EU/Japan: JEFTA agreement is hard to convince...

Entered into force just 4 months ago, the JEFTA is already entitled to its first balance sheet.... And his first criticisms!

LEU/Japan free trade agreement European exporters are struggling to convince them because of problems encountered at destination concerning the proof of preferential origin of products : differences in interpretation of common rules have been reported by many EU operators to the European Commission.

The Commission agreed to set up working groups in each Member State (via DGDDI in France) to identify problems encountered in order to engage in discussions with the Japanese authorities to find solutions.

For now, many operators have decided not to use the agreement in order not to increase the time needed to transport the goods.

In addition, the rules for the justification of preferential origin laid down in the JEFTA Agreement raise questions as to manufacturing confidentiality: local authorities have the possibility ofcontrol the preferential nature of a good directly with the importer.

As such, Article 3.21.2 of the Memorandum of Understanding specifies the elements which may be requested :

• a brief description of the production process;
• [...] specific description of the manufacturing process;
• [...] description of the originating and non-originating materials used in the manufacturing process;
• the value of all non-originating or originating materials used in production;
• the weight of all materials entering production;
• the list of all non-originating materials and their classification.

This approach raises questions in the trade relations between a European exporter and its Japanese importerAs the disclosure of this confidential information to the customer may be detrimental to the exporter, the exporter is less likely to give his partner the tariff preference at destination.

A new situation for operators, linked to the fact thatthe rules for determining the origin of JEFTA are different from those of trade agreements signed so far by the EU (cf. EU/Japan: Economic Partnership Agreement launched on 01/02/2019!).

Source(s): Customs Policy Committee (DASCE – 14/06/2019) | EU-Japan Memorandum of Understanding