Guidance

UK-Japan CEPA tariff rate quota (TRQ) scheme: technical notice

Published 30 November 2020

Under the new UK-Japan CEPA, UK exporters will continue to have access to the same preferential tariff rates as in the EU EPA for products covered by 10 priority tariff rate quotas (TRQs).

UK exporters will also continue to benefit from access to Japan’s duty-free global TRQ for Malt.

For butter, milk and milk powders, UK exporters will continue to have access to the Japanese market via Japan’s WTO TRQs.

Japanese importers would initially pay no tariff on imports of products covered by the 10 TRQs. At the end of each financial year, importers would pay the same in quota rate as under the EU scheme for any TRQ volume not utilised by the EU member states (EU27).

The UK anticipates there will continue to be enough surplus volume in the EU27 TRQs until around 2024, by which time we expect to have joined the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). As part of UK-Japan CEPA discussions, Japan committed (via a Ministerial side letter) to support the UK’s quick accession to CPTPP and provide the UK meaningful market access to similar products to those covered by TRQs in the EU-Japan deal.

Japan further committed (via a Ministerial side letter) to working closely with the UK to ensure the new scheme operates effectively and that the UK has unfettered access to any under-utilised EU27 quota.

Actions for exporters in the UK

No direct action is required by UK exporters to access the preferential terms of the CEPA scheme.

Japanese importers of UK products covered by the TRQ arrangements in the CEPA will need to take action as outlined under actions for importers in Japan.

If you already export goods from the UK under an EU-Japan TRQ, you may want to contact your Japanese importer to discuss these new arrangements.

Actions for importers in Japan

Importers will need to follow the process below in order to access the preferential terms of the CEPA scheme for covered products (See Annex A).

Japan’s Before Permit (BP) scheme

At the point of import the importer will need to register the import under the BP scheme with NACCS (Nippon Automated Cargo and Port Consolidated System), Japan’s digital customs interface system.

Japan’s BP scheme temporarily suspends the need to pay tariffs at the border at the point of import on the condition that the importer provides an acceptable guarantee to the Japanese customs authority.

Acceptable guarantees include:

• a Banker’s Guarantee
• alternatives such as placing sufficient deposit at the Legal Affairs Bureau in advance of importation

If using a Banker’s Guarantee, the importer must provide a customs authority guarantee reference number on the import declaration form (importers will need to submit a C5400 form along with the payment guarantee to the customs authority).

There should be no delay in the release of the goods compared to imports under the EU-Japan TRQ scheme.

The importer will then be provided with a receipt of the Before Permit Application, including the date of registration. The Japanese customs authority then takes a note of the out-of-quota tariff for the imported goods and registers that amount against the total amount provided in the guarantee.

Preferential Import Certificates (PICs)

As soon as data is available, and no later than one month after the end of the financial year, Japan will issue UK Japan PICs to importers that allow imports to qualify for the in-quota rate (in many cases 0%).

For each of the products covered by the scheme, the total quota available for PICs will be the volume of the EU27 quota minus all the quota reported to the Minister of Agriculture, Forestry and Fisheries (MAFF) as utilised by the EU27 by the end of the third week after the end of the financial year.

All importers who have imported products covered by the scheme in the previous year can apply for PICs. PICs will be distributed to those importers who imported earliest in the financial year until the PICs are exhausted.

Importers applying for the certificates are only required to provide to MAFF copies of the origin declaration form, alongside proof of registration of the import from NACCS in the Before Permit scheme.

MAFF will issue PICs to the Japanese importers as soon as possible. Importers who receive PICs then submit them to the customs authority, who then issue an Import Permit which confirms the importer is liable only to pay the in-quota rate (0% for many products) for the imports covered. PICs must be submitted by the importer to the customs authority of Japan on or before the following 30 June after the end of each particular financial year (ending 31 March).

For importers that do not receive a PIC covering their imports, or where a valid PIC is not submitted, then the importer is required to pay the out-of-quota rate.

Throughout the year, MAFF will make easily accessible data available to importers about the EU EPA quota license allocations. At the end of each financial year when publishing the amount of UK Japan PICs for each product covered in the scheme, the Government of Japan will also publish the total utilisation of the relevant TRQs in EU-Japan, the amount of applications for PICs and the amount of PICs that have been issued.

Where the amount of applications exceed the total amount of PICs, Japan will also publish the latest date of Before Permit registration that qualifies for a PIC and thus qualifies for the in-quota duty. Importers with Before Permit registrations dated after this date would be required to pay the out-of-quota rate.

In future years this historic data could be used to give an indication of potentially available volumes.

Annex B gives a current overview of EU TRQ license applications and current utilisation.

Annex A: target products and corresponding TRQ titles in the EU-Japan EPA

• TRQ 1: Wheat products
• TRQ 2: Mixes and doughs and cake mixes
• TRQ 3: Food preparations made primarily of wheat
• TRQ 8: Food preparations of barley
• TRQ 11: Coffee, tea mixes, food preparations and doughs
• TRQ 12: Food preparations
• TRQ 15: Food preparations containing more than 50% of sucrose, and cocoa powder
• TRQ 19: Food Preparations containing cocoa
• TRQ 20: Food Preparations containing cocoa (for the preparation of chocolate)
• TRQ 25: Cheeses

Annex B: Summary of TRQ utilisation under the EPA in 2019

Download the table summary of TRQ utilisation under the EPA in 2019 [CSV].