E.U. - Japan Trade Deal Brings Opportunities to Olive Oil Exporters

The European Union and Japan have agreed on a deal that will boost the trade of goods and ser­vices between them by elim­i­nat­ing duties and cum­ber­some pro­ce­dures. Many European agri­cul­tural prod­ucts will enjoy reduced taxes or an entirely tax-free sta­tus when exported to Japan, open­ing the way for EU farm­ers and exporters to pen­e­trate a mar­ket of 127 mil­lion peo­ple.

The Economic Partnership Agreement (EPA) was the result of long nego­ti­a­tions that started in 2013. The agree­ment cov­ers almost one-third of the world’s econ­omy and affects 600 mil­lion peo­ple.

Cecilia Malmström, the EU Commissioner of Free Trade, said the EU-Japan agree­ment is the biggest bilat­eral agree­ment ever nego­ti­ated by the EU. ​“The eco­nomic ben­e­fits of this agree­ment are clear,” she noted. ​“The deal will open huge mar­ket oppor­tu­ni­ties for both sides. European agri­cul­ture also has some­thing to cel­e­brate, with access to the enor­mous Japanese mar­ket and pro­tec­tion for over 200 dis­tinc­tive food and drinks.”

Currently, the annual exports from the EU to Japan exceed €58 bil­lion ($67 bil­lion) for prod­ucts and €28 bil­lion ($32 bil­lion) for ser­vices, and it is esti­mated that EPA will save EU exporters approx­i­mately €1 bil­lion ($1.16 bil­lion) in cus­toms duties every year.

Tariffs on more than 90 per­cent of EU exports to Japan will be elim­i­nated imme­di­ately when the EPA comes grad­u­ally into effect in early 2019. When the agree­ment is fully deployed, 97 per­cent of the EU’s prod­ucts and ser­vices exported to Japan will have their cus­toms duties sharply reduced or com­pletely abol­ished. The deal includes indus­trial, forestry, phy­tosan­i­tary, tex­tile, and food prod­ucts, and finan­cial, med­ical, and mar­itime ser­vices, and many more.

When it comes to agri­cul­ture, Japan is extremely valu­able to European farm­ers and food pro­duc­ers. It is the EU’s fourth-largest buyer with annual imports value exceed­ing €5.7 bil­lion ($6.60 bil­lion). The agree­ment will enable most of Europe’s agri-food prod­ucts, like wine and cheese, to enter Japan com­pletely tax-free.

But apart from the appar­ent ben­e­fit of cre­at­ing an open trade zone of 600 mil­lion peo­ple, what will the agree­ment bring to olive oil pro­duc­ers and exporters?

There are no duties imposed on imported olive oil in Japan today, but there are other bar­ri­ers that will be elim­i­nated by the agree­ment.

For exam­ple, the stan­dards of the International Olive Oil Council (IOC) for label­ing of bot­tles con­tain­ing olive oil are not cur­rently applic­a­ble in Japan, cre­at­ing uninvit­ing con­di­tions for exporters who need to adjust to the spe­cific label­ing require­ments of the coun­try.

By dis­card­ing its own label­ing rules and by adopt­ing the rules of the IOC, Japan will make it a lot eas­ier for bot­tlers and exporters to send their olive oils to this part of the Far East.

In advance, some Geographical Indications (PGIs) will be pre­served, mean­ing that Japan will rec­og­nize the spe­cial sta­tus of agri­cul­tural prod­ucts with a spe­cific European geo­graph­i­cal ori­gin.

Greece, among other mem­ber states of the EU, can get its fair share from this colos­sal agree­ment. According to the European Commission, the main prod­ucts exported from Greece to Japan are mar­ble, pasta prod­ucts, and olive oil, with the value of annual exports reach­ing €121 mil­lion ($140 mil­lion) and sus­tain­ing 2,981 jobs in Greece.

The Office for Economic and Commercial Affairs of the Greek Embassy in Tokyo told us that they fore­see an indi­rect ben­e­fit for olive oil from the open­ing of the Japanese mar­ket to EU prod­ucts, which will prompt con­sumers to opt for more prod­ucts from the EU mem­ber states.

For exam­ple, feta cheese is going to be relieved from any tax­a­tion and pro­tected from other imi­ta­tive prod­ucts imported in Japan. And since feta is often com­bined with olive oil in food recipes, its con­sump­tion, it is hoped, could ulti­mately lead to an increase of olive oil con­sump­tion in the coun­try.

As far as the Geographical Indications are con­cerned, the Office spec­i­fied that the agree­ment rec­og­nizes and pro­tects a lim­ited num­ber of the Protected Destination of Origin (PDO) labels from each EU mem­ber state.

For the Greek olive oil indus­try, the agree­ment rec­og­nizes the PDOs of Sitia Lasithi Olive Oil from Crete and Kalamata Olives, which means that they will carry their dis­tinc­tive sta­tus in the Japanese mar­ket. The other two Greek agri­cul­tural prod­ucts that will retain their PDO labels in Japan are Feta Cheese and Chios Mastic.

While the Japanese olive oil mar­ket is dom­i­nated by Spain and Italy, the unprece­dented agree­ment between Japan and the European Union for set­ting up a huge free trade zone will present oppor­tu­ni­ties for exporters and mer­chants to check into the vast and, now, more acces­si­ble mar­ket.