Australia-Japan FTA Enters Into Force

On January 15, the free trade agreement (FTA) between Australia and Japan entered into force. The agreement provides substantial tariff cuts, set to grant over 97 percent of Australian exports preferential or duty-free access to Japan.

The Japan-Australia Economic Partnership Agreement (JAEPA) was first signed in July 2014, the result of over seven years of negotiations.

The JAEPA features tariff cuts on Australia’s resource, energy, and manufacturing exports, with 99.7 percent of these goods allowed duty-free access to Japan upon full implementation.

Exports from the resource and energy sectors currently occupy four of the top 5 exports to Japan, with liquefied natural gas (US$11.86 billion), coal (US$11.29 billion), iron ores and concentrate (US$7.88 billion) and copper ores and concentrate (US$1.13 billion) exports cumulatively valued at US$32.1 billion.

Notably, the JAEPA provides significant tariff reductions for beef – Australia’s largest agricultural export to Japan valued at US$1.1 billion – reducing the tariff on fresh beef to 23.5 percent over 15 years and frozen beef to 19.5 percent over 18 years. This will give an estimated US$5.15 billion boost to the beef industry over 20 years.

Related-Link-IconExport Procedures in Australia and New Zealand

The JAEPA will remove Japan’s 15 percent tariff on bottled Australian wine over the next seven years and implement tariff reductions and eliminations on an extensive range of Australian fruit, vegetable, nut, and juice exports from April 1.

The five percent import tariff on Japanese passenger and goods motor vehicles, electronics, and white goods will be removed. This will make Japanese cars up to US$1400 cheaper in Australia. In addition, the US$9,764 specific tariff on Japanese used cars will be retained.

The five percent tariff on sensitive sectors (such as auto parts, steel, copper, plastics, chemicals, clothing, textiles, and footwear) will be phased out over periods of up to eight years.

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

Japan is Australia’s second-largest trading partner. In 2013, bilateral trade amounted to US$58.7 billion; Japanese investment in Australia was valued at US$107.7 billion, and Australian investment in Japan reached US$41.2 billion. The JAEPA will significantly aid the already flourishing bilateral trade relationship between Australia and Japan.

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