The rules of origin of the EPA (EPA) are contained in the text of each agreement. Free trade agreements between the EU and Japan, such as the EPA, are often criticised for having potential effects on trade diversion that harm trading partners. This is a serious argument that goes back to Jacob Viner`s 1952 book The Customs Union Issue. However, as stated in the introduction, it is precisely the risk of trade diversion that gives a twine effect: other countries are subject to incentives to conclude free trade agreements; The denser the global network of bilateral trade agreements, the closer the world is to multilateral free trade. How big is the free trade agreement? One way to measure this is to look at the common GDP of the signatories. The best way to study the relevance of the global trading system is the current U.S. dollar (or another currency) rather than measures using purchasing power parities. Thanks to this lens, the free trade agreement is certainly very important: from 2017, it covers a common gross domestic product (GDP) of more than $22 trillion, or 27.5% of the world total (see Chart 1). The EPA is only slightly lower than the common GDP of NAFTA, the North American Free Trade Agreement that, once parliaments have ratified the revised agreement, will change its name to USMCA, the U.S.-Mexico-Canada agreement.
It is about twice the largest of the Comprehensive and Progressive Trans-Pacific Partnership (TPP), which brings together 11 countries, including Australia, Canada, Japan and Mexico. The EPA BETWEEN the EU and Japan is slightly smaller than the draft agreement between the United States and Japan, which would account for about 30% of global GDP, and the Global Regional Economic Partnership Agreement (RCEP), which appears to be nearing completion, and the 10 ASEAN (Association of Southeast Asian Nations) and six regional powers, including Australia, China, India, Japan and South Korea 1994 , 1992, 1992 If the UK left the EU, the GDP covered by the EU-Japan EPA would fall to $19.5 trillion. Overall, the EPA between the EU and Japan is important, but it has significant competitors in the global race, some of which have the potential to profoundly influence discussions on global trade policy. These and many other issues – such as the EU`s recent anti-dumping duties on rice or electric bikes – are watering down the EPA`s message between the EU and Japan. Indeed, since 2013, EU imports have increased from 2193 billion euros to 2494 billion euros (up 14%), while customs revenues recorded by the European Commission have increased from 20.2 billion euros to 25.4 billion euros (an increase of 26%). The weighted average tariff remains low, but has increased in recent years despite the new trade agreement. There is no doubt that the agreement is one of the most modern and comprehensive that has come into force recently. The text contains 23 chapters and a long list of appendices.
Felbermayr et al. (2019) argue that the EU-Japan EPA has textual, contextual and substantive similarities to the EU-Korea Free Trade Agreement, which came into force in 2011; Chowdhry et al. (2018) and Dreyer (2018) share this view. While this means that the agreement is relatively standard in many of its provisions, it also offers the possibility of predicting its potential impact, given that the EU-Korea agreement has been thoroughly reviewed. This trifecta of agreements significantly improves relations between the EU and Japan and has global implications. While geography has divided them, common values and principles have brought the EU and Japan closer together and defended these values together. However, as always, there are new improvements. This is especially true in the areas of investment protection and data flow.