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Japan-Mongolia EPA agreement takes effect

  • June 8, 2016
  • , Yomiuri , p. 9
  • Translation

The economic partnership agreement (EPA) between Japan and Mongolia took effect on June 7. This agreement abolished around 50% of tariffs (in value terms) on Japanese exports of cars and other items to Mongolia. About 96% of tariffs will be eliminated in the next 10 years, which will be a great boost for Japanese exports.

 

Mongolia is the 15th country with which Japan has concluded and effectuated an EPA. Although there had not been substantial trade between Japan and landlocked Mongolia in the past, this country is expected to achieve high economic growth in the mid- and long-term with progress in the development of coal and other resources. Minister of Economy, Trade and Industry Motoo Hayashi stated at a news conference on June 7: “This agreement is not only about expansion of tariff-free trade. It also covers broad areas, including the protection of intellectual property rights. Bilateral trade and investment will grow,” hailing the significance of the EPA effectuation.

 

Japan’s annual exports to Mongolia in 2012 amounted to 39.9 billion yen, nearly 70% of which consisted of autos and auto parts. Japanese cars are in fierce competition with South Korean cars in the Mongolian market. With the immediate abolition of the 5% tariff on Japanese cars, they will have an advantage over South Korean products, which are taxed. The tariff on bulldozers and other construction equipment was also scrapped immediately. Since demand for such equipment may rise with the development of coalfields and other projects, it is hoped that exports will increase.

 

A distinguishing feature of the EPA is the ban on government intervention in private company contracts. Japanese companies are interested in resources development and other businesses. The effectuation of the EPA will make it easier to increase investment. Imports from Mongolia have so far consisted mostly of coal and other mineral resources worth around 1.9 billion yen annually (2012 statistics). They are likely to surge with Mongolia’s economic development.

 

The government is hoping that the successful conclusion of bilateral EPAs will also help spur other major trade negotiations, such as the EPA with the European Union, the East Asian Regional Comprehensive Economic Partnership (RCEP), and the Japan-China-ROK free trade agreement (FTA). (Slightly abridged)

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