Australia-Japan Trade Deal Enters Into Force

The landmark free trade agreement between Australia and Japan entered into force on January 15, 2015. When it is fully implemented, more than 97 percent of Australian exports will receive preferential or duty-free access to Japan.

The Japan-Australia Economic Partnership Agreement (JAEPA) was signed in July 2014. According to a joint statement issued by the Australian Prime Minister Tony Abbott and his Japanese counterpart Shinzo Abe, the deal "lays the foundation for the next phase of bilateral economic relations, and will strengthen 'the special strategic partnership' between Japan and Australia."

Under the terms of the agreement, 99.7 percent of Australia's exports of resource, energy, and manufacturing goods will now enter Japan duty-free. Rapid tariff reductions for beef, Australia's largest agricultural export to Japan, also commenced on January 15. Japan's 15 percent tariff on bottled Australian wine will be eliminated over the next seven years, and the majority of Australia's fruit, vegetables, nuts, and juice exports will benefit from the speedy removal of tariffs.

Consistent with Australia's other bilateral trade agreements, the remaining tariffs on Japanese imports will be eliminated upon full implementation. The five percent tariff on Japanese passenger and goods motor vehicles, electronics, and white goods will be removed. In the case of certain sensitive sectors (including auto parts, steel, copper, plastics, chemicals, clothing, textiles, and footwear), the five percent tariff will be phased out over periods of up to eight years. The AUD12,000 (USD9,764) specific tariff on Japanese used cars will be retained.

The JAEPA also guarantees Japanese market access to Australian financial, legal, education, and telecommunications services providers.

Japan is Australia's second-largest trading partner. Bilateral goods and services trade was worth AUD72.2bn (USD58.7bn) in 2013-14. At the end of 2013, Japanese investment in Australia was valued at AUD131bn, and Australian investment in Japan reached AUD50.2bn.

Australian Trade Minister Andrew Robb said: "JAEPA is the most liberalizing trade agreement Japan has ever signed, giving Australian exporters a significant advantage over their competitors. Its commencement also comes at a time when a softer Australian dollar is working to the benefit of our exporters. There's growing demand across Asia for Australia's clean green produce; the opportunities are there for the taking, and if seized upon, will help create jobs, build our economy, and lead to greater prosperity for everyone."

Source: Tax News