CPTPP and Japan
CPTPP is New Zealand’s first trade agreement with Japan – the world’s third largest economy and our fourth-largest individual trading partner and source of foreign direct investment.
Japan is a high value consumer market and a significant participant in global value chains.
The trading relationship is highly complementary with New Zealand supplying food and industrial materials, such as wood and aluminium, and Japan exporting finished industrial goods and machinery to New Zealand.
Japan is the world’s largest net food importer. CPTPP will help New Zealand agriculture exporters in particular overcome high agricultural tariff rates into Japan and correct the competitive disadvantage they face with exporters from Australia and Chile, which already have preferential access to that market through bilateral trade agreements.
Tariffs on New Zealand exports into Japan will be eliminated completely over time with the exception of those on beef, which will still be cut significantly, and a number of dairy products, where access will be improved through partial tariff reductions and duty-free quotas. This will result in an estimated NZ$94 million in reduced tariffs in the first year, rising to NZ$207 million annually once fully implemented.
Some key goods tariff outcomes are shown in the table below or you can search the online tariff finder (external link) to find the outcome for your particular export or import item.
CPTPP provides new commercial opportunities for New Zealand businesses to win government procurement contracts. Japan’s government procurement market is sizable (about 16% of GDP) and it procures a diverse range of goods and services, which will provide greater opportunities for New Zealand’s established industries as well as more specialised and niche exporters. By and large, New Zealand businesses will be able to compete for government procurement contracts in Japan on an equal footing with domestic suppliers and they will be subject to more open, fair and transparent procurement rules.
Japan is a top-five source of students and tourists to New Zealand.
For New Zealand service suppliers, key outcomes from Japan’s CPTPP commitments include:
- Improved protection, predictability and transparency for those already conducting business with Japan, and those wanting to enter the market in the future.
- Access for accounting and legal service providers has been clarified so suppliers are now aware of restrictive measures imposed, including registration and local presence requirements. These measures have been locked in, so any further relaxation of these requirements will flow through to New Zealanders.
- Guaranteed access for providers of “adult education” and “other education services”.
- Japan has locked in its current regime surrounding the provision of higher educational services meaning that any further reforms will flow through to New Zealand suppliers.
- Access has been guaranteed for management consultants, environmental services suppliers, computer and related service suppliers, tourism and travel related services and ground handling services.
It is important to note that in many sectors, Japan has licencing requirements and commercial presence requirements that require suppliers to be resident in Japan and/or establish a local office. CPTPP does not change this requirement. In other sectors Japan has also retained the right to impose restrictions on the number of licences issued to suppliers.
New Zealand business travellers will have greater freedom to travel and stay in Japan. Business visitors can currently stay in Japan for up to 90 days. Under CPTPP, they will have the opportunity to extend the period of stay.
The business visitor cannot, however, acquire remuneration from within Japan, engage in direct sales to the public, supply goods or services, undertake negotiations for the sale of goods or services (or conduct similar activities) or prepare to establish a commercial presence in Japan.
Under CPTPP, New Zealand companies can send staff and their families to work in Japan for up to five years, with an opportunity to extend the period of stay, if they fall within one of the following categories:
- Intra-corporate transferees: The intra-corporate transferee must be employed by, and being transferred to, a company that, for more than one year, has supplied goods or services in Japan or invested in Japan. To be eligible she/he must also be taking a role as a branch or department director, board member or auditor; or a role that requires advanced technical knowledge.
- Investors: While in Japan, investors must be investing in a business in Japan and managing that business; managing a business in Japan on behalf of a person (who is not Japanese) that has invested in a business; or be conducting business for a person (who is not Japanese) who has invested in Japan.
- Qualified Professionals: legal, accounting or taxation service suppliers who have qualified under the laws and regulations of Japan.
- Independent Professionals: professionals who will engage in one of the following activities while in Japan: (a) activities that require an advanced level of technical skills and knowledge in the natural sciences, human sciences, or activities which require ideas and sensitivity based on culture of a country other than Japan; or (b) activities for research, guidance of research, or education at a university in Japan, an equivalent educational institution in Japan, or a college of technology in Japan, recognised under the status of residence of “Professor” provided for in the Immigration Control and Refugee Recognition Act.
- Contractual Service Suppliers: a business person employed by a New Zealand company (or a company from another CPTPP Party), with no presence in Japan, who will engage in one of the following activities during his/her stay: (a) activities that require an advanced level of technical skills and knowledge in the natural sciences, human sciences, or activities which require ideas and sensitivity based on culture of a country other than Japan; or (b) activities for research, guidance of research, or education at a university in Japan, an equivalent educational institution in Japan, or a college of technology in Japan, recognised under the status of residence of “professor” provided for in the Immigration Control and Refugee Recognition Act.
CPTPP provides greater certainty and protection for investors, while preserving the rights of governments to legislate and regulate in the public interest. Strong rules will help ensure that New Zealand and Japanese investors are treated in a fair, equitable and non-discriminatory manner, allowing them to compete on an equal footing with other investors.
In respect of a wide range of sectors, Japan has locked in its current investment screening regime meaning it cannot place tighter restrictions on foreign ownership in these sectors in the future. The threshold above which a non-government Japanese investor must get approval to invest significant business assets in New Zealand has increased from NZ$100 million to NZ$200 million as a result of CPTPP.
Investors in both countries will have access to an investor-state dispute settlement mechanism that is independent and transparent.
Exporting to Japan CPTPP goods outcomes factsheet [PDF, 297 KB]
Tariff rate quota administration information (external link) (Japanese language only)