Lexi Webster
Australia and Japan have a free trade agreement, known as the Japan–Australia Economic Partnership Agreement (JAEPA). The agreement was signed on July 8, 2014, and took effect on January 15, 2015. JAEPA aims to strengthen the economic relationship between the two countries by providing improved market access and enhanced investment protections. It involves the elimination or reduction of tariffs on various goods, such as agricultural products, electronics, and vehicles, promoting trade and investment liberalization between Australia and Japan.
| Characteristics | Values |
|---|---|
| Name of the agreement | Japan-Australia Economic Partnership Agreement (JAEPA) |
| Date signed | 8 July 2014 |
| Date entered into force | 15 January 2015 |
| Tariffs eliminated on | Bulk wine, raw sugar, milk protein concentrates, lactose and casein, wheat, barley, beef, passenger and goods motor vehicles, electronics, white goods, coke and semi coke of coal, non-crude petroleum oils, aluminium hydroxide, etc. |
| Tariff to be eliminated by 1 April 2024 | Tuna and Atlantic salmon |
| Tariff eliminated for | Bottled wine |
| Date | 1 April 2021 |
| Duty-free quotas | Cheese, ice cream, frozen yoghurt |
| Screening threshold liberalised from | $252 million |
| Screening threshold liberalised to | $1.134 billion |
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What You'll Learn
The Japan-Australia Economic Partnership Agreement (JAEPA)
Under JAEPA, Australian exporters gained significantly improved market access, with around 98% of merchandise exports to Japan receiving preferential access or entering duty-free once the agreement is fully implemented. This includes the elimination of tariffs on various agricultural products, such as bulk wine, high-polarity raw sugar, milk protein concentrates, lactose and casein, wheat, and barley for animal feed. JAEPA also provides enhanced protections and certainty for bilateral investments and progressive elimination of remaining Australian tariffs on Japanese imports, such as motor vehicles, electronics, and white goods.
The agreement is particularly beneficial for Australian agricultural exporters, who have secured a competitive advantage in Japan's heavily protected agriculture market. JAEPA also includes rapid tariff reductions for beef, providing a significant advantage over competitors like the United States. Additionally, Australian tariffs on electronics, white goods, and cars were lowered, benefiting Japanese exporters.
JAEPA promotes further growth and diversification in Japanese investment in Australia. It has liberalised the screening threshold for private Japanese investment in non-sensitive sectors, while Australia retains the ability to screen proposals for investment in sensitive sectors, agricultural land, and agribusinesses. JAEPA also ensures continued cooperation between the two countries, with the Australian government monitoring and reviewing the agreement to ensure its intended benefits are delivered.
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JAEPA outcomes for Australian exporters
The Japan-Australia Economic Partnership Agreement (JAEPA) was signed on 8 July 2014 and entered into force on 15 January 2015. JAEPA provides valuable preferential access for Australian exporters and supports growth in two-way investment. It is the most liberalising bilateral trade agreement that Japan has ever concluded, providing Australian exporters with a significant advantage over their international competitors.
JAEPA eliminates or reduces barriers to trade in goods between Japan and Australia. This benefits Australian businesses that seek to export Australian goods to Japan or import Japanese goods for sale in Australia or for use as inputs into further manufacturing. A key impediment to importing and exporting goods is tariffs (customs duties) – taxes imposed by governments on goods arriving from overseas. On full implementation, JAEPA will provide 97% of Australian exports (by 2013 import value) with customs duty-free or preferential tariff access to Japanese markets.
JAEPA provides Australian service exporters with treatment equivalent to the best Japan has agreed with any other trading partner. For example, Australian financial service providers are guaranteed cross-border access to Japan when providing investment advice and portfolio management services. Australian education providers are guaranteed market access to Japan's higher education services market, including vocational and technical education.
JAEPA also provides enhanced protections and certainty for bilateral investments. Australian innovators and creative industries enjoy high levels of intellectual property protection in Japan, broadly equivalent to protections in Australia. JAEPA is promoting further growth and diversification in the flow of Japanese investment into Australia, having liberalised the screening threshold at which private Japanese investment in non-sensitive sectors is considered by the Foreign Investment Review Board, from $252 million to $1.134 billion.
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Japan's heavily protected agriculture market
Australia and Japan have a free trade agreement, known as the Japan–Australia Economic Partnership Agreement (JAEPA), which was signed on 8 July 2014 and entered into force on 15 January 2015.
Japan's agricultural sector is heavily protected by trade barriers, domestic subsidies, and government support. Japan's federal and regional authorities have implemented policies to protect agricultural producers and boost production. About 50% of the value of Japan's farm production comes from government support, compared to around 7% in the US. Japan's agricultural production is often inefficient compared to exporting countries, yet it is sheltered by high trade barriers and subsidies. Japan's government has supported the agriculture sector for decades with policies such as fertiliser subsidies and relaxed lending conditions. This support has allowed farmers to estimate their revenues and plan for the next agricultural season.
The food and agri-business sector in Japan is very competitive. There are large annual trade shows such as the Supermarket Trade Show and FOODEX Japan, which are good opportunities for companies to learn about the Japanese marketplace. The USDA’s Foreign Agricultural Service maintains two Agricultural Trade Offices (ATOs) in Japan, which provide market familiarization services to potential exporters. Japan was the fourth-largest single-country export market for US agriculture in 2022, valued at $16.8 billion. The US is the largest supplier of food and agricultural products to Japan, followed by the EU, China, Australia, and Thailand.
There is a strong demand for "healthy foods" in Japan due to its high life expectancy and aging population. Concepts such as "functional food" are well understood by consumers, and products certified by the Ministry of Health, Labor and Welfare as FOSHU (Food for Specific Health Use) are common.
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JAEPA's impact on Japanese investment in Australia
Australia and Japan have a free trade agreement, known as the Japan-Australia Economic Partnership Agreement (JAEPA). The agreement was signed on 8 July 2014 and came into force on 15 January 2015.
JAEPA has had a significant impact on Japanese investment in Australia. Japanese investment in Australia has traditionally been focused on the energy and resources sectors. However, in recent years, Japanese companies have been expanding their investments into new sectors, including retail, consumer goods, health sciences, and technology. This diversification of Japanese investment in Australia can be attributed to various "'push'" and "'pull'" factors.
One of the key "push" factors is the external pressure on Japanese companies to enhance shareholder value. Global geopolitical risks and a weak yen have led foreign investors to increase their investments in Japanese equities, providing Japanese companies with the capital and confidence to pursue overseas investment opportunities. Additionally, Japanese companies may view investing in Australia as a way to safeguard and diversify their earnings growth, particularly in response to global macroeconomic factors and geopolitical risks.
The "pull" factors in Australia that attract Japanese investment include the country's stable political environment, strong economic performance, and highly skilled workforce. Australia's status as a global leader and innovator in sports, as well as its cultural diversity, may also contribute to its appeal for Japanese investors. Furthermore, Australian firms' expertise and resources in various sectors make them attractive partners for Japanese companies through joint ventures and acquisitions.
Japanese direct investment in Australia has been growing rapidly, reaching a record 141.1 billion Australian dollars ($84.7 billion) in 2024, with real estate and resources projects being significant contributors. This trend suggests that the expansion of economic relations between Japan and Australia is likely to continue, benefiting businesses in both countries.
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JAEPA's progressive elimination of Australian tariffs on Japanese imports
The Japan-Australia Economic Partnership Agreement (JAEPA) was signed on 8 July 2014 and entered into force on 15 January 2015. The agreement promotes further growth and diversification in the flow of Japanese investment into Australia. It also provides enhanced protections and certainty for bilateral investments.
JAEPA eliminates or reduces barriers to trade in goods between Japan and Australia. A key impediment to importing and exporting goods is tariffs (customs duties) – taxes imposed by governments on goods arriving from overseas. On full implementation, JAEPA will provide 97% of Australian exports (by 2013 import value) with customs duty-free or preferential tariff access to Japanese markets.
Consistent with Australia's other bilateral trade agreements, remaining Australian tariffs on Japanese imports are being eliminated progressively. This includes removing the 5% tariff on Japanese passenger and goods motor vehicles, electronics, and white goods. Consumers and businesses will benefit from lower prices and/or greater availability of Japanese products.
JAEPA's staging categories range from 'A' – indicating that existing duty-free access will be maintained – to 'G', indicating the gradual elimination of the base duty rate over 5 equal annual stages, beginning in the fourth year of JAEPA's operation and falling to 0 by year 8. The Australian and Japanese tariff schedules look slightly different, but each schedule contains a 'base rate' column (column 3) showing the base duty rate or tariff from which reductions will be calculated.
JAEPA provides for the immediate elimination of tariffs on paints, key plastic products, and pearl jewellery. It also guarantees market access for Australian service exporters, financial service providers, law firms, education providers, and telecommunications providers.
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Frequently asked questions
Yes, the Japan–Australia Economic Partnership Agreement (JAEPA) is a trade agreement between the two countries.
The agreement was signed on 8 July 2014 and came into effect on 15 January 2015.
JAEPA provides Australian exporters with significantly improved market access and substantially improves investment protections. It also promotes growth and diversification in the flow of Japanese investment into Australia.
