EU-Japan FTA/EPA JETRO s perspective Jan 2015 Jun ARIMA Director General, JETRO London 1
Globalization Status of Japanese SMEs Not globalized 63.1% Imports from overseas Exports to overseas 15.8% 22.9% Partnership with a foreign company Manufacturing facilities or sales branch Expatriates to collect information Hire foreign students in Japan Accept trainees/interns from abroad Onlinesales/business for foreign customers Others No answer 8.5% 7.8% 4.7% 1.9% 1.6% 0.6% 4.9% 0.4% N=1,812 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% Source: Survey on SME s Globalization: Tokyo Chamber of Commerce and Industry (2012) 2
SME s Interests in Globalizing 0.6% N=1,802 26.6% 6.0% 19.9% 43.5% Great interests in globalizing Moderate interests in globalizing Little interests in globalizing No interests in globalizing 23.6% Other 23.6% No answer Source: Survey on SME s Globalization: Tokyo Chamber of Commerce and Industry (2012) 3
Top 10 Promising Markets for Japanese Companies Thailand China Indonesia Vietnam US Taiwan India Malaysia Singapore Germany 27.2% 26.2% 27.4% 24.6% 20.9% 23.4% 26.8% 22.5% 22.1% 23.5% 21.7% 19.3% 22.9% 18.5% 32.9% 35.2% 34.1% 37.7% 37.3% 38.2% 37.9% 36.6% 42.2% 41.8% 39.9% 48.7% 46.6% 60.6% 60.1% 60.0% Total Large Companies SMEs N=3,471 N=680 N=2,791 EU-Japan FTA/EPA will encourage SMEs to consider great potential in Germany and Europe 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% Source: 2013 JETRO Survey on Japanese Companies Overseas Business Development 4
Challenges in Exports and Overseas Development JETRO will support! Local business partner In-house human resources 47.8% 46.3% 48.1% 41.2% 52.6% 38.4% Information on rules & regulation (tariff, regulation, license) 40.1% 38.0% 48.7% Information on overseas market (consumer preference, needs) 39.4% 42.1% 38.8% Total N=3,471 Expansion of sales network in overseas Cost competitiveness Product development for local markets 32.5% 33.8% 32.2% 27.0% 36.0% 24.8% 21.4% 26.3% 20.2% Large N=680 Companies SMEs N=2,791 Financial resources 8.1% 16.2% 18.2% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% Source: 2013 JETRO Survey on Japanese Companies Overseas Business Development 5
Successful German-Japanese Companies Collaboration Nittoku Engineering and EUTECT GmbH Jan 2012 First meeting through JETRO s RIT Program May 2012 Sales and service agreement Nittoku Engineering purchase of EUTECT s soldering equipment => Enabling bonding of specific electric parts => Response to diverse customer needs through broader product lineup combining excellence of Nittoku Engineering and EUTECT EUTECT utilize Nittoku s distribution network in Asia Planning personnel exchange program for enhancing production technologies More success cases will come from EU-Japan EPA! 6
Japanese Companies Expectation to FTA/EPA Multiple answers n=2,018 Reduction of procurement cost by eliminating Japanese tariffs Increased sales by expanding business of Japanese companies Improved business environment Loosening regulation to foreign capital Enhanced export competitiveness Source: Teikoku Data Bank Survey on Japanese Companies Overseas Operation and Impact on Domestic Operation (2014) 7
Development of Japan s EPA/FTA Networks Aiming at FTA Coverage from 22.6% to 70%+ in 2018 13 countries and 1 region Launched Negotiation 1 Country EU Under negotiation Turkey TPP Under negotiation Australia Signed in Jul. 2014 RCEP Under negotiation 8
Utilization of Preferential Tariff under FTA/EPA Using preferential tariff in Export or Import Using preferential tariff in Export Using preferential tariff in Import Source: JETRO Survey on Japanese Companies Overseas Operation (2013) 2009FY Survey 2012FY Survey 2010FY Survey 2013FY Survey 2011FY Survey 9
Problems faced by Exporters Using FTA/EPA 10
Broader Scope/Higher Liberalization => More Benefit TPP and EU-Japan FTA/EPA with broader scope and high level liberalization will enhance the benefit of FTA/EPAs and their use 11
Forming Mega FTA Triangle TTIP Japan-EU EPA Shared Value - Democracy - Rule of law - Human rights - Market economy TPP High-level EPA/FTA among developed countries sharing common values => Rule making for global trade and investment 12
Addressing NTM will facilitate foreign business in Japan 13
EU s Business Environment needs improvement as well Challenges in Management for Japanese Companies Operating in Europe Economic slowdown, market contraction High labour cost Difficulty in securing good workers Lower prices offered by competitors Exchange rate fluctuation Transfer pricing taxation Stringent dismissal laws Entry of new competitors Heavy social security burdens Quality of workforce Visa/work permits European political and social conditions Procurement costs REACH Deliveries 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0% 14 Source: 2013 JETRO Survey Business Conditions of Japanese Companies in Europe (March 2014)
EU-Japan Regulatory Cooperation Win-Win for Both Behind the border issues are influential in determining business environment Various new regulations/standards responding to evolving economic/social development on both sides => need of close collaboration from initial stage EU s strong power in setting standards and disseminating them to non-eu region Regulatory cooperation => win-win solution for EU and Japan Penetrate into growing Asian market utilizing Japan s FTA link in the region Disseminate EU s standard in the region Penetrate into global market combining Japan s strength in technology and EU s strength in standard setting/dissemination 15
EPA will boost two way FDI between EU and Japan Japan s Cumulative Outward/Inward FDI (end of 2013) Billion $ 1200 1000 800 600 400 200 Outward Total $1,117 Billion To Europe $ 267 Billion Africa Middle East Europe Oceania Latin America North America Asia JETRO strongly support foreign companies interested in FDI to Japan - Free incubation office - Information service - Consultancy service Inward Total From Europe $ 171 Billion $ 79 Billion 0 16
Vielen Dank!