After 7 negotiating rounds, starting in May 2009, Japan and Peru governments reached mutual agreement to conclude the Economic Partnership Agreement (“EPA”) in November 2010. On May 31, 2011, the Japanese government signed the EPA with Peru to enhance trade ties with the South America economy. The Japan-Peru EPA is expected to be implemented sometime in 2011. For Japan, the EPA with Peru is the 13th EPA that Japan has concluded, and the third with the Latin America economies following Mexico and Chile. In fiscal 2010, Japan exported US$ 1 billion worth of goods to Peru, while importing US$ 2.4 billion worth of items from Peru.
Tariffs on about 99% of total trade will be abolished between the two countries within 10 years after implementation of the EPA. Peru’s import duty on certain industrial items, currently 9% for most of items such as cars, automotive parts, steel products, machinery, and electrical items will be reduced either progressively or immediately to 0% in the 10th year. On the other hand, Japan’s import duties on almost all industrial items will immediately be duty free upon implementation of the EPA. Import duties on some agricultural products will be reduced with tariff quota system or progressively reduced in 10 years, such as pork, chicken, asparagus, and corn. Some of Japan’s sensitive agricultural products are excluded in the duty reduction schedule, such as rice, wheat, and beef.
Compared with most of other EPAs Japan have concluded, the EPA with Peru has practical facilitation measure for traders with regard to origin certification. A Certificate of Origin can be issued by approved exporter’s self-declaration. (Article 58 in Chapter 3 Rules of Origin of the main text of the Agreement) The ordinary certificate of origin issued by designated authority is also available as used to be as other EPAs. Among the EPAs Japan have concluded, this self-declaration method by approved exporter has been adopted first in Japan – Swiss EPA since September 2009. Peru is the second country Japan will introduce self-certification by approved exporter. In addition, among existing EPA, Japan-Mexico EPA will also adopt self-declaration method by amending the Agreement. This self-declaration system helps exporters to minimize administrative cost and lead time in export transaction.
Peru has recently enacted FTAs with the United States, China, Singapore and Canada, and in March 2011, signed an FTA with South Korea, which will reduce tariffs for TVs and certain automobiles once it is implemented. Considering the competition with Korean rivals in electronics and cars industries, the EPA with Peru gives competitive edge to Japanese industries. As for Peru side, they can expect investments from Japan in manufacturing and technological products. Peru have FTAs with the rest of South America and is located in middle of pacific coast of South America. As being in the process of building more ports, airports and highways, Peru may become a hub for Japanese, Korean or Chinese business in South America in future.
MOFA announcement: http://www.mofa.go.jp/announce/announce/2011/5/0530_01.html
Overview of EPA: http://www.meti.go.jp/press/2011/05/20110531002/20110531002-2.pdf