes further than the previous deal agreed with Japan and the EU. It includes preferential guaranteed market access for UK services companies. It also ensures fair treatment.

Provision has been made for making it more open and transparent regarding licence renewal procedures and processing times. CEPA allows UK and Japanese telecoms companies to operate in each other’s country. It is intended also to ensure that permission to provide telecoms services should be simplified in the ways in which notification and authorisation is required.

Temporary movement of professionals included in the Japan/EU agreement is maintained. This will benefit business visitors, independent professionals and investors.

Investment

The UK has a strong position with regards to Japanese companies investing here. In 2018, Japan was the 6th largest investor in the UK and the UK was the 4th largest investor in Japan. CEPA includes directions on market access which prevents limits being placed on either country.
CEPA also includes provisions on other topics relating to business and sustainability.

There are sections included making provisions for:

• Gender Equality
• Anti-Corruption
• Labour
• Standards
• Animal Welfare
• The environment