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EU-Japan EPA Ex-Post Evaluation: Inception Report
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Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership MAIN REPORT Draft Inception Report 14 May 2025 Prepared by consortium ECFORTE (European Consortium for Trade Evaluations) led by Trade Impact B.V. May 2025 The views expressed in the report are those of the consultant, and do not present an official view of the European Commission. Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership EUROPEAN COMMISSION Directorate-General for Trade Directorate B – Asia, Services and Digital Trade, Investment and Intellectual Property Unit B1, Far East European Commission B-1049 Brussels Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership MAIN REPORT Draft Inception Report 14 May 2025 The information and views set out in this report are those of the authors and do not necessarily reflect the official opinion of the Commission. The Commission does not guarantee the accuracy of the data included in this study. Neither the Commission nor any person acting on the Commission’s behalf may be held responsible for the use which may be made of the information contained herein. Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership Europe Direct is a service to help you find answers to your questions about the European Union. Freephone number (*): 00 800 6 7 8 9 10 11 (*) The information given is free, as are most calls (though some operators, phone boxes or hotels may charge you). LEGAL NOTICE This document has been prepared for the European Commission; however, it reflects the views only of the authors, and the Commission cannot be held responsible for any use which may be made of the information contained therein. More information on the European Union is available online (http://www.europa.eu). Luxembourg: Publications Office of the European Union, 2025 ISBN [number]number] © European Union, 2025 Reproduction is authorised, provided the source is acknowledged. Printed in [Country] PRINTED ON ELEMENTAL CHLORINE-FREE BLEACHED PAPER (ECF) D ON TOTALLY CHLORINE-FREE BLEACHED PAPER (TCF) PRINTED ON RECYCLED PAPER Directorate-General for Trade 2025 Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership ABSTRACT The Agreement between the European Union (EU) and Japan for an Economic Partnership (EPA) has been in force since 1 February 2019. In line with a well-established EU practice, the European Commission has requested that an ex-post evaluation of the EPA be conducted at least five years after it entered into force. To this end, the Commission has contracted an external consortium to deliver a study on which the evaluation will be based. The study will be conducted in 2025-2026 by the ECFORTE consortium (the European Consortium for Trade Evaluations), a team of independent experts led by Trade Impact B.V. It will analyse ex-post economic, social, environmental, and human rights-related effects of the EPA for the EU and Japan. The study will comprise the general part of the analysis and three case studies. Throughout the analysis, desk research will be complemented by extensive engagement with stakeholders. The inception report aims to present a way to achieve the ex-post evaluation objectives and explain the contractor’s proposal. The report and its Annex present the intervention logic and a detailed evaluation framework, an analysis of the existing studies and reports related to the EU-Japan EPA, a description of the Agreement and its context, the proposed methodological approach, and a fine-tuned approach to case studies. Moreover, regarding stakeholder engagement, they include a draft stakeholder consultation strategy with a website, a preliminary list of stakeholders, and proposed questionnaires for online consultations. Regarding project management, they contain the proposed approach to risk management, a list of outputs, a study plan with a timeline, and a draft outline of the final report. ii Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership TABLE OF CONTENTS ACRONYMS ........................................................................................................................ IV EXECUTIVE SUMMARY........................................................................................................... 1 1 EVALUATION CONTEXT, SCOPE, AND OBJECTIVES ............................................................ 4 2 EVALUATION FRAMEWORK ............................................................................................. 6 2.1 Intervention logic for the Agreement ...................................................................... 6 2.2 Evaluation Questions, Judgement Criteria, and Indicators ......................................... 6 3 REVIEW OF EXISTING STUDIES AND REPORTS ON THE EPA............................................... 7 4 THE DESCRIPTION OF THE AGREEMENT ........................................................................ 10 5 4.1 Concise description of the Agreement and its institutional structures ........................ 10 4.2 The EU-Japan EPA’s context and stakeholder concerns ........................................... 12 PROPOSED METHODOLOGICAL APPROACHES ................................................................. 15 5.1 5.2 5.3 5.4 Analysis of economic effects ................................................................................ 15 5.1.1 Trade in goods ....................................................................................................... 15 5.1.2 Customs, trade facilitation and rules of origin ............................................................ 19 5.1.3 Intellectual property (IP) rights................................................................................ 20 5.1.4 Trade in services .................................................................................................... 20 5.1.5 Investment liberalisation ......................................................................................... 21 5.1.6 Technical barriers to trade (TBT) .............................................................................. 22 5.1.7 Government procurement ....................................................................................... 23 5.1.8 Implementation in other areas ................................................................................. 23 5.1.9 Modelling results .................................................................................................... 24 Social analysis ................................................................................................... 24 5.2.1 The effects on employment, income and consumers ................................................... 25 5.2.2 The effects on working conditions and labour standards .............................................. 27 5.2.3 The effects on gender equality ................................................................................. 28 Environmental analysis ....................................................................................... 29 5.3.1 Overall approach for the environmental analysis ........................................................ 30 5.3.2 Detailed approach for the environmental analysis....................................................... 31 Human rights analysis ........................................................................................ 34 5.4.1 6 7 8 Methodological approach ......................................................................................... 34 FINETUNED CASE STUDY APPROACH ............................................................................. 39 6.1 Overall approach ............................................................................................... 39 6.2 Case study 1: Trade in key agricultural goods, SPS market access & barriers ............ 40 6.3 Case study 2: Geographical Indications (GIs) protection ......................................... 41 6.4 Case study 3: Trade in specific services sectors ..................................................... 42 DRAFT STAKEHOLDER CONSULTATION STRATEGY .......................................................... 44 7.1 Consultation objectives and scope ....................................................................... 44 7.2 Identification and mapping of stakeholders ........................................................... 45 7.3 Targeted Consultation methods and tools ............................................................. 45 7.3.1 Pillar 1: Civil Society Dialogue meetings .................................................................... 45 7.3.2 Pillar 2: Stakeholder consultations in the EU, EU MS, and Japan................................... 45 7.3.3 Pillar 3: Open Public Consultation ............................................................................. 47 7.3.4 Pillar 4: Consultations with EU and Japanese institutions ............................................. 48 7.3.5 Pillar 5: Website and other electronic communication ................................................. 48 CONCLUSION AND NEXT STEPS .................................................................................... 49 iii Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership ACRONYMS AEO BIT CBAM CCA CGE CH4 CITES CO CO2 CPI CPTPP CRD CSD CSR DAG DG EDGAR EGS EP EPA EU EU ETS EU MS EQ FAO FDI FDIR FRA FTA GATS GATT GDP GHG GI GMO GPA GPN GTAP GVC HRIA HS ICERD ICESCR ICMW ICPED ICRPD ICS ICT ILO IP IPCC IPR Authorised Economic Operator ISDS Bilateral Investment Treaty ITC Carbon Border Adjustment Mechanism IUCN Causal Chain Analysis Computable General Equilibrium JC Methane (a greenhouse gas) JCM Convention on International Trade in JDCS Endangered Species JETRO Carbon monoxide JVETS Carbon dioxide (a greenhouse gas) Consumer Price Index LDC Comprehensive and Progressive Agreement LULUCF for Trans-Pacific Partnership MEA Convention on the Rights of the Child MFN Civil Society Dialogue NDC Corporate Social Responsibility NGO Domestic Advisory Group NH3 Directorate-General NMVOC Emission Database for Global Atmospheric No Research NOx Environmental Goods and Services NTB European Parliament NTM Economic Partnership Agreement OECD European Union EU Emissions Trading System OHCHR EU Member States Evaluation Questions OPC Food and Agriculture Organisation OR Foreign Direct Investment PM Foreign Direct Investments Restrictiveness PUR Index RBC EU Agency for Fundamental Rights RCF Free Trade Agreement RoO General Agreement on Trade in Services SADC General Agreement on Tariffs and Trade SDG Gross Domestic Product SIA Greenhouse Gas SME Geographical Indication SOx Genetically modified organisms SPS Government Procurement Agreement STRI Global Production Networks TBT Global Trade Analysis Project TPP Global Value Chains TRIPS Human Rights Impact Assessment Harmonised System TRQ International Convention on the Elimination TSD of All Forms of Racial Discrimination UN International Covenant on Economic, Social UNCTAD and Cultural Rights International Convention on the Protection UNECE of the Rights of all Migrant Workers and Members of their Families UNEP International Convention for the Protection UNFCCC of All Persons from Enforced Disappearance International Convention on the Rights of UPR Persons with Disabilities WB Investment Court System WCMC Information & Communication Technology WDI International Labour Organisation WHO Intellectual Property WITS Intergovernmental Panel on Climate WTO Change Intellectual Property Rights iv Investor-State Dispute Settlement International Trade Centre International Union for Conservation of Nature Judgement Criteria Joint Crediting Mechanism (from Japan) Joint Dialogue with Civil Society Japan External Trade Organisation Japan’s Voluntary Emissions Trading Scheme Least Developed Country Land use, land use change and forestry Multilateral Environmental Agreement Most-Favoured Nation Nationally Determined Contribution Non-Governmental Organisation Ammonia Non-methane volatile organic compound Number Nitrogen Oxide Non-Tariff Barrier Non-Tariff Measure Organisation for Economic Cooperation and Development Office of the United Nations High Commissioner for Human Rights Open Public Consultation Outermost Region Particulate Matter Preference Utilisation Rate Responsible Business Conduct Regulatory Cooperation Forum Rules of Origin Southern African Development Community Sustainable Development Goal Sustainability Impact Assessment Small or Medium-sized Enterprise Sulphur Dioxide Sanitary and Phyto-Sanitary Measures Services Trade Restrictiveness Index Technical Barriers to Trade Trans-Pacific Partnership Trade-Related Aspects of Intellectual Property Rights Tariff Rate Quota Trade and Sustainable Development United Nations United Nations Conference on Trade and Development United Nations Economic Commission for Europe United Nations Environment Programme United Nations Framework Convention on Climate Change Universal Periodic Review World Bank World Conservation Monitoring Centre World Development Indicators World Health Organisation World Integrated Trade Solution World Trade Organisation Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership EXECUTIVE SUMMARY Introduction Since 1 February 2019, the European Union (EU) and Japan have applied the EU-Japan Economic Partnership Agreement (EPA). It is one of the largest and most ambitious trade agreements concluded by the EU, at the time of its entry into force, covering a market equivalent to around 30% of the global GDP. The EPA opens markets on both sides, with a high degree of tariff liberalisation (99% of tariff lines liberalised by the EU and 97% by Japan) and a reduction of Non-Tariff Barriers (NTBs). The Agreement enhances the stability and predictability of the trade and investment environment, aiming to create benefits for consumers and foster sustainable development. It has a comprehensive scope that covers the liberalisation of trade in goods, trade in services, investment, electronic commerce, Government procurement, competition, subsidies, Intellectual Property Rights (IPRs), Technical Barriers to Trade (TBT), Sanitary and Phytosanitary measures (SPS), Trade and Sustainable Development (TSD), as well as cooperation in agriculture and regulatory areas. Study in support of the ex-post evaluation of the EU-Japan EPA After more than five years of the EU-Japan EPA’s implementation, the Commission will undertake its evaluation to analyse the economic, social, environmental, and human rightsrelated impacts and identify areas where the implementation or the Agreement itself may require improvement. Based on the well-established practice, an external study will provide findings on which the Commission’s evaluation will build. In line with Tender Specifications, the study will include the following parts: • A robust analysis of the economic, social, environmental, and human rights-related effects of the EU-Japan EPA on the Parties and selected third countries (e.g. Least Developed Countries). It will examine effects that have resulted from the reduction in tariffs and Non-Tariff Measures (NTMs), as well as provisions adopted in the Agreement. The analysis will be based on results provided by the economic (CGE 1) model and other methodological tools, such as gravity analysis, the E3ME (Energy-EnvironmentEconomy Macro-Econometric) model, which analyses changes in consumer purchasing power, and other data and information sources. In the final phase, the study team will formulate conclusions, reply to the evaluation questions, and make recommendations to strengthen the positive and mitigate any adverse impacts of the Agreement. • A broad consultation, following a detailed strategy, aimed at gathering inputs from key stakeholders regarding the sustainability effects of the Agreement. The study is divided into the inception, interim, and final phases. • The inception phase defines the study's scope and objectives. It provides an opportunity to fine-tune the methodological approach and finalise planning for the consultation process and further stages of work. In this phase, the study team will also prepare tools for stakeholder engagement through a stakeholder strategy, including a dedicated website to inform interested parties about the evaluation and facilitate their contribution to it, an email account, social media accounts, and questionnaires for online consultations. • The interim phase will be dedicated to developing the analysis aligned with the proposed methodological approach and conducting stakeholder consultations, including targeted interviews based on interview guidelines. 1 Computable General Equilibrium (CGE) model. For the ease of understanding, we will refer to it in our study as the economic model. The European Commission will provide the results of the modelling exercise. Page 1 Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership • In the final phase, the last elements of the analysis, including three case studies, will be developed (see Figure 1.1). The study team will also formulate conclusions and recommendations. The proposed methodology (general analysis) The economic analysis will commence with a description of trade and investment relations between the EU and Japan since 2014. This will include the evolution of EU-Japan trade in goods and services, a review of existing research on the potential effects of the EPA, and an analysis of impacts that the NTMs have had on trade between the EU and Japan. In addition, the analysis will cover the participation of Small or Medium-Sized Enterprises (SMEs) in trade between the Parties, conditions for bilateral investment, diversification of suppliers, the participation of economic operators from the EU and Japan in Government procurement procedures of the other Party, and customs operations. Based on the economic models, the study will evaluate the economic effects of the reduction of tariffs and NTMs between the EU and Japan on GDP, welfare, trade in goods, services, and investment. Lastly, the analysis will estimate the impact on selected third countries, e.g. Least Developed Countries (LDCs). It will finish with conclusions and recommendations. The social analysis will determine how the reduction of tariffs and NTMs between the Parties, the related changes in production and trade levels, and the demand for labour have affected employment and various other social aspects in the EU and Japan. It will also evaluate the impacts of implementing specific provisions of the Agreement, such as the TSD Chapter, and the operation of related EPA bodies. This analysis will cover employment, gender equality, working conditions, labour standards and enforcement, income, poverty, and consumer rights. In the first step, the analysis will examine the latest developments in the EU and Japan and trends and influencing factors for each of these thematic areas. In the second step, a comprehensive impact analysis in these areas will follow, underpinned by the economic modelling results, literature review and stakeholder consultations. It will finish with conclusions, replies to the evaluation questions and policy recommendations. The environmental analysis included in the study will examine the Agreement's effects on various environmental aspects through the reduction of tariffs and NTMs and the implementation of specific EPA provisions, such as the TSD Chapter. By doing so, it will consider different channels through which the effects have been generated, e.g. the scale effect, structural effects, and technology and product effects. In the first step, the analysis will focus on the situation in the EU and Japan since 2014, examining observed trends and influencing factors in six impact areas: climate change; air quality; natural resources and biodiversity; waste management; water quality and chemicals management. In the second step, an in-depth analysis will be conducted in two areas selected from those above. The analysis will finish with conclusions, replies to the evaluation questions and policy recommendations. The human rights analysis will determine whether the EPA has affected the enjoyment of human rights and state responsibilities in this area. It will follow the ’Guidelines on the analysis of human rights impacts in impact assessments of trade-related policy initiatives’ (European Commission, 2022k). In the first step, the international human rights obligations of the Parties will be identified based on the ratification status of the core international human rights conventions. Subsequently, a concise description of trends and pre-existing vulnerabilities regarding human rights in the EU and Japan before the EPA will be presented. This step will be followed by a screening and scoping exercise that will examine the Agreement's effects on specific human rights. If a significant impact from the Agreement is identified, the affected human right will be analysed in detail. The evidence underpinning the analysis will include relevant human rights indicators for the EU and Japan, outcomes of the economic modelling, relevant EPA provisions, reports from the EPA Committee meetings, and stakeholders' views. The analysis will be completed with Page 2 Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership conclusions and recommendations, as well as proposals for measures to enhance the positive effects of the EPA and improve its implementation. A separate part of the study will analyse the operation of the EPA's institutional structures (Committees). It will examine reports from EPA Committee meetings, actions and decisions taken, and stakeholder views, including those of EU Commission staff/officials, Japanese officials, and civil society organisations from the EU and Japan. The study will also examine stakeholder concerns expressed before and during the EUJapan EPA negotiations. The study team will verify whether those concerns have materialised based on the outcomes of other parts of the analysis and additional research. Case studies The analysis will also include three case studies: • • • Trade in key agricultural goods, including SPS market access and related barriers Geographical indications (GIs) protection aspects Trade in specific services (transport services; financial services; telecommunication, computer services and electronic commerce, and delivery services). While each case study will be tailored to the specified topic, all will follow a similar structure. They will begin by defining the subject matter and the scope of the analysis. This will be followed by a description of the background, i.e. the situation in the EU and/or Japan, as well as their trade relations in the subject matter, the latest developments, and influencing factors. The case studies will then provide a quantitative and qualitative analysis of the EPA’s effects, including impacts of actions taken by the Parties individually or jointly (in the EPA Committees), remaining challenges and untapped opportunities. Each case study will include substantial stakeholder engagement through interviews. Moreover, each will finish with conclusions and recommendations. Consultation strategy The wide-ranging consultation strategy in the study will be based on five pillars: 1. Pillar 1: Two online Civil Society Dialogue meetings with EU civil society 2. Pillar 2: Consultations with stakeholders from the EU and Japan a. The online survey for businesses and SMEs from the EU and Japan b. Four online seminars for stakeholders from selected EU MS c. One online seminar for stakeholders from Japan d. SME stakeholder engagement in the EU and Japan e. Interviews and meetings with stakeholders in the EU and Japan 3. Pillar 3: The Open Public Consultation (OPC) 4. Pillar 4: Meetings with EU institutions and other meetings 5. Pillar 5: Digital engagement with stakeholders through setting up a website, social media accounts, and other channels. Engagement with stakeholders will continue throughout all stages of the study and will have multiple aims. It will inform stakeholders about the evaluation, its objectives, and timeline. As the analysis progresses, consultations will focus on collecting stakeholder views about the EU-Japan EPA and seeking their feedback on preliminary findings. Moreover, the consultation process will help gather additional evidence to support the analysis. Page 3 Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership 1 EVALUATION CONTEXT, SCOPE, AND OBJECTIVES Since 1 February 2019, the European Union (EU) and Japan have implemented the EUJapan Economic Partnership Agreement (EPA). It is one of the largest and most ambitious trade agreements concluded by the EU, at the time of its entry into force, covering a market equivalent to around 30% of the global GDP. The EPA opens markets on both sides, with a high degree of tariff liberalisation (99% of tariff lines liberalised by the EU and 97% by Japan) and a reduction of NTBs. The Agreement enhances the stability and predictability of the trade and investment environment, aiming to create benefits for consumers and foster sustainable development. It has a comprehensive scope that covers the liberalisation of trade in goods, trade in services, investment, electronic commerce, Government procurement, competition, subsidies, intellectual property rights, technical barriers to trade, sanitary and phytosanitary measures, trade and sustainable development, as well as cooperation in agriculture and regulatory areas. After more than five years of the EU-Japan EPA’s application, this study is undertaken to analyse its economic, social, environmental, and human rights-related impacts and the operation of its institutional structures, and identify areas where the implementation of the EPA or the Agreement may require improvement. The analysis will cover the whole application period of the EU-Japan EPA, since February 2019 up to now, compared, where appropriate, with the five years preceding its entry into force (2014-2018). It will examine effects on the EU and Japan generated by the Agreement and impacts on selected third countries, e.g., the LDCs. The study will be conducted by the ECFORTE consortium (European Consortium for Trade Evaluations), led by Trade Impact B.V. and comprising experts from Trade Impact, SQ Consult, the European Institute for Japanese Studies (the Stockholm School of Economics), and Cambridge Econometrics. Work started in February 2025 and will continue until April 2026. The study will contribute to the further development of EU trade policy objectives and the negotiation and implementation of trade agreements. It will also provide inputs to the European Commission’s ex-post evaluation of the Agreement, which will be presented in a Staff Working Document. The analysis in both documents will answer the evaluation questions examining the effectiveness, impact, and efficiency of the EU-Japan EPA, its coherence with the EU policies, and relevance in addressing the EU’s needs and interests (see section 2.2 for further details). The study will, moreover, analyse the effects of the EU-Japan EPA, particularly those related to sustainable development, and resilience and diversification of supply chains, in a broader context. The impacts of the Agreement will be considered against the backdrop of the aftermath effects of the COVID-19 pandemic, increasing geopolitical tensions, the intensified focus on transitioning to a net-zero economy, subsidy races, volatility of commodity prices, and the effects of trade agreements and relations with other partners. This report outlines the proposed approach to the study and is structured as follows: Chapter 2 presents the evaluation framework. Chapter 3 provides an overview of the existing reports and studies on the EU-Japan EPA and bilateral trade between the EU and Japan (‘the Parties’). Chapter 4 includes a brief description of the Agreement, with more detailed information available in the Annex to this report. Chapter 5 outlines the proposed methodology for the analysis. Chapter 6 presents the proposed approach to case studies. Chapter 7 discusses the stakeholder consultation strategy, which includes a dedicated website as one of the communication channels. Further information is provided in the Annex to the report, which includes: a detailed evaluation framework (Chapter 1), a description of the economic (CGE) model (Chapter 2), a detailed description of the Agreement (Chapter 3), tables with the main indicators and information and data sources (Chapter 4), preliminary stakeholder lists (Chapter 5), the questionnaires for the online surveys (Open Public Consultation and Business/SME Page 4 Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership Survey) that are part of the stakeholder consultations (Chapter 6), risk management strategy (Chapter 7), work plan for the study with the related timeline (Chapter 8), the draft outline of the final report (Chapter 9), and the list of references for the study (Chapter 10). Figure 1.1 below outlines the study's structure, including its inception, interim, and final phases, and all tasks envisaged in the Tender Specifications. Analytical tasks under the four pillars are marked in dark green, consultation tasks in dark blue, and the remaining tasks in light blue. Figure 1.1: The structure of the study and the proposed approach Page 5 Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership 2 EVALUATION FRAMEWORK 2.1 Intervention logic for the Agreement An intervention logic outlines the channels through which the objectives of the EPA, set out in the preamble and individual chapters of the Agreement, can be achieved in the short, medium, and long term. It identifies the bodies established by the EPA and lists actions they should take to support the Agreement's implementation. It also identifies other actors, such as economic operators, including SMEs, who can benefit from the EPA and whose activities can generate positive outcomes for the Parties and their societies. The intervention logic (in the Annex to this report) also outlines the links between trade and the sustainable development - economic growth, social development, human rights and environmental protection - and how the implementation of the EPA may impact them. It also forms part of the evaluation framework, complemented by the evaluation questions provided below, the judgement criteria, methodological tools, and information and data sources discussed in Chapter 1 of the Annex to this report. 2.2 Evaluation Questions, Judgement Criteria, and Indicators The evaluation framework has been based on the evaluation questions listed in the Tender Specifications for the study, which are as follows: Effectiveness • EQ 1: To what extent have the objectives of the Agreement been achieved? • EQ 2: What are the factors influencing (either positively or negatively) the achievement of the objectives of the Agreement? • EQ 3: Has the implementation of the EU-Japan EPA had unintended (positive or negative) consequences, and if so, which ones? Impact • EQ 4: What has been the impact of the implementation of the EU-Japan EPA? Efficiency • EQ 5: To what extent has the implementation of the EU-Japan EPA efficiently achieved its objectives? • EQ 6: To what extent are the costs associated with the implementation of the EU-Japan EPA proportionate to the benefits it has generated? Is the distribution of both costs and benefits proportionate among different stakeholder groups and interests? • EQ 7: Are there unnecessary regulatory costs (including administrative burden)? What is the potential for simplification? Coherence • EQ 8: To what extent has the implementation of the EU-Japan EPA been coherent with the EU’s trade policies and, in particular, with the EU’s commitment to sustainable development in trade policies as a contribution towards attaining the UN Sustainable Development Goals (SDGs)? Relevance • EQ 9: To what extent do the provisions of the EU-Japan EPA continue to be relevant to address the current trade needs of the EU and Japan? The evaluation framework (Table 1.1 in the Annex) links each of the evaluation questions and judgement criteria with relevant parts of the analysis and information and data sources that will provide the corresponding evidence. Page 6 Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership 3 REVIEW OF EXISTING STUDIES AND REPORTS ON THE EPA This section provides a preliminary literature review to support the ex-post evaluation work and create an inventory of studies on the ex-ante impact and ex-post effects of the EUJapan EPA. It includes the following aspects: • • • Studies already identified in the Tender Specifications are reviewed and complemented by other studies to examine horizontal or specific aspects of ex-ante impact assessments or evaluations. The overview identifies research related to the sustainability pillars in the context of the EU-Japan EPA. A more detailed literature review will be conducted at the interim and final stages of the study to support each pillar's baseline and impact analyses. The identified literature contains the following elements: o The definition of the scope of a study, e.g., focus on specific sectors o List of other aspects (focus points) analysed o A summary of the main results o Information about the methodological tools used o A comparison of the study outcomes This literature review will inform policymakers and interested stakeholders and help contextualise and cross-validate the evaluation's results. Methodological aspects The potential (future) economic effects of the EPA have been analysed ex-ante by the Sustainability Impact Assessment (SIA) outsourced by the Commission (DG Trade) in 2014, in parallel to EPA negotiations (Lee-Makiyama, 2016). It combined quantitative and qualitative approaches: the former was based on the CGE model and Causal Chain Analysis, and the latter was built on stakeholder interviews (Lee-Makiyama, 2016). The CGE model underpins the SIA and the literature on the likely economic impact of the Agreement (European Commission, 2013b; Benz and Yalcin, 2014; Lee-Makiyama, 2016; Chowdry et al., 2018). Most of these studies are based on the assumptions of the likely structure of the Agreement, as the negotiations were not concluded at that time yet, except for the Chowdtry et al. (2018) study. The CGE model was also used by Górska (2019) and Przeździecka et al. (2020). The analysis in both these studies was conducted based on the outcome of negotiations; however, it focused only on impacts that may be generated by tariff reductions, without considering reduction in NTMs. Felbermayr et al. (2018) proposed a more comprehensive economic analysis based on the outcome of negotiations, using the Eaton-Kortum (2002) model for goods and services and reduction in tariffs and NTMs. Grübler, Reiter and Stehrer (2018) used a structural gravity model to estimate economic effects on the EU MS, focusing on Austria. All these studies were limited to the economic analysis based on desk research. The EU annual Free Trade Agreements (FTAs) implementation reports (European Commission, 2020; 2021; 2022) use annual Eurostat data to look at the evolution of trade in goods and services and cover specific outcomes of the various Committee meetings. The main added value brought by this study, compared to previous studies, consists of the CGE model, the E3ME model, the gravity model, and the application of these tools to updated EPA statistics (until 2024, if possible, and otherwise until as recent as possible in terms of available data), to isolate the strictly related economic implications of the Agreement from other external factors influencing bilateral trade. This allows for an analysis of the isolated EPA effects. The Commission (2025) modelling used for this study focuses on tariff effects, NTM effects and reductions in barriers to trade in services. This work is complemented by gravity analysis, allowing this report to examine holistically the economic effects of the EU-Japan EPA. Regarding the assessment of non-economic effects, the methodology applied in the existing studies tends to forecast estimated general trends and usually does not make Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership detailed projections. Predicting long-term socio-economic effects stemming from the EPA is more challenging than estimating short-term trade impacts. Regarding quantitative social and environmental variables, the models used are the CGE model and structured gravity approaches to estimate the effect of NTMs (European Commission, 2013b; Benz and Yalcin, 2014; Lee-Makiyama, 2016; Chowdry et al., 2018). The main methodological constraints to calculate (non-quantifiable) social, environmental and human rights effects from a quantitative perspective are the problem of attribution and the so-called counterfactual scenario, given that one cannot know what would have happened if the Agreement were not in place. While the tools are available for economic variables to isolate the effects of the EPA only, for social and environmental variables, this is much more challenging, while for human rights variables, it is nearly impossible. Substantive issues According to the statement ‘EU’s Bilateral Trade and Investment Agreements – Where Are We?’, the EU wanted the negotiations with Japan to address several concerns, including NTBs and unsatisfactory access to the Japanese Government procurement market (European Commission, 2013b). In terms of the economic and social impact, at the time, the Commission estimated that a successful EPA would increase the EU’s exports to Japan by 30% and create 400,000 new jobs (European Commission, 2013). Thus, the expected impact of the EPA between Japan and the EU was significant, albeit still low in terms of the share of the Gross Domestic Product (GDP), estimated at 0.2% GDP increase for the EU and about 0.8 % GDP increase for Japan (Benz and Yalcin, 2014). The Chowdry et al. (2018) study for the European Parliament’s INTA Committee highlighted the EPA’s scope as the EU's largest bilateral trade deal by market size, encompassing nearly 30% of the global GDP. It anticipated balanced impacts, with significant gains for the EU in sectors like agri-food, textiles, and leather products. It projected a 0.14% increase in EU GDP and a €13 billion rise in exports to Japan by 2035. The Frenkel and Walter (2017) study examined the EPA's content against the global trade dynamics, discussing its significance amid stalled multilateral negotiations and public opposition to bilateral trade deals. It underscored the Agreement's role in reinforcing commitments to rules-based trade and addressing protectionist trends. JETRO, the Japan External Trade Organisation, organised seminars and reports between 2012 and 2015 focused on the anticipated effects of the EPA on economic growth in the EU and Japan. They provided early insights into the potential benefits and challenges of the Agreement (JETRO, 2012; 2015). Similar activities have also been conducted by the EU-Japan Business Roundtable and the EU-Japan Centre for Industrial Cooperation. The London School of Economics (LSE) (2016) formal Trade Sustainability Impact Assessment of the EPA predicted an increase in the EU GDP by 0.76% and Japan’s GDP by 0.3%, thanks to the Agreement. According to the same study, bilateral trade could rise by around 30% in both directions. Significant benefits would accrue to the EU’s agri-food sector, while Japanese automotive exports to the EU were expected to increase. Recent articles evaluating the Agreement suggest it has had a positive economic impact in terms of increased trade volumes (Nakamura and Ström, 2021; Porto, 2021; Yi, 2022). The Agreement has also contributed to increased productivity of Japanese firms stemming from increased international competition in the Japanese market in goods and services, yielding new employment opportunities in Japan. Van der Vorst (2025), reports, taking into account the effects of the EPA using realistic preference utilisation rates, a 13.2% increase in EU exports to Japan and a 23.5% rise in Japanese exports to the EU, reflecting the Agreement's substantial effect on bilateral trade flows. The EU-Japan comprehensive trade and broader economic relationship can also be analysed with a geopolitical lens, as the EU and Japan position themselves firmly in the changing security situation in the Asia-Pacific and Europe (Berkofsky et al., 2019). Thus, the EPA and the Strategic Partnership Agreement (SPA) create a foundation for the global economic setting, in which firms need to find a viable strategic outlook and adapt the EU- 8 Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership Japan relationship to the geopolitical dynamics of the 2020s. In this context, the increasing fragmentation of production processes (with a large volume of trade in the intermediary goods and tasks in the production process being located in different countries), and links between trade in goods and supporting or incorporated services play an important role. A stable framework provided by the Agreements may influence the operation of some Global Value Chains (GVCs) and Global Production Networks (GPNs), and the related decisions among multinational corporations on production locations and the choice of suppliers and first-tier customers in the value chain. On top of the shifting gravity in international trade, with the People’s Republic of China’s strengthened geopolitical position compared to the “traditional” economic, military and political powers, the EU and Japan have suffered from relatively slow economic growth due to structural impediments in their economies. Here, by including the effects of the GVCs and GPNs on trade patterns between the EU and Japan, the EPA and ongoing economic security cooperation (i.e. the SPA) are two complements, using mutual comparative advantages and revitalising key domestic industries. One recent example of how this economic and security industrial cooperation has materialised is the EU Commission’s initiative to create a framework for a new strategic partnership cooperation with Japan and the Republic of Korea, focusing on private sector R&D in defence technology (Nikkei Shimbun, 23 June 2024). The social impact considerations are linked to the economic ones, since the effect of the EPA on trade would also influence wages or employment levels in affected sectors. The employment changes triggered by the EPA in the EU were expected to be marginal, owing to Japan's relatively modest (but not insignificant) role in the EU’s trade with the rest of the world. The Lee-Makiyama (2016) Sustainability Impact Assessment finds small but positive wage effects in the EU (0.68% increase for unskilled workers and 0.7% for skilled ones) and in Japan (a rise of 0.4% and 0.5%). At the same time, before the EPA was implemented, some academics and civil society stakeholders expressed concerns over the potential social impact of the EPA, for example, on labour issues. These social concerns about the EPA will be investigated and covered as part of the stakeholder concerns analysis. On the environmental aspects, the literature contributions show a divide between (i) proponents, who believe that the state-of-the-art TSD chapter is a massive step forward in the right direction (Herman, 2024), (ii) those who find no negative effects of the EPA (Lee-Makiyama, 2016) and (iii) those who argue that the EPA will lead to more emissions and also weaker levels of environmental protections (negative impact on EU standards) because EU standards are seen as higher and could be affected by the ‘race to the bottom’. Ultimately, the effectiveness of the TSD Chapter would depend on the willingness of the involved Parties to implement the EPA provisions (Chowdry et al., 2018), as will be researched in this study. The recent ex-post evaluation of the impact of EU FTAs on the environment, including aspects of the EU-Japan EPA, provides some valuable input (ECORYS, IEEP, CEPS, 2025). Finally, regarding human rights, the EPA effects through the causal chain analysis are difficult to assess. The SIA is short on human rights effects. It only mentions that some civil society stakeholders have expressed concerns regarding the human rights effects of the EPA and refers to the legal texts of the EU-Korea FTA and EU-Canada Comprehensive Economic Trade Agreement (CETA). From a right to health perspective, some civil society organisations have expressed concerns about the right to regulate, healthcare effects and impacts related to the use of pesticides. The raised human rights concerns about the EPA will be covered in the stakeholder concerns analysis. 9 Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership 4 THE DESCRIPTION OF THE AGREEMENT This chapter presents the structure of the EU-Japan EPA, the institutional framework established by the Agreement and the proposed approach to the analysis of its operation. It is complemented by a detailed description of EPA’s content, areas of responsibility of individual EPA structures and the quantitative analysis of their activities (such as the number of meetings) provided in Chapter 3 in the Annex to this report. Moreover, this chapter outlines the context of the EU-Japan EPA negotiations and the Agreement's implementation and the proposed approach to analysing stakeholders' concerns expressed during the EPA negotiations. Further elements, such as decisions and other activities of the EU-Japan EPA bodies and the user-friendliness of information and data sources, will be evaluated as part of the institutional analysis at the next stage of the study. 4.1 Concise description of the Agreement and its institutional structures This section outlines the structure of the Agreement and its bodies, and the proposed approach to the institutional analysis. It is complemented by a detailed description of the EPA’s content, the areas of responsibility of individual bodies and the quantitative analysis of their activities provided in Chapter 3 in the Annex to this report. Structure of the EU-Japan EPA As one of the ‘new generation’ EU trade agreements, the EU-Japan EPA has a comprehensive scope that covers the liberalisation of trade in goods, trade in services, investment, electronic commerce, Government procurement, competition, subsidies, IPRs, TBT, SPS measures, TSD, and cooperation in agriculture and regulatory areas. It has 23 chapters in total, as outlined in Table 4.1. Table 4.1: Chapter structure of the EU-Japan EPA Chapter number Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 Chapter 9 Chapter 10 Chapter 11 Chapter 12 Chapter 13 Chapter 14 Chapter 15 Chapter 16 Chapter 17 Chapter 18 Chapter 19 Chapter 20 Chapter 21 Chapter 22 Chapter 23 Chapter title General Provisions Trade in Goods Rules of Origin and Origin Procedures Customs Matters and Trade Facilitation Trade Remedies Sanitary and Phytosanitary Measures Technical Barriers to Trade Trade in Services, Investment Liberalisation and Electronic Commerce Capital Movements, Payments, Transfers, and Temporary Safeguard Measures Government Procurement Competition Policy Subsidies State Enterprises, Enterprises Granted Special Rights or Privileges, and Designated Monopolies Intellectual Property Corporate Governance Trade and Sustainable Development Transparency Good Regulatory Practices and Regulatory Cooperation Cooperation in the Field of Agriculture Small and Medium-Sized Enterprises Dispute Settlement Institutional Provisions Final Provisions Source: EU-Japan 20220201 EPA: https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:02018A1227(01)- 10 Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership Overview of the institutional structure of the EU-Japan EPA The EU-Japan EPA has a comprehensive institutional framework to oversee its implementation and facilitate effective cooperation between the EU and Japan. Chapter 22 of the Agreement establishes a Joint Committee and ten Specialised Committees, each assigned specific responsibilities (as outlined in Article 22.3 of the EPA). All specialised committees report to the Joint Committee, which supervises the overall implementation and application of the Agreement and addresses all trade and investment-related matters between the Parties. In addition to the Specialised Committees, two Working Groups (the Working Group on Wines and the Working Group on Motor Vehicles and Parts) operate under the Committee on Trade in Goods, in line with Article 22.4 of the EPA. Figure 4.1 illustrates the institutional structure of the Agreement. Figure 4.1: The EU-Japan EPA institutional structure Source: Own compilation based on the legal text of the Agreement The proposed approach to the institutional analysis As part of the study, institutional provisions of the EU-Japan EPA, the operation of the bodies established by the Agreement and their role in the achieving its objectives will be analysed. This will include the following elements: • Step 1: EPA provisions establishing the Joint Committee, Specialised Committees, and Working Groups will be reviewed, identifying their areas of responsibility, specific tasks and decision-making powers. This will be complemented by the analysis of the Joint Committee’s Rules of Procedure,2 which also apply to Specialised Committees. • Step 2: The operation of all the abovementioned structures will be analysed based on available documents and engagement with the Parties and relevant stakeholders, e.g. civil society Members of the Domestic Advisory Groups (DAGs). The study team will review the annual Commission’s FTA Implementation Reports and meeting reports of the Joint Committee, Specialised Committees, Working Groups and other structures, such as the Joint Dialogue with Civil Society (JDCS) under the TSD Chapter. The analysis will aim to determine the extent to which the EPA institutional structures fulfil their roles, provide a forum for discussion and cooperation, manage the implementation of the relevant EPA provisions and address issues and concerns raised by the Parties or non-governmental stakeholders. In this context, the analysis will also cover decisions taken by the EPA Joint Committee and their role in achieving the Agreement's objectives. Those decisions will also be reviewed. Findings from this analysis related to content, i.e. subject matter covered by each body , will provide input to the general 2 Decision No. 1/2019 of the Joint Committee of the EU-Japan EPA of 10 April 2019 [2019/2015]: https://eurlex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.L_.2019.167.01.0081.01.ENG 11 Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership economic, social, environmental, and human rights analysis, while operational aspects and stakeholder feedback will be discussed in the institutional section. • Step 3: Based on stakeholder feedback, the study team will also evaluate the userfriendliness and operation of portals storing data and documents relevant to the EPA and other EU trade agreements. These portals will include Access2Markets, CIRCABC, and the Commission’s websites. • Step 4: The main findings from the analysis will provide the basis for replies to the evaluation questions and recommendations. 4.2 The EU-Japan EPA’s context and stakeholder concerns Context of the EU-Japan EPA negotiations The EU-Japan EPA negotiations took place against the backdrop of complex economic, social, and political dynamics in the Parties and globally. They started in 2013, i.e., when the EU and Japan sought to bolster their economic competitiveness and stimulate growth. The aftermath of the global financial crisis (in 2013, the unemployment rate in some EU MS was still above 20%, e.g. 27.6% in Greece and 25.6% in Spain, Eurostat Labour Force Survey) and subsequent economic challenges prompted policymakers on both sides to explore opportunities for expanding trade and investment. There was a growing recognition of the importance of trade agreements in fostering economic integration and facilitating access to new markets for goods, services, and investments. In 2010, the new EU trade strategy, ’Trade, Growth and World Affairs’, outlined how trade policy can contribute to the overarching strategy Europe 2020 about smart, inclusive and sustainable growth, boost growth and stimulate job creation. With no progress in the World Trade Organisation (WTO) multilateral negotiation (Doha) round, the strategy acknowledged a need to pursue bilateral trade negotiations and deepen trade and investment links with big economies, including Japan. Moreover, it stressed that in relations with developed partner countries, there is a need to seek further market access in trade in services, investment and Government procurement. It also advocated regulatory cooperation to reduce NTBs and emphasised the role of trade policy in supporting green growth and sustainable development (European Commission, 2010). Indeed, the number of EU FTA negotiations and concluded trade agreements increased dynamically. In 2011, the provisional application of the EU-Korea FTA (a new-generation FTA) began, followed by agreements with the Andean countries, Central America, Georgia, and Moldova (all in 2013-2014), and later also Ukraine, Canada, and the Southern African Development Community (SADC). Moreover, FTA talks with several other partners, including the US, were pursued, although some were suspended after the first few rounds. The EU also engaged in multilateral and plurilateral negotiations, including in the WTO, on the Trade Facilitation Agreement, 3 Trade in Services Agreement and Green Goods Agreement.4 The subsequent 2015 EU ‘Trade for All strategy’ emphasised the importance of global value chains (with an interdependence between sourcing raw materials and parts and exporting more developed products), investment, trade in services, digital trade, comprehensive trade relations with partner countries going beyond tariff reductions and trade based on values, including its contribution to sustainable development. It also highlighted a need to focus on improving the implementation and enforcement of EU FTAs and protecting the EU’s rights by tackling unfair trade practices (European Commission, 2015b). 3 4 WTO Trade facilitation: https://www.wto.org/english/tratop_e/tradfa_e/tradfa_e.htm Discussions on the Green Goods Agreement were launched in 2014: https://www.wto.org/english/tratop_e/envir_e/ega_e.htm 12 Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership Over the last few decades, the Government of Japan has gradually become explicit about the benefits of trade agreements. It has attributed its engagement in setting up treaties allowing a broader international economic cooperation to the continued globalisation of the world economy (MOFA, 2002; Katada, 2020). The Japanese Government’s attention to the outward trade relationships has been mainly focused on the Trans-Pacific Partnership Agreement/Comprehensive and the Progressive Agreement for Trans-Pacific Partnership (TPP/CPTPP) talks and their consequences. Government reports (e.g., Ministry of Economy, Trade and Industry (METI), 2013; 2014) reflect a stronger focus on trade talks in the Pacific region than trade relations between Japan and the EU. Moreover, in parallel with EPA negotiations with the EU, Japan also negotiated or concluded trade agreements with Australia, Mongolia, China, the Republic of Korea, Canada and Colombia.5 Context of the EU-Japan EPA implementation The implementation of the EU-Japan EPA has followed in a challenging period, marked by the COVID-19 pandemic (with a subsequent economic recovery), the UK’s withdrawal from the EU, Russia’s unprovoked and unjustified invasion in Ukraine and the related cost-ofliving crisis and sanctions against Russia, volatility of commodity prices, race entered by several countries to provide subsidies to businesses and entire sectors, geopolitical tensions, the weakness of the multilateral trading system and technological changes, including the dynamic development of artificial intelligence and solutions related to the strive towards a net-zero economy. As regards EU policies, this period has been related to a policy and legislative package of the European Green Deal and the development of legislative autonomous measures, such as the Carbon Border Adjustment Mechanism (CBAM),6 the Corporate Sustainability Reporting Directive,7 the Regulation on Deforestation-Free Products,8 the Forced Labour Regulation,9 and the Corporate Sustainability Due Diligence Directive.10 In 2023, a new Anti-Coercion Instrument11 entered into force, and in 2020, the EU Foreign Direct Investment (FDI) Regulation12 started applying. In 2021, a new EU trade strategy, the ’Open, Sustainable and Assertive Trade Policy’, was adopted. It aims to build on the EU’s openness to contribute to economic recovery through support for the green and digital transformations and a renewed focus on strengthening multilateralism and reforming global trade rules to ensure they are fair and sustainable. It also provides reinforced rules to tackle competitive distortions. Moreover, it identifies the implementation and enforcement of EU trade agreements as a key priority to support the recovery and help EU businesses compete internationally while addressing public concerns around globalisation (European Commission, 2021i). The Commission stepped up its TSD approach in 20 action points presented in its 2022 Communication ’The power of trade partnerships: together for green and just economic growth’ (European Commission, 2022d). Over the same period, new EU trade agreements with Singapore, Vietnam, New Zealand, the UK, Kenya, and Chile started to be applied. Moreover, the EU concluded negotiations 5 6 7 8 9 10 11 12 Ministry of Foreign Affairs of Japan (MOFA), EPA/FTA and related initiatives: https://www.mofa.go.jp/policy/economy/fta/index.html Carbon Border Adjustment Mechanism (CBAM): https://taxation-customs.ec.europa.eu/carbon-borderadjustment-mechanism_en Corporate Sustainability Reporting Directive: https://finance.ec.europa.eu/capital-markets-union-andfinancial-markets/company-reporting-and-auditing/company-reporting/corporate-sustainability-reporting_en Regulation on Deforestation-free Products: https://environment.ec.europa.eu/topics/forests/deforestation/regulation-deforestation-free-products_en Regulation on prohibiting products made with forced labour on the Union market: https://eurlex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32024R3015 Corporate Sustainability Due Diligence Directive: https://eur-lex.europa.eu/eli/dir/2024/1760/oj/eng Anti-Coercion Instrument: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=OJ:L_202302675 EU FDI Regulation: https://policy.trade.ec.europa.eu/enforcement-and-protection/investment-screening_en 13 Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership with Mexico and Mercosur and re-launched FTA negotiations with India, Thailand, Malaysia and the Philippines. It also negotiated with Australia. Japan negotiated a continuity trade agreement with the UK, a trade agreement with the US, and a set of regional agreements forming the Indo-Pacific Framework for Prosperity (IPEF). It also implemented the CPTPP and the Regional Comprehensive Economic Partnership (RCEP). Proposed approach to the analysis of stakeholder concerns The EU-Japan EPA negotiations have not received as much attention from stakeholders, particularly civil society, as the EU-US Transatlantic Trade and Investment Partnership (TTIP) or the EU-Canada CETA trade talks. Nonetheless, reviewing stakeholder concerns expressed during the EPA negotiations, going as far back as 2013, is important for various reasons. This is because, unlike the ex-ante SIA study, the ex-post study can, based on agreed EPA provisions and other available evidence, conclude with more certainty what impacts the Agreement has generated and whether stakeholder concerns have materialised. Such an analysis may also support future stakeholder engagement accompanying FTA negotiations by providing evidence and illustrative examples for a discussion. It may also inform FTA talks by drawing negotiators’ attention to sensitive aspects important for stakeholders, any elements of the Agreement or its implementation that may require improvement or, on the contrary, lack of problems or unexpectedly good performance in any of the areas highlighted previously by stakeholders. It is proposed to analyse stakeholder concerns along the following three steps: • Step 1: A comprehensive inventory of the key arguments made by different stakeholders from 2013 to 2018 will be developed. It will include, for example, views and position papers shared with the Parties and/or made public, findings from the exante studies, and stakeholder inputs provided to that work. The identified views will be divided in line with their topics to form groups that can be linked with specific areas of the analysis in this study. • Step 2: A comparative analysis of stakeholder concerns and EPA effects will begin with the analysis of EPA provisions, given that some views or concerns are usually linked to what stakeholders fear or expect the Parties to agree upon in the Agreement's text. An analysis of EPA provisions will determine the extent to which concerns related to the text of the Agreement have materialised. Moreover, some concerns are linked to the expected impacts of the Agreement. An answer to this question will be sought in conducting the analysis across all pillars of this study, i.e. economic, social, environmental and human rights-related, as well as case studies. Findings from the analysis should allow for a division of each thematic group into categories of concerns that have not materialised, that have occurred (wholly or partly) and those where it is not possible to provide an answer. • Step 3: The remaining concerns and arguments will be reviewed, and additional evidence will be searched for, including 1) quantitative data, 2) qualitative research information, or 3) inputs from stakeholders (all from the post-2019 period) to either validate or refute the argument made. The findings should enable grouping concerns into thematic areas and dividing them within each group, consistently with the extent to which they have materialised. In this context, it is worth noting that some concerns, e.g. regarding processes and procedures accompanying negotiations, including transparency, may be challenging to verify several years later. The analysis will finish with conclusions and recommendations. 14 Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership 5 PROPOSED METHODOLOGICAL APPROACHES This chapter outlines the proposed methodological approach for the general part of the analysis. Across all pillars, data will be provided for 2014-2018 and 2019-2023 (or 2024 if available) to focus on general trends. The complementary qualitative analysis will cover the period from 2014 to the latest available information. Regarding EU MS, depending on data availability, some data points will be generated across the study for each EU MS to illustrate the impact of the EPA at the EU MS level. 5.1 Analysis of economic effects The overall economic analysis consists of the following steps: • • • Step 1: Analysing the EU and Japan's pre-EPA situation (2014-2018), including trends for five years before the EPA was applied. Step 2: Analysing the EU and Japan's post-EPA situation (2019-2024) and investigating whether there has been a change in the trend compared to the pre-EPA situation that can be attributed to the EPA. Step 3: Formulating conclusions responding to the evaluation questions, focusing on the observed changes due to the EPA and areas where the EPA could be improved or used more; and the main obstacles to trade in goods and services, including the most surprising findings and key recommendations to make the EPA better going forward. For the economic analysis, a multi-pronged approach is envisaged to analyse the effects of the Agreement, because one source should not be the sole driver for a complex and diverse analysis like this one. For this reason, a combination of sources will be used: • • • Quantitative tools like the economic (CGE) modelling results, complemented, where necessary, by gravity analysis for trade in goods, services, FDI and Government procurement, and the E3ME model to deepen social and environmental quantitative analyses, Statistical analysis using time series and cross-sectional data, Qualitative tools, including qualitative desk research and stakeholder consultations (in-depth interviews, online questionnaires and written inputs). This allows for cross-validation of one information source with other sources, strengthening the validity of the analyses and results. 5.1.1 Trade in goods The main elements related to the analysis of trade in goods in the EU-Japan EPA include: Trade diversification The analysis of how the EU-Japan EPA has contributed to trade diversification will cover two levels of trade diversification (see Table 5.1 for further details): • • Trends and patterns comparing the EU trade position in Japan to that of the EU’s competitors and the Japanese trade position in the EU compared to its competitors – checking whether the source countries for both the EU and Japan have become more diversified. Diversification of goods traded within the bilateral EU-Japan relationship to determine whether the Agreement has contributed to a higher or lower concentration of goods traded bilaterally. 15 Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership Tariff analysis While tariffs for 99% of EU and 97% of Japanese tariff lines have been eliminated, there are some sensitive products for which both Japan and the EU still have tariffs. As outlined in Table 5.1, the analysis will examine changes in trade flows between the EU and Japan depending on the level of tariff liberalisation and preference margin. Non-tariff measures (NTM) analysis While tariffs are important, NTMs between the EU and Japan require particular attention. There are two challenges for the analysis. First, unlike tariffs, which either go up or down, NTMs can generate difficult-to-quantify effects. Second, while tariffs constitute a unilateral measure taken by one Party, NTMs are not necessarily on one side: they merely constitute differences between regulatory systems. These differences can lead to trade costs and become de facto trade barriers. The approach to analysing NTMs will consist of the following steps: Step 1: Identify, describe, and review sector-specific NTMs The most important NTMs will be identified and analysed in terms of their type and how they affect trade and investment relations between the EU and Japan. The following sources will be used: • Interviews with key stakeholders to gather information on issues/ barriers they identify. • Literature review and review of existing databases, mainly the EU Access2Markets database with NTMs for Japan; Japan’s and the EU’s latest WTO Trade Policy Review Body (TPRB) Reports; the WTO e-Ping portal and Integrated Trade Intelligence Portal (I-TIP), United Nations Conference on Trade and Development, UNCTAD’s NTM database and relevant portions of the United States Trade Representative, USTR’s 2022 National Trade Estimate Report on Foreign Trade Barriers and USTRs Special 301 reports. Particular attention will be paid to SPS measures, while an in-depth analysis will follow in case study No. 1, as foreseen in the Tender Specifications. • Inputs and close consultation with Commission services to identify important NTMs. Later in the project, replies to the business/SMEs survey may provide further information. Step 2: Prioritisation of the list of NTMs During the gathering of information and the creation of the inventory, NTMs will also be prioritised in the following way: • • The scope (‘width’) of an NTM, The level of restrictiveness of an NTM (e.g. the difference between an NTM that effectively blocks market access for a specific group of products and an NTM that adds, for example, 5% to the cost of cross-border trade in the affected product category). Step 3: Analysis of the prioritised NTMs Once a list of NTMs is gathered and prioritised, a combined quantitative and qualitative analysis will be used. The sources for the analysis are the following: • Literature review of quantification studies of effects of NTMs with estimations of ad valorem equivalents (AVEs) of NTMs.13 This would be the best source, but information on the economic quantification of individual NTMs is only sparsely available • Review of established indexes for NTMs, e.g. the Organisation for Economic Cooperation and Development OECD’s Trade Facilitation Indicators (TFI) index • Economic modelling (CGE) results, given that the model will also include NTM effects • In-depth literature review regarding qualitative effects, expert inputs, EU-Japan EPA Committee work, stakeholder consultations (including the business surveys ), and case study insights. 13 An ad valorem equivalent (AVE) of an NTM can be viewed as a ‘tariff equivalent’ value of an NTM. 16 Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership A causal-chain analysis is also applied to the NTM effects. That means starting with the economic effects complemented by direct (if the NTM is, for example, an environmental barrier) and indirect sustainability effects. The study will also examine the costs and benefits of removing NTMs. The result of this NTM analysis will be a list of key, prioritised NTMs with an assessment of their economic relevance. This will support future EU-Japan discussions, including in the EU-Japan EPA Committees, or a review of the EU-Japan EPA. Small- and Medium-Sized Enterprises (SME) analysis The assessment aims to establish the effects of the EU-Japan EPA on businesses and, in this context, on SMEs compared to large companies. It will include: • • • • • • Trends in the number of companies in the EU MS and Japan exporting to the other Party (using data from Customs/Revenue Authorities), An analysis of whether new companies, notably SMEs, have started to engage in international trade, particularly under the EPA, An analysis of whether new products have started to be exported (using HS6 level product disaggregation to get as close as possible to product-level). Stakeholder consultation, including SME representatives, through online surveys and meetings/interviews targeting SME representatives, to gather further insights. Engagement with the EU-Japan Centre for Industrial Cooperation, a joint venture between the Commission (DG GROW) and the Japanese Government (METI), established in 1987 to promote industrial, trade and investment cooperation between the EU and Japan, Engagement with business representatives to gather evidence for SME analysis and other aspects covered by this section, including: o remaining NTMs affecting SMEs, o areas where the EPA has made a positive difference in removing obstacles to trade and supporting trade, investment and cooperation between the Parties, o stories from SMEs in the EU (and EU MS) on the effect the EPA has had on them. The SME density at sector level will also be investigated to assess more accurately the EPA effects on SMEs in sectors engaged in trade between the EU and Japan and affected by the Agreement, given that the economic modelling results are provided in a breakdown by sector. Methodology for analysing the EU-Japan EPA impact on trade in goods Specific analyses that will examine the EU-Japan EPA impact on trade in goods have been summarised in Table 5.1. The specific analysis is presented for each sub-task with the main methodological approach and relevant sources. Some of these tasks have been discussed above (e.g. the approaches to the analysis on NTMs and SMEs). Table 5.1: Main methodological approach and sources regarding impacts on trade in goods Specific analysis to be conducted Main methodological approach and sources 1. Goods showing the most significant increase in total and bilateral trade flows. Goods showing the most significant decrease in total and bilateral trade flows. This analysis will be conducted using Eurostat/COMEXT statistics at different levels of disaggregation. It will start at a relatively high level of aggregation and be disaggregated for sectors of interest to identify the best/worst performing products. 2. Compare the trends from the previous with trends in Japan’s trade patterns with other trading partners. This analysis will use COMEXT and third-country statistics to put the overall and product-level trends into relative perspective vis-à-vis the main trading partners. The study will do this for the aggregate and more detailed levels. 3. Describe the underlying factors for trade patterns and the extent to which the latter The best way to do this is to conduct a gravity analysis of the EPA to isolate the Agreement's effects on trade flows and separate them from all other factors like the war in Ukraine, 17 Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership Specific analysis to be conducted can be attributed to the EPA instead of external circumstances. Main methodological approach and sources COVID-19, etc. This should be part of the preparation for the correct CGE modelling. If this has not been done, this work for goods (and services) will be carried out as part of the study. While the gravity regression analysis is the best way to address this, if it is not available, it is also possible to analyse trends and patterns, compare them with similar data for third countries as a reference and determine the (relative) effects of the EPA. 4. Describe the top-20 import and export products at the 6digit level between the EU and Japan, as well as for each EU MS, including providing context if applicable. An analysis will be done at the HS6 level, identifying the top20 import and export products for the EU-Japan EPA (at the EU overall level). A similar HS6 level analysis is envisaged for EU MS. 5. Import market share analysis of key/sensitive products exported by the EU to Japan at the EU level. A strategic analysis will examine how the EPA has affected EU exports of key/sensitive products to Japan. This means analysing: 1) Shares of imports from the EU to Japan and how they have changed; and 2) For the EU as a whole – trade shares of international suppliers and how they changed because of the EPA, using a Herfindahl-Hirschmann import supplier analysis. 6. Development of trade in goods for which tariffs were 0 under MFN versus the development of trade in goods for which tariffs were greater than 0. An analysis of the growth of EU exports to Japan and EU imports from Japan, split by preference margin, will be done. This shows the effect of tariff liberalisation (as 99% of all tariffs were liberalised upon the application of the EPA in February 2019) from 2019 to today. 7. Use and management of Tariff Rate Quotas (TRQs) and the reasons for their underutilisation. Data up to 2024 are already available in the Commission’s annual implementation reports, and trade statistics are exchanged as part of Article 2.32 of the EPA. This will allow 1) to determine the degree to which the different TRQs have been used and 2) to identify (jointly with questions to businesses on Preferential Utilisation Rates, PURs) reasons for the sub-optimal use of TRQs. 8. Which products have performed below or above their potential for import/export after 2019, and which products of high demand are not yet imported/exported? This analysis will use the International Trade Centre (ITC) Export Potential Map. It determines trade potential and compares it with the observed trade flows to identify overor underperformance. 9. The impact of the NTMs, especially SPS measures, on trade flows. Look at the quantitative impact of barriers registered in Access2Markets on bilateral trade flows and provide a qualitative analysis using stakeholder consultations. • • • First, the study will conduct an extensive literature review, including through Access2Markets, to identify the key NTMs between the EU and Japan. Second, the best way to analyse NTMs overall is to use potential gravity results from DG Trade that would have to feed into the CGE model to estimate the EPA's ex-post effects. Any gravity work would show quantitatively the overall reductions in NTMs on the EU and Japanese sides at the sector level. Third, these possible quantitative results would serve as the basis for further identification and analysis of specific NTMs affecting trade relations between the EU and Japan. The UNCTAD’s NTM TRAINS database and classification could be used for this analysis. 18 Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership Specific analysis to be conducted Main methodological approach and sources • If gravity results are unavailable, the work will focus on the third step of the approach, complemented by inputs from the business survey on existing (growing/declining) NTMs. 10. Analysis of the evolution of the share of imports originating from the EU in total imports of Japan and vice versa at HS4 level (if relevant, at a more detailed level) The analysis will be conducted similarly to point 5 above. COMEXT and COMTRADE data will be used. Third countries will be specified clearly. The analysis will include the following elements: • The shares of EU and Japan in the other Party’s imports will be compared to the total of third countries as specified below. • The US, China, Japan, South Korea, Russia, and the UK will be singled out. • Other countries (the Rest of the World) will be displayed as one group and used in the analysis to calculate relative share changes. The total import shares from 2014-2018 (five years before the EPA) and 2019-2023/2024 (five years after the EPA application) will be studied. The study will first analyse and assess the findings at the aggregate level and then do the same analysis at the HS4 level, highlighting the key results (product groups) that stand out positively or negatively and analysing the results. 11. Investigation of whether new enterprises started to export or whether enterprises already exporting started to export new products This analysis will be undertaken by relying on firm-level data (if available), customs data and tariff revenue data, as well as specific questions for SMEs in the targeted business survey and other consultation activities directed towards SMEs. Additionally, for this sub-task, it would be helpful to access national databases containing firm-level panel data based on highly disaggregated customs information, including exports/imports of products and their destinations. 12. Investigation of whether there have been any negative effects of trade liberalisation in Japan and/or the EU MS The modelling results will be used to analyse the quantitative effects of the EPA at the sector level for the EU and Japan. They will be complemented by information from stakeholder consultations, especially business representatives, such as Chambers of Commerce. 13. Analysis of the extent to which the implementation of the EUJapan EPA has contributed to the diversification of sources of supply of goods. COMEXT and COMTRADE data will be used to carry out this analysis. The methodology is the same as proposed for import share analysis (see point 5 in this table). 1) The study will analyse input shares for specific products in Japan from the EU and EU MS and vice versa, and compare the development of these shares with the shares for the same products from international trade partners. 2) The Herfindahl-Hirschmann supplier concentration index will be used to verify if the diversification has led to a decrease in EU, EUMS and Japanese dependency on imports. 5.1.2 Customs, trade facilitation and rules of origin The customs analysis will follow the sub-tasks specified in the Tender Specifications and will be based on the following steps: • Step 1: Create a detailed overview of the EPA’s provisions regarding customs, trade facilitation, Rules of Origin (RoO) and PURs, as well as progress made during the annual meetings of the Committee on Rules of Origin and Customs-related Matters. 19 Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership • Step 2: Carry out desk research and stakeholder consultations to analyse the extent to which the implementation of the customs and trade facilitation-related provisions of the Agreement has simplified / complicated life for producers, exporters, importers, forwarders, and customs administration and whether they have had an (economic) impact on trade volumes. Some questions will be developed to ask in 1 to1 interviews with stakeholders. The EPA Business Surveys for Years 1, 2, 3, and 4 carried out in the framework of the Support Facility for the Implementation of the EU-Japan EPA will also be used. • Step 3: Conduct a ‘quality-of-data’ analysis on PURs and foregone duty savings of economic operators of both Parties. In particular: o Undertake a qualitative data analysis, comparing PURs calculated by the EU to the ones calculated by Japan, and explain any differences (if found) o Check the reliability of the raw import data provided by Japan, especially pertaining to Japanese alternative preferential customs regimes that could have had an impact on the PUR calculations for EU exporters to Japan (MOFA, 2024). • Step 4: In addition to the overall PUR analysis, sectors and product categories will be identified where preferences are not fully used, and foregone duty savings are large. The Tender Specifications refer, in this context, to the chemicals sector, hides & skins, leather, pearls & semi-precious stones, textiles and clothing, and prepared food as relevant sectors. The study will first do a corroborative data analysis to verify whether these sectors are indeed priority sectors in this analysis. For chosen sectors, desk research and stakeholder consultations will be carried out to determine why preferences are not fully used in these sectors. This work will be based, for example, on surveys conducted in the framework of the Support Facility for the Implementation of the EU-Japan EPA. 5.1.3 Intellectual property (IP) rights The analysis will be conducted in the following steps: • • • Step 1: Concisely summarise the EPA IP provisions and map them against other EU FTAs (as per the European Centre for International Political Economy ECIPE (2022) study on IP in EU FTAs), Step 2: Examine trends in trade between the EU and Japan from 2014 to 2023, especially how the IP-intensive sectors have fared before and after the implementation of the EPA, Step 3: Review the extent to which the EU and Japan have ensured the IP protection in their national laws and their enforcement, including enforcement modalities and administrative action, and the degree to which these protections are linked to the EPA. 5.1.4 Trade in services Table 5.2 summarises the specific analysis required to evaluate the EU-Japan EPA's impacts on trade in services, including the methodological approach and relevant data and information sources. The additional challenge for this part of the analysis is that the economic (CGE) modelling results are less applicable. The service sectors have been modelled in such a way that meaningful conclusions for different service sectors can be drawn to the maximum extent possible. However, by definition, this economic model provides an incomplete picture regarding trade in services, as it cannot cover all four GATS modes of supply. 20 Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership Table 5.2: Main methodological approach to the analysis of trade in services Specific analysis to be conducted Main methodological approach and sources 1. Analyse the overall crossborder trade in services between the EU (EU MS) and Japan, compare it to other trade partners and, if possible, dissect by mode of supply. To the extent data are available, examine trade in services between the EU and Japan and expand this analysis to compare the findings with data for trade with third countries. Where possible, seek to dissect trade in services by mode of supply. 2. Compare the development of trade in services between the EU-Japan and major trading partners. The comparison of the development of bilateral trade in services between the EU and Japan with the development of trade in services for the EU and major trading partners will provide further evidence of the Agreement's actual impact. As is the case for trade in goods (above), the reference group of countries is likely to include the US and China. 3. Describe the underlying factors for trade patterns and what can be attributed to the EPA instead of to other external circumstances. The best way to do this is to conduct a gravity analysis of the EPA to isolate the Agreement's effects on services trade flows and separate them from all other factors, like the war in Ukraine, COVID-19, etc. This should be part of the preparation for the correct CGE modelling of an ex-post evaluation and thus be done by the Commission’s Chief Economist Unit as part of the CGE work. It is also possible to analyse trends and patterns in crossborder trade, compare the observed changes with trade with third countries as a reference and determine the (relative) effects of the EPA. Data availability may be an issue when conducting this analysis. 4. Analyse regulatory barriers to EU-Japan services trade and assess the likely impact of their removal. Regulatory barriers to services trade in the EU and Japan, based on OECD data on services trade restrictiveness (STRI), will be assessed, and an examination of the likely impact of removing these barriers will be conducted by estimating a structural gravity model. The quantitative analysis will be supplemented by qualitative analysis based on existing literature and stakeholder consultations. This will be complemented by sectorspecific analysis in case study No. 3 and the analysis of stakeholder concerns. The issue of domestic regulation will also be covered, based on concerns raised in accessing the Japanese domestic market (e.g. language requirements, domestic licensing and authorisation procedures). Data source suggestions: • • • • • • The OECD’s Services Trade Restrictiveness Index The GATS Trade Restrictiveness Index International Trade and Production Database for Estimation (ITPDE) WTO Services Trade Database OECD International Trade in Services Statistics Industry data (provided by stakeholders) The analysis will finish with conclusions, replies to the evaluation questions and recommendations. 5.1.5 Investment liberalisation Although the effects of trade agreements on FDI with third countries are not easily quantifiable (European Commission 2019c), available data will be used to demonstrate the impact of the EPA’s investment liberalisation, including on bilateral FDI stocks and flows. 21 Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership Table 5.3 summarises the specific analysis required to evaluate the EU-Japan EPA's impacts on investment, including the methodological approach and relevant data and information sources. Like in analysing impacts on trade in services, the additional challenge for this part of the analysis is that the economic modelling results are less applicable. The economic model focuses on cross-border trade and does not cover all four GATS modes of supply, including establishment. Therefore, a complementary gravity analysis is proposed to examine the impact of the EPA on FDI flows. Table 5.3: Main methodological approach for analysing EPA’s impact on investment flows Specific analysis to be conducted Main methodological approach and sources 1. Descriptive analysis of bilateral FDI flows, including the most significant increases or decreases in FDI flows between EU MS, EU as a whole and Japan, and for other trading partners of equivalent size and level of development as Japan A descriptive analysis of the impact on investment flows will be based on comparing the evolution of FDI over five years before and five years after the application of the EPA for the EU and Japan. The descriptive statistics – if available – will focus on the sectors that have seen the most significant increases/decreases in total FDI stocks/flows between the EU, its MS and Japan. This analysis will use the UNCTAD investment data, the OECD data, and ISDB (International Standard Balance of Payments) data from Eurostat BOP (Balance of Payment) statistics. Data limitations are expected to be significant for this task. To the extent possible and depending on data availability, the development of FDI stocks/flows between the EU, its MS and Japan will be compared with data regarding other trading partners of an equivalent size and the level of development as Japan. 2. Showcase sectors with the most significant increases/decreases in investment between the EU and Japan For various years, FDI data at the aggregate level can be collected. The Japanese Government collects investment data for both the source and destination countries, as well as the sector of investment. Most other statistical agencies, including Eurostat, collect FDI data for source countries or sectors, but not both. Unless other data sources are found, the study will focus on data from the Japanese Ministry of Finance for the EU-Japan FDI flow at the sector level. These data will be corroborated with EU data on investment from partner countries (totals) or sectors, while identifying a likely share for Japan. The evolution of the following indexes will also be explored: OECD’s Foreign Direct Investment Restrictiveness (FDIR) index, Various FDI attractiveness and FDI confidence indexes – e.g., by A.T. Kearny and Ernst & Young, Global Investment Competitiveness Report (World Bank, 2022), World Bank ‘Doing Business Indicators’, ISDB data from Eurostat BOP statistics, and www.investmentmap.org from the ITC. 3. Assessment of the overall economic integration between the EU and Japan, including major bilateral investments and attractiveness to investment. Some examples of recent significant EU investments in Japan and vice versa will be reported and investigated to determine if there are any direct relations between the EPA and EU investments in the EU MS and Japan and vice versa. To the extent possible, an analysis of the investment climate and the attractiveness of investing in Japan and the EU will be provided, taking into consideration the possible impact of the existence of bilateral investment treaties or double-taxation treaties. The analysis will finish with recommendations for the future. conclusions, replies to evaluation questions, and 5.1.6 Technical barriers to trade (TBT) The analysis of EU-Japan EPA impacts on TBT will include the following elements: • Step 1: Provide an overview of the provisions in the TBT chapter (standards, technical regulations, conformity assessment procedures and labelling) in the EPA 22 Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership • Step 2: Analyse the effectiveness of implementing the TBT Chapter of the EPA, particularly its provisions related to technical regulations, quality requirements, standards, labelling, testing and conformity assessment procedures. This will also include an analysis of the conformity assessment work done through the EU-Japan Mutual Recognition Agreements (MRAs) (e.g. on pharmaceuticals) • Step 3: In conjunction with step 2, analyse how Japan removed the NTMs in parallel to the formal EPA negotiations. This pertains to the two lists of NTMs provided by the EU, which Japan addressed as part of the final negotiated EPA outcome • Step 4: Analyse the Japanese railway market, notably how conformity assessment procedures have affected market access for EU railway suppliers. This includes studying the minutes of the EPA TBT Committees, engaging with stakeholders to identify market access issues they face in Japan, and discussing the positives and challenges of doing business in Japan. At least five EU railway-integrated and railway component suppliers will be engaged with as part of this analysis, forming part of Case Study No. 3 5.1.7 Government procurement As part of the EU-Japan EPA, a Chapter on Government procurement has been negotiated (Chapter 10 of and Annex 10 to the EPA). Article 10.16 establishes a Committee on Government Procurement to oversee the effective implementation of Chapter 10. The analysis of EPA effects in this area will include the following elements: • • • • • • • A concise description of the EPA’s provisions related to Government procurement, including those related to market access The respect for the non-discrimination principles included in the EPA, especially at the local level, and the transparency provisions for tenders (due process consisting of proper and timely publication of tender notices and efficient single access point for tenders) Stakeholder consultations and available statistics to estimate the degree to which the increased access to Government procurement markets has been successfully picked up by tenderers in the other Party The analysis of the share and value of cross-border contracts won by EU firms in Japan and vice versa, making use of the CEPS (Centre for European Policy Studies) policy brief of Cernat and Kutlina Dimitrova (2020) Stakeholder consultations (including with the Japanese Government) to determine the extent to which certain initiatives focused on improving access to Government procurement and winning contracts have had an effect. In particular, this includes: o The detailed “Guide for EU suppliers on Government procurement in Japan” o The Access2Procurement (A2P) tool launched by the Commission (DG Trade) in 2021 to help businesses establish whether the EPA covers a specific procurement, Analysis of the Japanese railway market: obstacles faced by EU railway suppliers (such as rollingstock, infrastructure, engineering) to participate in procurement processes, whether the removal of the Operational Safety Clause (OSC) has resulted in increased business opportunities for EU railway operators, and the application of the EPA to railway maintenance contract and related tenders. Conclusions, replies to the evaluation questions and policy recommendations. 5.1.8 Implementation in other areas In this section, the analysis will focus on competition, subsidies, state-owned enterprises and motor vehicles and parts. Competition, subsidies, motor vehicles and parts, state-owned enterprises The methodological approach foreseen to analyse these areas of the Agreement will align with the methodological approach for other study aspects. The starting point of the analysis 23 Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership will be the review of the EPA’s provisions and discussions in the EPA Committees and the Working Group on Motor Vehicles and Parts. This will be complemented by: • Statistical analysis: Whenever possible, an effort will be made to compile statistical descriptive analysis on each issue in the period before and after the Agreement's entry into force. Literature review: A concise literature review will be carried out for other areas of the Agreement where data are scarce. For example, a more qualitative approach is more appropriate in competition, state enterprises, and subsidies. • Identify issues for the improvement of the EPA The analysis will also aim to identify issues in areas covered by the EPA that may prevent the full potential/benefits of the Agreement from being exploited. The approach will be as follows: • For each analytical section (economics, social, environmental, and human rights analyses), the study will determine whether the stakeholders see any untapped potential of the EPA and, if found, what could be suggested to capture that potential. In the online Open Public Consultation (OPC) and the Business/SME survey, questions are included regarding areas where more benefits from the EPA would be possible, and if so, what would need to be changed to achieve it. The analytical and consultation findings will be summarised in the draft final report and complemented by replies to the evaluation questions. Based on these, recommendations will be formulated to enhance positive and mitigate any negative effects of the EPA. • • 5.1.9 Modelling results This task will rely on the CGE modelling undertaken by DG Trade. The CGE model is the quantitative cornerstone/foundation of the study and the ex-post evaluation. Important variables of interest for the economic analysis will include the estimated impacts on GDP and trade flows (total, bilateral and by sector) and sectoral output. Other results, such as impacts on consumer prices, wages, sectoral employment, and CO2 emissions, will be used primarily in the social and environmental analyses. 5.2 Social analysis The analysis regarding social impacts of the EU-Japan EPA will be based on the following three steps, unless otherwise indicated in any of the thematic sections or required by Tender Specifications: 1) Analysis of the real-life situation in the EU and Japan in 2014-2023 (or until the latest available data), i.e., in the period preceding the EPA’s application and over the years since its entry into force. The analysis will focus on aspects related to the labour market and other elements listed in the Tender Specifications, trends in relevant indicators,14 and factors that influence the situation. This will make it easier to distinguish later effects generated by the EPA from the influence of other factors. 2) Quantitative and qualitative impact analysis of the EU-Japan EPA. It will build on the economic modelling results and impacts that may have resulted from specific provisions of the Agreement and decisions taken by the Parties within its framework, including within the EPA bodies. 3) Conclusions responding to the evaluation questions and recommendations. 14 Examples of indicators which will be used in the analysis are provided in the Annex to this report. 24 Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership In each step, relevant information, data sources, and analytical tools will be used, and desk research will be complemented by results of stakeholder consultations (see Chapter 7). The impact analysis will be primarily conducted at the EU level; however, data for individual EU MS will also be used when substantial differences in indicator values are identified between them and the EU average and to the extent data are available. Data for Japan will be provided at the national level, unless it is justified to use more granular data and such data are available. Further details of the proposed methodological approach are outlined below. In each of the discussed thematic areas, the analysis will aim to determine the extent to which the EPA implementation has contributed to attaining the relevant SDGs. Findings from the analysis will also contribute to the response to the evaluation questions. 5.2.1 The effects on employment, income and consumers For a better flow and presentation of the analysis, this section has been divided into three parts, focusing on, respectively, (a) effects on employment, (b) effects related to income (wages) and poverty levels and (c) effects on consumers. Effects on employment15 The analysis in this part will refer to the EU-Japan EPA impacts on the first pillar of the International Labour Organisation (ILO) Decent Work Agenda, i.e. job creation. It will ai to determine which employment effects across the EU MS and Japan, as well as sectors and worker groups, may have been created by the reduction of tariffs and NTBs and the resulting changes in sectoral output and trade and investment flows between the EU and Japan. It will also seek to establish whether the observed changes may have contributed to achieving SDG No. 1 (no poverty) and No. 10 (reduced inequality). In the first step, the analysis will focus on trends in the EU and Japanese labour markets since 2014. This will include data on the overall employment and unemployment levels and trends regarding growing and declining sectors in each Party. The analysis will also cover characteristics of the labour force, such as education levels, and their impact on the employment situation of specific groups (e.g. low-skilled and skilled workers) in the labour market. It will also provide a brief overview of the main factors that shape demand and supply in the labour markets of the EU and Japan to later distinguish their influence from the effects created by the Agreement. In the second step, the analysis will focus on assessing the EPA’s quantitative impacts on employment, building on the economic modelling results. That section will also briefly describe the model’s assumptions related to employment and explain their implications for interpreting the results. For example, the model may assume a fixed employment in the economy and will not display changes in the overall employment level.16 Instead, it will suggest that job creation in the growing sectors will need to be offset by a corresponding movement of workers away from other sectors, resulting in employment reduction there. The model also assumes a smooth movement of workers between sectors, which in reality may take more time or be more complex, for example, if additional training is required to take a job in another sector. That section will also include a more detailed analysis of the employment situation and trends in sectors identified by the model as those most affected by the Agreement, either positively or negatively. This will help to interpret the modelling results in a more nuanced way. For each of the selected sectors, a short profile will be developed. It will include data on the number of jobs with changes over the period under review, characteristics of employed workers (e.g. gender, level of skills), location within the EU and Japan, and 15 16 In this section, the analysis will cover all workers, while the analysis of the situation of chosen groups, such as women, youth, older workers, persons with disabilities, and migrants, i.e. those who may face challenges or be discriminated against in the labour market, will be discussed in sections 5.2.2 and 5.2.3. Instead, the model simulates overall changes in the labour market through effects on wages. 25 Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership factors that influence the demand for workers and job characteristics in each sector. This analysis will also rely on the results of stakeholder consultations and publicly available stakeholder positions to gain a more in-depth understanding of the reality of the analysed sectors and impacts of the EPA. In the final step, findings from sector profiles and modelling results for EPA-induced sectoral employment changes in the EU and Japan will be compared with trade statistics and modelling results regarding trade flows between the EU and Japan to quality-assure the results. The analysis will finish with conclusions, replies to the evaluation questions and recommendations. Income-related effects This part of the analysis will focus on the income-related effects created by the EPA, including its impacts on GDP, the wages of skilled and unskilled workers, and the situation of vulnerable groups in society. It should be read in conjunction with the preceding section on employment effects, as changes in job availability in individual sectors and regions, or for certain groups of workers (e.g. low-skilled workers or women), have a direct impact on the income of affected workers or local inhabitants. This analysis will also be linked to examining effects on working conditions, including wages and other benefits, in sectors identified as the most affected by the EPA. Its findings should underpin the answer to the question of whether the Agreement has contributed to the attainment of SDG No. 1 (no poverty) and No. 10 (reduced inequality). In the first step, the analysis will examine the situation in the EU and Japan since 2014, focusing on trends in poverty levels, wages, and other forms of income (e.g. pensions or social benefits), groups identified as being at risk of poverty or social exclusion, and factors influencing the situation. In the second step, the outcomes of the economic modelling will provide estimates of the income-related effects of the EPA, such as changes in GDP, welfare and wages modelled for low-skilled and skilled workers, at the aggregated (macro) level. Moreover, if data is available, this will be complemented by an analysis using the E3ME model to estimate the distributional effects of the EPA. The outcomes would demonstrate which groups in the EU and Japan have benefited from the EPA’s impact on incomes and prices and have recorded an improvement in their purchasing power. The analysis will finish with conclusions, replies to the evaluation questions and recommendations. Effects on consumer rights This section will analyse the effects of the EPA implementation on consumers in the EU and Japan. It will be closely linked to the preceding sections and the estimated impact on jobs, wages and purchasing power. To complement their findings, it will focus on the availability, accessibility and safety of goods and services for consumers in the EU and Japan as a result of the Agreement, as well as the promotion, respect for and protection of consumer rights in the EPA provisions. It will also seek a response to an evaluation question regarding the EPA’s coherence with the latest EU consumer policy and its approach to consumer rights in trade agreements, including provisions on digital trade. Moreover, jointly with findings from the two preceding sections, the analysis will seek to determine whether the EPA has contributed to the attainment of SDGs, notably No. 1 (no poverty), No. 3 (good health and well-being), No. 10 (reduced inequality) and No. 12 (responsible consumption and production). In assessing the impact on the availability of goods and services to consumers in the EU and Japan, the analysis will build on findings from the economic part and examine changes in trade in goods and services influenced by the EPA, particularly those relevant for consumers, like food products and beverages, passenger cars, or pharmaceuticals. It will also utilise findings from the analysis related to investment and Government procurement, where market access opportunities created by the EPA may have a direct or indirect impact on satisfying consumer needs (e.g. through contracts for public transport or medical devices). Impacts related to the safety of goods will be analysed based on reports from EPA bodies (e.g. the Committee on Sanitary and Phytosanitary Measures) and records from 26 Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership dedicated EU systems, namely RAPEX (Safety Gate) for unsafe non-food products and RASFF for food. Moreover, meeting reports of other EPA bodies will be examined to determine if they also addressed aspects relevant to consumers (e.g. TBT Committee and a discussion on the removal of lot codes from alcoholic beverages). Finally, EPA provisions on digital trade will be analysed and compared with the latest EU approach to consumer rights in online transactions. Desk research will be complemented by engagement with consumer organisations. The analysis will finish with conclusions, replies to the evaluation questions and recommendations. 5.2.2 The effects on working conditions and labour standards In this section, the analysis will examine the EU-Japan EPA’s impacts on the remaining three pillars of the ILO Decent Work Agenda, i.e. labour rights, social protection and social dialogue. For a better flow and presentation of the analysis, this section has been divided into two parts, i.e. (a) effects on working conditions, social protection, and enforcement of labour legislation (labour inspection), and (b) effects on labour standards as enshrined in the ten ILO fundamental Conventions (this part will be further divided into five thematic sections, each covering two ILO fundamental Conventions.17 Moreover, while the analysis will focus primarily on effects of the EPA as a whole, it will also examine the implementation of the TSD Chapter and aspects addressed by the bodies established by the EPA, i.e. the Committee on Trade and Sustainable Development, the Domestic Advisory Groups (DAGs), and the Joint Dialogue with Civil Society (JDCS), as well as actions taken by each of the Parties and EU Member States. The analysis will also aim to determine the extent to which the EPA has contributed to achieving SDG No. 8 (decent work and economic growth). Effects on working conditions, social security, and labour inspection In the first step, the analysis will focus on developments in the EU and Japan since 2014 regarding working conditions and social protection. This will include job quality indicators, such as the type and duration of contracts prevailing in the economy and in specific groups of workers (i.e. permanent and temporary contracts, full-time and part-time work, and other types), the average number of working hours per person per week, the number or rate of fatal and non-fatal accidents at work, wage levels, including the minimum wage, and the duration, type and frequency of training provided or paid by the employer. It will also identify factors influencing those indicators, such as actions taken by the governments and the private sector, as well as global trends. Moreover, the analysis will refer to the social protection coverage and expenditure (to the extent data are available) and the fact that the Parties have ratified ILO priority Convention No. 81 (labour inspection). In the second step, the analysis will focus on the economic modelling results to identify sectors affected by the Agreement in the EU and Japan. This will be followed by a more detailed analysis of working conditions in those sectors, trends over time and factors that have influenced them to determine if any observed trends can be wholly or partly attributed to the EPA implementation or if other factors played a role. In this context, the analysis will also focus on the implementation of the TSD Chapter, the policy dialogue and cooperation between the Parties, as well as their engagement with civil society to establish whether these activities may have had an impact on working conditions in the affected sectors or the EU and Japan more generally. The analysis will finish with conclusions, replies to the evaluation questions and recommendations. 17 At the time of the EU-Japan EPA’s entry into force, there were eight ILO fundamental Conventions. In 2022, the International Labour Conference (the ILO’s supreme body) added two Conventions related to occupational safety and health (No. 155 and No. 187) to the list of fundamental ones. 27 Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership Effects related to labour standards In the first step, the analysis will examine the situation in the EU and Japan in areas linked to the ten ILO fundamental Conventions,18 trends in the related indicators, factors that have influenced the situation and actions taken by the Parties in that context. In a breakdown by labour standard, the analysis will include (but will not be limited to): • Non-discrimination: identification of groups of workers facing particular challenges or discrimination in the labour market (e.g. youth, older workers, persons with disabilities and migrant workers), their employment and unemployment rates, levels of completed education, types of contracts, sectors of employment and other characteristics. This section will also discuss Japan's actions towards ratifying ILO fundamental Convention No. 111 (discrimination in employment and occupation). • Freedom of association and the right to collective bargaining: the share of trade union members among workers, coverage by collective bargaining and the engagement of social partners in the design and implementation of policies and legislation. • Occupational safety and health: progress in the ratification and implementation of the two new ILO fundamental Conventions (No. 155, on occupational safety and health and 187, on promotional framework for occupational safety and health) (data related to fatal and non-fatal accidents at work will be provided in the preceding section on working conditions). • Forced labour: progress in the ratification of the 2014 Protocol to Convention No. 29 (forced labour) and the ratification by Japan of ILO fundamental Convention No. 105; evidence related to human trafficking, the number of victims (if available) and purposes of human trafficking, including sectors where labour exploitation has been identified; and actions taken to eliminate forced labour in general and from supply chains in particular. • Child labour and poverty: poverty levels among children and actions taken to reduce them, as well as actions taken to eliminate child labour from supply chains. In the second step, based on the economic modelling results, the analysis will focus on the sectors most affected (positively or negatively) by the EPA. Using findings from step one and additional research into the situation in the affected sectors, it will seek to determine whether changes in trade and investment flows between the EU and Japan have impacted respect for labour standards in these sectors, including trends observed in the related indicators. Moreover, it will seek to determine whether the provisions of the TSD Chapter and the annual dialogue in the TSD Committee meetings had any impact on actions taken by the Parties regarding the ILO fundamental Conventions (e.g. the ratification by Japan of Convention No. 105 on abolition of forced labour). Likewise, the analysis will aim to establish whether the Parties have taken (jointly or individually) any actions to improve respect for labour standards in their bilateral trade, e.g. through the promotion and implementation of Responsible Business Conduct (RBC), due diligence along their supply chains, or cooperation activities towards third countries. The analysis will finish with conclusions, replies to the evaluation questions and recommendations. 5.2.3 The effects on gender equality In this section, the analysis will aim to determine the effects of the EPA on women as workers, entrepreneurs, traders, and consumers. It will also conclude whether the EPA has contributed to achieving SDG No. 1 (no poverty), No. 5 (gender equality), and No. 8 (decent work and economic growth). The structure of the analysis and the choice of focus 18 These include Conventions No. 100 and 111 on equal pay for work of equal value and non-discrimination at work, No. 87 and 98 on freedom of association and the right to collective bargaining, No. 155 and 187 on the occupational safety and health, No. 29 and 105 on the prohibition of forced or compulsory labour and No. 138 and 182 on the elimination of child labour. However, Conventions No. 155 and 187 were not fundamental at the time of signature and entry into force of the Agreement and were only made fundamental in 2022. 28 Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership areas will be guided by the well-established methodology, i.e. the UNCTAD’s Trade and Gender Toolbox (UNCTAD, 2017), the approach proposed by the European Institute for Gender Equality (2016) and more recent publications on the subject matter: e.g. Guidance note on data analysis for gender and trade assessments (Fontana, 2020). In the first step, the analysis will focus on developments in the EU and Japan since 2014 regarding the situation of women in each of the analysed roles. For women as workers, it will review their situation in the labour market, comparing it with the situation of men. This will include the labour market participation rate, the employment and unemployment rates, sectoral employment and other characteristics (e.g. the share of women among part-time workers), as well as factors influencing the situation. Focusing on women as entrepreneurs, the analysis will examine the sectors of their activity, characteristics of businesses owned and/or managed by women, and opportunities and challenges they face. A similar analysis will be conducted for women as traders, including the types of goods and services they trade and their participation in international trade, including bilateral trade between the EU and Japan. Given the limited data available about female entrepreneurship, this part of the analysis will rely on one-off studies and partial surveys rather than comprehensive statistics comparable to the Labour Force Survey. Finally, for women as consumers, the analysis will focus on the level and type of income received and at their disposal, and the gender-based pay gap. In the second step, the above findings will be compared with the outcomes of the economic modelling (notably, sectors affected by the Agreement and welfare-related impacts) to determine the EPA's effects on women. • For women as workers, the analysis will compare the list of sectors affected by the EPA with those having a substantial share in female employment to determine the importance of EPA-induced effects for women. Moreover, it will examine the share of women among workers in each affected sector and changes in that share over time to determine the likelihood that women employed in those sectors or seeking employment there have been affected positively or negatively by the EPA. In each case, findings regarding women will be compared with the scale and type of effects on men. • For women entrepreneurs, the analysis will compare sectors of their economic activity with those in which the Agreement had an impact on output. The level of detail in this analysis and the granularity of findings will depend on data availability. • For women as traders, the analysis will compare sectors of their trade activity with those in which the Agreement had an impact on bilateral exports. Moreover, it will consider the extent to which women-owned businesses are engaged in trade between the EU and Japan. As above, the level of detail in this analysis and the granularity of findings will depend on data availability. • For women as consumers, the analysis will utilise the economic modelling results related to wages, welfare and purchasing power, and findings regarding the availability and accessibility of goods and services. Moreover, regarding women as carers, the text will note after Fontana (2020) that, in the case of trade relations between developed countries (the EU and Japan), the analysis of paid work and wages is more relevant for the situation of women, while the analysis of the effects of an FTA on the use of time by women and their unpaid work is more relevant for developing countries. The analysis will finish with conclusions, replies to the evaluation questions and recommendations. 5.3 Environmental analysis The primary purpose of the environmental analysis is to assess the environmental effects of the EPA. The main difficulty lies in distinguishing the impact of the EPA on environmental performance from non-EPA-related developments. This is particularly challenging as the 29 Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership counterfactual environmental outcomes are not observable for most environmental impact areas (as is also the case for social and human rights effects), and quantitative data on most environmental impact areas is lacking. The analysis will inform the Commission and other stakeholders about the most significant environmental and climate impacts of the EPA, which may be neutral, positive or negative. 5.3.1 Overall approach for the environmental analysis Figure 5.1 summarises the proposed approach, beginning with the identification of components in the Agreement that may have generated environmental effects (EPA elements). Subsequently, these elements are identified that could have created, directly or indirectly, intended or unintended, environmental impacts (the impact channels) on various areas of environmental performance (the impact areas). The analysis of these impact areas will begin with an impact screening and scoping, followed by establishing a baseline for each impact area, along with qualitative and, where available, quantitative analysis of the impacts of the EPA. Triangulation will be used to review the information gathered, after which the evaluation questions will be answered. Figure 5.1: Approach for the analysis of environmental impacts Source: own compilation The EPA may have resulted in environmental impacts in the EU and Japan because of (1) changes in market access induced by the removal of tariffs and other trade barriers, and (2) the implementation of rules-based measures, specifically those outlined in the TSD chapter.19 The four impact channels considered follow the approach in the SIA Handbook, distinguishing: • The scale effect, i.e. the environmental impact resulting from an expansion of economic activity through enhanced trade. 19 Chapter 16 of the EU-Japan EPA, specifically relating to common ambitions in the ratification and implementation of multilateral environmental agreements, and agreements on cooperation in addressing the areas of climate change, biological diversity, forestry and fisheries. 30 Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership • The structural effect, i.e. the dynamic effect of the EPA on production and consumption patterns. • The technology effects, which may be triggered through efficiencies from increased competition or innovation because of other policies (e.g. the Green Deal) or from a transfer in environmental goods and services. • The product effect, which occurs via changes in production standards or labels (e.g. induced by the TSD agreement to cooperate on the use of eco-labels) and the use of goods in a country (e.g. through strengthened environmental policies and environmental regulation). As illustrated in Figure 5.1, the analysis will consider six environmental impact areas: (1) climate change, (2) air quality, (3) natural resources and biodiversity (including forestry, wildlife, fisheries, land use and ecosystem services and protected areas), (4) water quality and resources, (5) waste and waste management, and (6) chemicals. A baseline analysis will be conducted for each of these six environmental impact areas, followed by a screening and scoping assessment. The results of this analysis and assessment will be used to select the two most prominent environmental impact areas for which a deep dive analysis will be provided, including both a quantitative and qualitative evaluation. All results will be used to answer the evaluation questions and to provide recommendations on possible improvements in addressing environmental concerns. In short, the analysis will be structured along the following steps: • • • • Step 1: Fine-tuning the methodology and impact screening. Step 2: Establishing the baselines for the six impact areas. Step 3: Quantitative analysis of impacts, insofar as information is available. Step 4: Qualitative analysis of impacts (with a focus on two impact areas depending on the impact screening). • Step 5: Answering the evaluation questions and providing recommendations. 5.3.2 Detailed approach for the environmental analysis Step 1: Fine-tuning the methodology and impact screening This step aims to refine the methodology and engage with the Commission to agree on the focus of the analysis, which is essential for the success and efficiency of the environmental assessment. The impact screening of possible ex-post effects will ensure a proper focus and prevent any significant impacts from being overlooked. The analysis distinguishes between local and global environmental impacts, with a particular emphasis on adopting a global perspective for climate change. During the inception phase, an initial impact screening is conducted to refine the methodology, as provided in this report. Chapter 4 in the Annex to this report includes further information on the data sources and indicators for each impact area and sub-area. Next, an analysis outlining the context for each environmental impact area (approximately 10 pages) will be prepared. This will be followed by developing the impact screening and scoping matrix. The matrix will encompass all sectors used in the economic modelling and the six environmental impact areas. Interim results from this screening will be discussed with the Commission, leading to a clear scope and methodology for the environmental analysis. The screening will be undertaken against the criteria stipulated in the SIA Handbook and will be informed by: • The current environmental performance in the EU and Japan (to identify the most prevailing environmental threats in the countries/regions), • The details of the EU-Japan EPA (to identify the environmental areas which are likely to be most affected by the Agreement): 31 Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership The characteristics and specific provisions in the TSD Chapter of the Agreement, Economic modelling results, as developed by the Commission, outlining changed economic activity by sector due to the EU-Japan EPA (where possible, they will be compared with other economic modelling ex-ante findings), o The nature of these impacts, the geographical scope and duration, and their potential cumulative effect. Literature review: specific information on impact areas in the EU and Japan. Stakeholder/expert input: information provided by stakeholders will be weighed against the impact matrix, and relevant inputs from stakeholders and experts will be incorporated into it. o o • • The outputs of this step will include: • A fine-tuned methodological chapter, as presented in this inception report. • The scene-setting document (approximately 10 pages) describing the context of each environmental impact area for the EU and Japan. • A populated impact screening and scoping matrix, along with a summary and justification of the findings. Step 2: Establishing the baselines for the six impact areas Following the impact screening, draft baselines will be drafted for each impact area for the EU and Japan. Based on the sources and indicators identified in step 1, they will summarise the current state-of-affairs and recent developments regarding environmental governance and performance. Chapter 4 in the Annex to the report provides additional details regarding the proposed information and data sources, as well as indicators. Each baseline assessment will cover the following two sections: 1. An overview of the environmental governance framework providing information regarding the legislation in place across relevant environmental impact areas, the public authority responsible for environmental policymaking and the balance of power between public authorities in the country (i.e. whether regional authorities have independence in policymaking or whether the policymaking is federally determined). 2. An overview of the performance in each impact area, providing the available data and information (e.g. based on independent reports and evaluations) regarding each Party’s performance in each priority impact area. The available evidence should enable a response to questions about the effectiveness of the policy framework put in place, the level of compliance or progress regarding goals/targets set out in the national legislation and/or Multilateral Environmental Agreements (MEAs), as well as impact areas in which environmental performance is particularly weak/strong. Whenever quantitative indicators regarding performance in a particular field (e.g. emissions) are available, the EU’s performance will be compared with that of Japan. The baseline for the EU will be based, to the extent possible, on the work from the most recent reports published by DG Trade (ex-post evaluations and SIAs) and will be reviewed critically/updated where needed. The baseline for Japan will use the reports from the SIA for the EU-Japan EPA as a starting point and include developments in the period after the completion of the SIA until the entry into force of the EU-Japan EPA on 1 February 2019.20 Step 2 will include three sub-steps to operationalise the establishment of the baselines: 1. Literature review and data analysis to establish the draft baselines, 20 It is to note that the period used in the baseline will not be the focal point of the overall environmental analysis. Instead, the evaluation of the environmental effects that have occurred since the EU-Japan EPA’s entry into force is the heart of the analysis and will focus on that period. In steps 3 and 4, trends in various environmental indicators for the period since February 2019 will be analysed with the ultimate objective of assessing the causal relationship between the EU-Japan EPA and environmental performance in the EU and Japan, if data allows. 32 Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership 2. Interviews with stakeholders to obtain additional input, validate work, and fine-tune results, 3. Triangulation of information (literature, data and interviews) to establish final baselines. Sub-step 2.1: Literature review and data analysis The ongoing impact screening and literature review will be used to create a draft baseline for each of the six environmental impact areas. For the two impact areas selected for more detailed research, qualitative evidence will be combined with quantitative evidence (where data are available) to elaborate a more detailed baseline. Sub-step 2.2: Interviews To gain further insights, validate the work, fine-tune results, and increase triangulation, stakeholder interviews will be conducted using the baseline description developed in Substep 2.1. Questions will assess the environmental performance and the expected impact of the EU-Japan EPA on environmental performance, including potential changes in environmental governance. This approach will also enable gathering inputs for step 3 (qualitative in-depth analysis) and avoiding double-interviewing of stakeholders. The interviews for the environmental baselines are to be viewed as part of the broader stakeholder consultation activities conducted in this study. In stakeholder selection, special attention is paid to the composition of the sample. Interviewees should be balanced across impact areas, government levels, and general occupations (e.g. business owners, civil society representatives, academics). Sub-step 2.3: Triangulation of information An environmental baseline report will analyse changes based on information from various sources, including literature review and stakeholder interviews, to test the consistency of findings obtained. This triangulated information will be used to report on the baseline developments for all selected impact areas. The baseline reports will be incorporated as a section of the overall environmental analysis chapter. Step 3: Quantitative analysis of impacts, insofar as information is available The quantitative analysis will utilise the economic modelling results in the part related to the impact of the EU-Japan EPA on (gross) greenhouse gas emissions and emissions of air pollutants, if available. This will be complemented by Cambridge Econometrics’ E3ME model analysis on GHG emissions from increased freight transportation and changes in energy demand resulting from the EPA. No model analysis is available for other impact areas. However, if available, quantitative statistics and trend analysis will complement the quantitative analysis of impacts. The results from the quantitative analysis will be included in the final environmental reports. Step 4: Qualitative analysis of impacts The qualitative analysis will focus on how the EU-Japan EPA has supported or could support sustainability through the implementation of provisions included in the TSD chapter of the Agreement. It will include a causal chain analysis to identify the root causes of observed changes. The focus will be on the most relevant impact areas. A broad assessment based on desk research will be conducted for all six impact areas. It will explore major developments in environmental performance since the EPA’s entry into force and discuss the effectiveness of implementing TSD provisions for each of the selected impact areas. Whenever possible, the analysis will discuss the potential causal relationship between the Agreement and the developments. 33 Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership Based on the impact screening matrix, two impact areas will be selected for which an additional in-depth assessment will be provided. It will combine two methods: causal chain analysis (CCA; European Commission, 2016) and a review of the ecosystem accounting principles. The selection of the two impact areas for in-depth assessment will be discussed with the Commission. The current proposal includes climate change and waste, focusing on lessons learned on the circular economy. Step 5: Answering the evaluation questions and providing recommendations The results of the previous steps will be used to answer the evaluation questions from the perspective of the environmental impact areas and the commitments made in the EU-Japan EPA. The analysis will finish with recommendations to strengthen positive and mitigate any negative effects of the Agreement. 5.4 Human rights analysis This section outlines the approach envisaged for analysing the impact of the EU-Japan EPA on human rights, as described in the Tender Specifications. The analysis aims to assess how specific measures under the Agreement may have affected the enjoyment of specific human rights in both the EU and Japan. 5.4.1 Methodological approach The analysis will be based on the international human rights normative framework, including the core United Nations human rights treaties and conventions, 21 the Charter of Fundamental Rights of the European Union, the European Convention on Human Rights, the core ILO Conventions,22 and, where relevant, customary international law. Relying on the recognised methodology (United Nations, 2011; European Commission, 2015), the human rights analysis will follow a step-by-step process, focusing on the specific human and labour rights that may have been impacted by specific measures under the Agreement, as well as the ability of the state parties to fulfil or progressively realise their human rights obligations: • Step 1. Provide a brief overview of the pre-existing human rights situation in the EU and Japan, including human rights obligations and pre-existing vulnerabilities regarding human rights before the EPA (baseline). • Step 2. Conduct a screening and scoping exercise to identify the human and labour rights/issues most likely affected by the Agreement and clarify their scope and content. • Step 3. Perform a focused analysis of two rights significantly or directly impacted by the Agreement, combining qualitative and quantitative approaches and linking relevant Core UN human rights treaties include: International Convention on the Elimination of All Forms of Racial Discrimination (ICERD), International Covenant on Civil and Political Rights (ICCPR), International Covenant on Economic, Social, and Cultural Rights (ICESCR), Convention on the Elimination of All Forms of Discrimination again Women (CEDAW), Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment (CAT), Convention on the Rights of the Child (CRC), International Convention on the Protection of the Rights of All Migrant Workers and Members of Their Families (ICMW), International Convention for the Protection of All Persons from Enforced Disappearance (ICPED), International Convention on the Rights of Persons with Disabilities (ICRPD), and their Optional Protocols. 22 Core ILO Conventions include: Forced Labour Convention, 1930 (No. 29) (including its 2014 Protocol), Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87), Right to Organise and Collective Bargaining Convention, 1949 (No. 98), Equal Remuneration Convention, 1951 (No. 100), Abolition of Forced Labour Convention, 1957 (No. 105), Discrimination (Employment and Occupation) Convention, 1958 (No. 111), Minimum Age Convention, 1973 (No. 138), Occupational Safety and Health Convention, 1981 (No. 155), Promotional Framework for Occupational Safety and Health Convention, 2006 (No. 187), Worst Forms of Child Labour Convention, 1989 (No. 182). 21 34 Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership economic, social, and environmental results to potential human and labour rights impacts. • Step 4. Answer evaluation questions, formulate draft policy recommendations and propose accompanying measures related to human and labour rights. Stakeholder consultations will be integrated throughout all stages of the analysis to ensure continuous engagement and incorporate the perspectives, experiences, and concerns of relevant actors regarding the Agreement's impact on human rights in the EU and Japan. Figure 5.2 summarises the approach to the human rights analysis in schematic form. Figure 5.2: Methodology for the human rights analysis Source: own compilation The causal chain analysis will begin with an assessment of the pre-existing legal situation and key pre-existing vulnerabilities related to human rights (Step 1). In Step 2, relying on specific measures included in the Agreement and vulnerabilities determined in Step 1 of the analysis, various sources of information (literature review, economic analysis results, stakeholder and local expert inputs, statistical evidence, and human rights indicators) will be used to identify which specific rights may have been affected by the Agreement. At this stage, outputs from the economic modelling, which already disaggregate potential impacts of the Agreement, will be integrated with additional economic data produced by broader economic analysis. Step 3 will represent a focused analysis of two rights identified as significantly impacted by the Agreement, guided by the findings from Step 2. Given the likely limitations in quantitative data, this phase will rely substantially on qualitative methods and consultation outcomes. Stakeholder consultations will play an important role throughout the human rights analysis, verifying findings and providing additional details. The feedback received from stakeholders will inform and adjust the analytical approach at each stage. In Step 4, the analysis will conclude with evidence-based findings and policy recommendations, including stakeholder perspectives gathered throughout the process. A cross-cutting lens will be applied throughout all steps to study, to the extent possible, how the Agreement may have impacted vulnerable population groups (e.g. women, 35 Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership migrant workers, persons with disabilities, ethnic minorities, persons with low incomes, and unskilled workers or workers in the informal sector). To address the challenge of isolating the Agreement's impact from other factors that may affect the enjoyment of a human right over time, in Steps 2 and 3, a methodological triangulation will be applied for each of the prioritised human rights to enhance the validity and credibility of the findings. The impact will be analysed based on the Agreement's legal provisions, the economic modelling results, an analysis of pre-existing vulnerabilities regarding human rights, literature review, relevant indicators, expert opinions, and stakeholder inputs. The findings of each method will then be cross-validated to enhance the credibility of the conclusions. Each of these steps is elaborated on below. Step 1. Overview of the pre-existing human rights situation in the EU and Japan This step's objective is to gain a brief understanding of the EU’s and Japan’s current status regarding international human rights obligations and their implementation and identify key pre-existing vulnerabilities. The findings will serve as the baseline for the impact assessment in Steps 2 and 3. The output will comprise brief human rights profiles for the EU and Japan, complemented by two tables presenting an overview of the ratification status of core international human rights treaties and ILO fundamental Conventions. This step focuses on the pre-Agreement context, including both the legal framework and social vulnerabilities present before the entry into force of the EU-Japan EPA. At the beginning, the Parties' international human rights commitments will be identified, with particular attention to treaty ratification (including reservations) and adherence to core ILO Conventions, given the relevance of labour rights. The ratification status will be presented in tabular form, with additional information regarding reservations and reporting obligations under these instruments included in the accompanying human rights profiles. These will be based on data from the UN Office of the High Commissioner for Human Rights (OHCHR) and ILO NORMLEX databases. Short human rights profiles will highlight key issues and anticipated challenges at the time of the Agreement’s entry into force to contextualise existing vulnerabilities. This overview will draw on a literature review, a review of reports from UN human rights treaty bodies, Universal Periodic Review (UPR) outcomes, UN Special Rapporteur reports, and other relevant UN sources. It will be complemented by findings from the EU Agency for Fundamental Rights (FRA), the Council of Europe, and international and national NGOs, such as Human Rights Watch, Amnesty International, Amnesty Japan, Human Rights Now, and Hurights Osaka. Step 2. Screening and scoping This step aims to identify the specific human rights most likely affected by the Agreement, using a triangulated methodology. The findings will inform the focused analysis in Step 3. Outputs will include a concise table listing affected rights and a separate explanatory note clarifying the scope of the impact. The analysis will build upon the pre-existing vulnerabilities identified in Step 1. It will apply a structured triangulation of data sources summarised in Figure 5.2 to identify specific rights potentially affected by the Agreement. It will begin with a detailed review of the Agreement's legal provisions to identify measures that could plausibly affect the enjoyment of human rights in the EU and Japan. A key pillar of this step is the use of the economic analysis results, which isolate the Agreement's effects from other external influences and provide a methodologically sound 36 Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership basis for linking specific economic outcomes, such as shifts in employment, wages, or sectoral activity, to potential human rights impacts. A targeted literature review will complement this by identifying academic and policy studies examining similar linkages. Stakeholder consultations and expert inputs will provide qualitative insights that help contextualise these findings, particularly regarding how rights are protected in practice. Furthermore, statistical data and human rights indicators will be examined to corroborate patterns of change. In line with the EC Guidelines on the analysis of human rights impacts in impact assessments for trade-related policy initiatives (European Commission, 2022k) and making use of Tool No. 29 of the ‘Better Regulation’ Toolbox on Fundamental Rights, Including the Promotion of Equality (European Commission, 2023f),23 the analysis will further clarify the scope and the content of the identified human rights and related issues. This will help focus further analysis on those rights that are most significantly impacted by the Agreement. Each identified issue will be accompanied by textual explanations that substantiate the kind of impact, identify specific measures under the Agreement that may have contributed to it, and, where possible, specify the population groups affected. Following the approach set out in the EC Guidelines (European Commission, 2022k), a table will be prepared summarising the following information: ▪ The trade measures/provisions that may have contributed to the impact on human rights ▪ The specific rights likely to have been affected and the corresponding normative basis for each of these rights ▪ Whether the affected rights are absolute rights, based on the Fundamental Rights Checklist outlined in Tool No.29 of the Better Regulation Toolbox ▪ The type of impact (direct or indirect) ▪ The degree of the impact (major or minor) ▪ The direction of the impact (positive and/or negative) An explanatory note will be provided separately from the table to ensure a clear and accessible presentation of the findings. The note will synthesise insights gathered from the multiple data sources mentioned above. The screening and scoping process will remain iterative. The findings will be updated and refined if new, relevant information emerges during stakeholder consultations. Step 3. Focused analysis of human rights significantly impacted by the Agreement This Step involves a focused quantitative and qualitative impact assessment of selected human rights identified in the previous step as being significantly affected or highlighted as priority concerns by stakeholders (in line with the EC Guidelines). The outputs of this step will include reporting on available quantitative findings and presenting qualitative insights regarding the impacts on the selected rights. Applicable human rights laws will be reviewed in light of the Parties’ obligations under international and regional human rights treaties, providing a framework of applicable and binding entitlements and duties related to the selected human rights. This scanning explicitly adopts the human rights approach focused on the state obligations to respect, protect, and fulfil human rights. National legislation will also be examined to determine whether legal protections exist and whether implementation mechanisms are functioning to prevent or mitigate possible negative impacts, while enhancing positive ones. The analysis will use the pre-Agreement baseline to evaluate how the Agreement may have contributed to either strengthening or weakening the Parties’ capacity to uphold these 23 The assessment will also rely on Tools 30, 31, and 32 of the ‘Better Regulation’ Toolbox, if this can support the analysis of specific human rights, e.g. the right to health. 37 Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership rights. Particular attention will be paid to the impact on vulnerable or marginalised groups, such as women and migrant workers. The assessment will integrate quantitative and qualitative methods, as summarised in Figure 5.2. Quantitative elements will draw on the economic modelling results prepared by the Commission to the extent that these results relate to the specific rights being assessed. Where relevant and available, statistical data and human rights indicators will supplement this (see chapter 4 in the Annex to this report). Qualitative analysis will rely on desk research, stakeholder consultations, and collaboration with local partners. As in Step 2, methodological triangulation will be employed to enhance the validity of the findings and ensure a comprehensive picture of how the Agreement has affected specific human rights. Step 4. Answer evaluation questions and formulate policy recommendations The results of the previous steps will be used to answer the evaluation questions from the perspective of the human rights impact of the EU-Japan EPA. The analysis will finish with recommendations to strengthen the positive effects of the Agreement and mitigate any negative effects. Particular emphasis will be placed on protecting the rights of vulnerable groups. 38 Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership 6 FINETUNED CASE STUDY APPROACH Tender Specifications foresee three case studies to be prepared as part of the analysis: 1. Trade in key agricultural goods, including SPS market access and related barriers 2. Geographical Indications (GI) protection aspects 3. Trade in specific services sectors, such as transport services, financial services, telecommunications, computer services, electronic commerce, and delivery services. The case studies have to: • Provide clarity and insights into the opportunities/challenges for trade and investment • Analyse barriers to trade specific to the sector in question, as well as opportunities, and constraints related to exporting to the EU and importing to Japan (with a focus on NTMs and behind-the-border measures) • Analyse any positive or negative impact that may have arisen from the EPA; and • Capture the impact on the economic, social, and environmental sustainability pillars and SMEs. 6.1 Overall approach To develop high-quality case studies in the areas requested, fully integrated into the report, the following approach will be pursued: • • • Each case study will have a clear structure that increases readability and consistency and covers all aspects requested. The length of each case study will depend on its scope, the availability of information and data, and other content-related aspects. At the same time, the guidance provided by Tender Specifications (the length of around 15 pages on average) will be considered. All case studies will be developed building on a consistent methodological approach and will include at least the following horizontal aspects (in addition to elements linked to the specific topic provided for each case study): o o o o o • Concise summary of the circumstances preceding the EPA’s entry into force and the current situation Barriers to trade in goods and services (especially non-tariff measures and behind-the-border measures – split out into types if possible) Opportunities the EPA has provided and constraints that remain, especially for SMEs Impact on the economic, social and environmental sustainability pillars Stakeholder consultation inputs Depending on the topic, the case studies will contain, in addition to qualitative analysis, statistics and data, if available, and modelling. Case study structure (tentative) Subject to minor deviations that may be necessary depending on the topic, each case study will be structured as follows: 1) Introduction: a short sketch of the context and structure of the case study 2) Baseline situation: a description outlining the pre-EPA situation regarding the case study topic 3) Provisions in the EPA: a short description of the EPA provisions related to the case study topic, e.g. tariff reductions or non-tariff-related provisions 39 Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership 4) Economic effects of the EPA: an analysis of the quantitative economic impact of the EPA on trade, production structure and other key economic variables relevant for the case study, complementary qualitative analysis and the use of stakeholder inputs – if applicable – including a write-up of NTMs, the impact on SMEs and opportunities the EPA has provided and constraints that remain 5) Specific sustainability effects of the EPA: an analysis of social, environmental and/or human rights effects of the EPA following from the economic effects (causal chain) 6) Conclusions and policy recommendations: a summary of key findings and policy recommendations on how to improve the EPA and its implementation, e.g. what remaining barriers to remove to allow SMEs to benefit more from the Agreement or what flanking measures to add to mitigate any remaining negative environmental effects. Case study stakeholder consultations As part of the overall stakeholder consultations, stakeholders will be approached to share their views and the available evidence related to case studies. In particular, they will be asked for inputs on: ▪ The economic impact of the EPA on production and prices ▪ The effects of the Agreement in regulatory areas (e.g. SPS, TBT, or GIs) ▪ The social, environmental, and human rights effects of the EPA. 6.2 Case study 1: Trade in key agricultural goods, SPS market access & barriers Introduction It will outline the scope of the case study and its structure. Baseline situation: trends and diversification of bilateral trade and market share This section will examine statistics on trade in agricultural products between the EU and Japan from 2014 to 2018, i.e. in years preceding the EPA’s entry into force. They will be compared later with data for 2019-2024. This will enable the analysis of trends in bilateral trade and product diversification in the agricultural goods and processed food sectors. The focus will be on key product categories, i.e. beef, poultry, pork, dairy products, wine, and plant-based products. Depending on the availability of information and data, the analysis will also cover trade in organic food products between the EU and Japan in both periods. The analysis will also focus on changes in the share of products imported from the EU to Japan compared to imports from other countries, such as the US, Canada, China, Australia, Brazil, and Thailand. The comparison will be made between imports in the years preceding the EPA’s entry into force and the period since 2019. It will be based on data from the UN Comtrade and WITS (World Integrated Trade Solution) databases, which contain information on global trade patterns classified by HS code. This will enable the analysis of Japanese imports from any country source, disaggregated to product categories. Impact of the EU-Japan EPA on promoting agricultural bilateral trade This section will examine the effects of the EPA. To avoid repetition, cross-references will be made between the general economic analysis and case studies, including this one, in all aspects relevant to both parts. This section will begin with an analysis of the EPA’s provisions regulating trade in agricultural products. It will include the following elements: • • Tariff provisions in the EPA, including tariff reductions with a corresponding timeline Provisions related to TRQs and their management 40 Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership • Provisions related to NTMs and other regulatory and institutional aspects, such as SPS measures and the establishment of the EPA SPS Committee. Subsequently, it will focus on the EPA’s economic and other sustainability impacts regarding trade in agricultural and food products between the EU and Japan. This will be based on the analysis of trade statistics (particularly for key product groups) since 2019, the analysis of the economic modelling results, the analysis of the implementation of EPA provisions, and an examination of NTMs and other practical aspects of trade management (e.g. licenses) applied by the Parties, which may either facilitate or impede bilateral trade. It will cover, but will not be limited to, the following aspects: • Market access and food safety-related questions addressed by the SPS Committee, and any decisions taken in this context or solutions applied • Elements relevant to this analysis and addressed by other EPA bodies, e.g. the Organic Equivalence discussed by the Committee on the Cooperation in the Field of Agriculture, and the oenological practices discussed and agreed upon by the Working Group on Wine • Management of TRQs and any issues raised by stakeholders in this context • Changes in NTMs or practical trade management introduced by the Parties since 2019 (or before, if the latter can be linked to the EPA negotiations or implementation) • The application of the Japanese market access approval procedures (length and predictability), especially for plant products and for beef (Bovine Spongiform Encephalopathy, BSE), the regionalisation principles for poultry (Highly Pathogenic Avian Influenza, HPAI) and pork (African Swine Fever, ASF) • Other requirements related to human, animal and plant health relevant to trade between the EU and Japan, particularly applicable to key product groups, e.g. the Japanese approval system for food additives. The review of trade statistics, literature and other available documents and evidence will be complemented by the results of stakeholder consultations. This will enable a more indepth analysis and the identification of further impacts of the EPA and the existing unilateral measures. Conclusions and recommendations The analysis will finish with conclusions and recommendations. 6.3 Case study 2: Geographical Indications (GIs) protection Introduction and baseline situation This section will outline the scope of the case study and discuss the significance of Geographical Indications (GIs) in the EU trade policy. It will acknowledge their importance in enhancing the reputation of agricultural products, supporting local producers, and fostering consumer trust. It will also provide an overview of the situation regarding GI protection in EU-Japan trade in the years preceding the entry into force of the EPA. Impact of the EU-Japan EPA The analysis will begin by examining the relevant EPA provisions related to GIs, including the Parties’ agreement to extend the respective GI lists in four phases. This will be followed by an assessment of the EPA’s implementation and its impacts. Aspects which will be covered in this part will include, but will not be limited to: • The analysis of the evolution in the number of protected, GI-labelled agricultural EU and Japanese products and the extension of their respective lists in four phases, 41 Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership • An analysis of the de jure and de facto protection granted by the parties, including the enforcement mechanisms and administrative actions in place , • An analysis of the performance of EU GIs in the Japanese market and Japanese GIs in the EU market, in terms of market access, pricing, and trade volume/value, subject to data availability and based on DG AGRI work on GIs in the EU and Japan. • Identifying any issues related to GI protection and how they have been addressed, including concerns raised during the negotiation process (e.g. use of some GI terms in Japan, considered by local operators as generic terms, thus infringing EU GI rights) subject to information availability. • An analysis of discussions in the relevant EPA bodies, particularly the Committee on Intellectual Property. As in each case study, stakeholder engagement will complement desk research. Conclusions and recommendations The analysis will finish with conclusions and recommendations. 6.4 Case study 3: Trade in specific services sectors Introduction This case study will cover four types of services: transport services; financial services; telecommunication, computer services and electronic commerce; and delivery services. The introductory sections will outline the scope of the case study and note any limitations, such as data availability, that may impact the analysis. The remaining part of the case study will be presented in a breakdown by sector or service type, and each will follow a similar structure. Baseline situation For three of the analysed service types (all but delivery services), the analysis will begin with a review of trade statistics and trade flows between the EU and Japan from 2014 to 2018, i.e. in the years preceding the EPA’s entry into force. For delivery services, sector data are not singled out. Impact of the EU-Japan EPA This section will focus on the effects of the EPA. It will analyse the relevant EPA provisions for each of the analysed service types. Moreover, for three of them (all but delivery services), it will also examine trade statistics covering the period between 2019 and 2023 (or the latest available data), as well as the results of the economic modelling. Additionally, the analysis will cover specific aspects for each service type, which include the following: Transport services The analysis will focus on maritime commitments made in the EPA, as well as those for auxiliary services (such as storage-warehousing and freight forwarding) and other modes of transportation, including road (trucking) and rail. In addition to the aspects mentioned above, it will examine: • What has happened between 2014 and 2023 in terms of changes in trade volumes (i.e. containers and bulk cargo) between the EU and Japan, and whether any EPA volume effects can be identified • Which companies have been trading between the EU and Japan and invested in the EUJapan international transport • The extent to which they have taken steps to become integrated transport providers, and what role the EPA has possibly played to facilitate this process 42 Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership • • The extent to which an uptake of new technologies can be identified and whether it has been related to the EU-Japan EPA Characteristics of intermodal (sea-land transport) and – if available - traded volumes. Financial services Regarding financial services, the analysis will examine: • How the value and volume of financial services have grown since 2019, who the main players are and what has happened to new entrants • What the drivers for the increase in financial services trade have been and the key developments • How the EPA and its provisions may have contributed to this increase in financial services trade (linking to the binding sub-section on financial services in the EPA) • The level of compliance with the EPA provisions on financial services • Barriers to the operation in the financial services market in Japan faced by EU firms. Telecommunication services Regarding telecommunication services, the analysis will examine: • How the EPA and its provisions may have contributed to the increase in telecommunication services trade (linking to the provisions in the EPA) • What the drivers for the increase in telecommunication services trade have been, and key developments • The developments in e-commerce and how to build on the current EU-Japan collaboration, • Cross-border data flow (depending on data availability), • Digital services, although the availability of verifiable and consistent data may limit the depth of this part of the analysis. Delivery services For the sub-sector of delivery services, no OECD services data are available that are split out. They are covered under a broader category of business services. Keeping in mind data limitations, the analysis of delivery services will cover the following: • Data on postal and courier services in terms of volumes and growth, the main players and what has happened to new entrants • The level of compliance with the EPA provisions on delivery services • Barriers to the operation in the delivery services market in Japan faced by EU firms In each part, desk research will be complemented by stakeholder engagement. Conclusions and recommendations The analysis will finish with conclusions and recommendations. 43 Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership 7 DRAFT STAKEHOLDER CONSULTATION STRATEGY Stakeholder engagement is a central component of this study, especially given the critical stance adopted by stakeholders towards trade agreements in general and the EU-Japan EPA in particular, during the negotiation and ratification phases. This chapter outlines the draft stakeholder consultation strategy. The following sections provide more detailed information about the elements of the consultation strategy: 1. Consultation objectives and scope (section 7.1), 2. Identification and mapping of stakeholders (section 7.2) 3. Targeted consultation methods and tools (Section 7.3), including: a) Pillar 1: Two meetings with EU civil society (Civil Society Dialogue – CSD) b) Pillar 2: Stakeholder consultations in the EU, EU MS and Japan, consisting of: i. Online survey for businesses and SMEs in the EU and Japan ii. Four online regional seminars for EU MS iii. One online seminar for Japan iv. Targeted SME stakeholder engagement in both regions, v. Interviews and meetings with stakeholders in the EU and Japan c) Pillar 3: Open Public Consultation, OPC (survey) d) Pillar 4: Meetings with EU and Japanese institutions e) Pillar 5: Digital engagement through a dedicated website, social media strategy, and other digital channels 7.1 Consultation objectives and scope The consultation process is an essential element of this study, contributing to its transparency and participatory nature. Meaningful engagement with stakeholders at every stage of the analysis enhances the study's legitimacy and supports the development of well-grounded findings and recommendations. Objectives In line with Tender Specifications, the objectives of the stakeholder consultations are: • • • • To identify sectors and groups that have benefited from or been negatively affected by the EU-Japan EPA To collect evidence supporting the analysis of the reasons for the identified effects To inform the development of case studies To gather stakeholder input on areas of the EPA that should be prioritised and where further evidence and research are needed Scope To fulfil the consultation objectives, the strategy requires a broad scope: • Timing: Consultation activities will be conducted throughout the study and strategically timed to maximise participation and accommodate holiday periods • Stakeholders: The process is open to all interested parties, particularly those with a direct and indirect stake in the negotiation, implementation, or monitoring of the EPA. These stakeholders will be proactively engaged • Geographical coverage: Although input is welcomed from any location, the targeted consultations will focus on the EU, EU MS, and Japan The scope is defined along two dimensions: (1) the types of consultation activities to be implemented and (2) the depth of outreach, including the number of stakeholders engaged and the duration of activities. 44 Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership Deliverables Stakeholder consultations will support the final study report by addressing the following: ▪ ▪ ▪ ▪ ▪ 7.2 Implementation progress of the Agreement Stakeholder awareness and understanding of the Agreement The experience of economic operators, including challenges related to the length of customs procedures and other administrative processes The effectiveness, efficiency, coherence, and impact of cooperation mechanisms The broader impact of the EPA on economic, social, human rights, and environmental dimensions in the EU, EU MS, and Japan Identification and mapping of stakeholders Tender Specifications outline key EU, EUMS, and Japan stakeholder groups. Next, stakeholders within these broad groups should be identified. Stakeholder identification An initial list of potential stakeholders has been compiled and is provided in Chapter 5 in the Annex to the report. It focuses on NGOs, business associations, businesses, and trade unions in the EU and Japan. Further stakeholder mapping will be carried out as the study progresses, based on the findings from the analysis that help pinpoint where the most significant effects of the EPA have occurred. Stakeholders from all EU MS are encouraged to engage in the consultation process. Stakeholder mapping Stakeholder mapping, particularly in Japan, is essential to enhance the effectiveness of the consultation process. It helps identify potential gaps or imbalances that may influence civil society inputs, allowing corrective measures to be implemented. It also enables targeted outreach in areas where additional efforts may be required to ensure that key perspectives are represented in this study. 7.3 Targeted Consultation methods and tools 7.3.1 Pillar 1: Civil Society Dialogue meetings Meetings with EU civil society will focus on presenting and discussing the ongoing work as part of DG Trade’s Civil Society Dialogue (CSD), a system of regular exchanges between civil society and the Commission on EU trade policy. Two CSD meetings will be held (in line with the requirements in the Tender Specifications) to present and discuss the key deliverables from the study: the draft inception report and the draft final report. For each of the meetings, the following actions will be taken: • Relevant materials (i.e. draft reports) will be provided in advance to allow participants to review and prepare • A meeting agenda will be prepared • A clear and concise presentation will be delivered (supported by slides), covering the work completed and outlining the way forward • Discussions will be held with stakeholders on the progress made and results obtained • Meeting discussions will be summarised, and minutes will be prepared 7.3.2 Pillar 2: Stakeholder consultations in the EU, EU MS, and Japan As part of the stakeholder consultation outreach in the EU, its MS, and Japan, five key activities are proposed: • An online survey for businesses and SMEs in the EU and Japan 45 Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership • • • • Four online regional seminars for EU MS One online seminar for Japan Targeted SME stakeholder consultations in the EU and Japan Interviews and meetings with stakeholders in the EU and Japan Online Business/SME survey In addition to the Open Public Consultation (see Section 7.3.3 below), a separate online survey focused on business, particularly SMEs, will be launched. It will include a clear, accessible overview of relevant aspects of the EPA and the purpose of the questions. The survey follows EU guidelines for online consultations. It includes questions that allow the respondents to share insights about the Agreement's impact on businesses and SMEs (see draft survey in chapter 6 in the Annex to this report). Based on previous experience and according to the Tender Specifications, intensive dissemination and promotion of the survey will be required to obtain a sufficiently high number of responses: • • • In Japan, the business/SME survey will be promoted through the local partners, the expost evaluation dedicated website, Newsletters, social media, Chambers of Commerce, and the support of the EU Delegation in Japan and the EU-Japan Centre for Industrial Cooperation In the EU, the survey will be promoted through the extensive network of the ECFORTE Consortium members, Newsletters, social media, Chambers of Commerce, the EUJapan Centre for Industrial Cooperation and the support of the Commission In EUMS, the survey will be promoted through national-level stakeholders, Newsletters, social media, Chambers of Commerce, and support from the Commission Representations in EUMS. This survey will remain online for 18 weeks to allow sufficient time for stakeholders to respond and to allow for the inclusion of the survey results in the draft final report to allow enough time for assessing and evaluating stakeholder inputs. Four regional online seminars for EU MS Four regional online seminars will be organised across the EU, targeting four groups of EU MS regionally, with support from the European Commission and its Representations in the EU MS. This ensures alignment with Tender Specifications while remaining feasible within the existing resources. The seminars will be held after the Advanced Chapters are submitted to the Commission and before the work on the draft final report is completed to share preliminary results from the study with the stakeholders and gather their feedback, which will inform the final analysis. The aim is to ensure a balanced stakeholder representation that corresponds with the different parts of the analysis in this study. It is proposed to split the EU MS into four regional groupings, as outlined in Table 7.1. Table 7.1: Regional EU MS groupings for online seminars Region 1 Austria Belgium France Germany Ireland Luxembourg Region 2 Bulgaria Croatia Czech Republic Hungary Poland Romania Region 3 Cyprus Greece Italy Malta Portugal Spain 46 Region 4 Denmark Estonia Latvia Lithuania Finland Sweden Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership Region 1 The Netherlands Region 2 Region 3 Region 4 Slovakia Slovenia The EU MS regional online seminars will be organised between November 2025 and January 2026, subject to holidays and special days in the EU MS. One online seminar for Japan One online seminar will be organised for Japanese stakeholders with support from the Commission, the EU Delegation in Japan, and the EU-Japan Centre for Industrial Cooperation in January 2026. Like the EU seminars, it will seek balanced stakeholder participation and be timed to allow incorporation of feedback into the draft final report. Targeted SME stakeholder engagement in the EU and Japan Tender Specifications place special emphasis on SMEs, which may benefit from the Agreement directly (as exporters or importers) or indirectly (as suppliers to exporting businesses). To capture their views and experience with the implementation of the EPA, the following activities will be conducted: • • • SMEs will be invited to participate in online seminars A targeted business/SME online survey will be launched, as discussed above Tailor-made SME-focused questions will be included in meetings and interviews Interviews and meetings with stakeholders in the EU and Japan In-depth interviews with private sector representatives, trade unions, NGOs, and other stakeholders will be conducted throughout the study. They will be virtual, offering scheduling flexibility and broader geographical reach. Written contributions will also be welcomed, particularly from trade associations and Organisations that represent various economic sectors. Interviews will be conducted: • In the EU: from the inception phase through to the finalisation of the draft final report • In Japan: from the inception phase (to identify key issues and sectors) to the draft final report (to validate findings and gather feedback) 7.3.3 Pillar 3: Open Public Consultation The parameters of the Open Public Consultation are specified in the Tender Specifications. As the consultation targets a broad audience (the general public), while also needing to cover all evaluation criteria and impact dimensions, a key challenge is balancing the desire to gather as much information as possible with respondents' limited willingness to complete lengthy and complex questionnaires, especially those including open-ended questions. To address this, the number of questions, including open questions, will be closely linked to the research needs, and questions going beyond the study scope outlined in Tender Specifications will be avoided. Moreover, surveys will be designed in a “smart” way, meaning respondents’ answers to specific questions will determine which follow-up questions they will receive. The study team will do the following: • Prepare and test the survey questionnaires (see Chapter 6 in the Annex to this inception report) • Disseminate information about the public consultation to relevant stakeholders • Transparently inform about survey responses in the Consultation Report • Analyse the responses and incorporate the results into the quantitative and qualitative analyses 47 Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership This OPC will remain online for 18 weeks to give stakeholders sufficient time to respond and enable the inclusion of the survey results in the draft final report. This will allow enough time to assess and evaluate stakeholder inputs. 7.3.4 Pillar 4: Consultations with EU and Japanese institutions The study will be conducted in close cooperation with European and Japanese institutions. This pillar includes consultations with the European Commission’s Interservice Steering Group, the European Economic and Social Committee (EESC), the European Parliament’s INTA Committee (in discussion with DG TRADE), and the Government of Japan. Meetings with the European Commission ISG Tender Specifications indicate the project stages at which meetings with the ISG will be held. They include the kick-off meeting at the beginning of the study and one meeting in each phase to discuss the draft report submitted by the study team. For each meeting, the study team will provide: • • • • Relevant materials, notably draft reports A draft agenda A clear, concise presentation (supported by slides), covering (at the inception stage) the proposed approach to the study and (at the interim and final stage) findings from the analysis and outlining the way forward A summary of the discussion (minutes) Meetings with other EU and Japanese institutions In addition to internal meetings with the ISG, the following meetings will be organised: • A meeting with the European Economic and Social Committee (EESC) • A meeting with the European Parliament’s INTA Committee (to be confirmed with DG TRADE) • Two meetings with representatives of the Japanese government, one in the inception phase to discuss the methodological approach and one in the final phase to present findings from the analysis and receive feedback 7.3.5 Pillar 5: Website and other electronic communication Website The dedicated website was developed during the inception phase. It is designed to: • • • • Share timely and relevant information about the evaluation process and deliverables Serve as a platform for stakeholders to contact the study team and provide input Host outreach tools, including surveys, updates, and links to social media Connect with DG TRADE website and other EU trade evaluation resources The website will remain accessible for at least two years following the approval of the study's final report (in line with the Tender Specifications), serving as a repository of information and outputs. Stakeholder inputs provided as part of the EU’s Better Regulation initiative (EU-Japan trade agreement – evaluation) will also be included in the study. X (formerly Twitter) This platform will be used to: • • • • Share key findings and updates throughout the study Highlight related research and publications Feature noteworthy insights from the report to keep audiences engaged Promote outreach activities such as CSDs and online seminars 48 Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership Stakeholders from the list will be contacted and invited to follow the study’s X account. Support from stakeholders in sharing content (e.g. via retweets) is anticipated and encouraged. LinkedIn Profile LinkedIn will complement X by offering a platform for more in-depth engagement and longer content. It will be used to: • • • • Disseminate findings and interim results through summary posts Share related research and analysis relevant to the study Periodically highlight sections of the published reports to promote transparency and encourage dialogue Advertise outreach activities, including CSD meetings and online seminars Email and electronic newsletters While social media have essentially replaced email for bulk information sharing, it remains useful for direct, tailored engagement. Emails will be used to: • • • • • Invite stakeholders to events Request feedback Provide updates about the project Schedule one-on-one interviews or meetings Receive stakeholder inputs and position papers For broader updates, periodic newsletters will be distributed to stakeholders in the project database. These newsletters will promote key elements of the consultation strategy and direct recipients to the website, X account, and LinkedIn page. 8 CONCLUSION AND NEXT STEPS This report and the accompanying Annex present the proposed approach to delivering a study that will support the Commission’s ex-post evaluation of the EU-Japan EPA. Further to stakeholders' review of this report and the Commission's approval of the revised version, the study team will develop the analysis and conduct stakeholder consultations in line with the proposed approach. A substantial part of the analysis (Advanced Chapters) will be submitted to the Commission in mid-October, and a draft final report will follow in February 2026. 49 Study in support of an ex-post evaluation of the Agreement between the European Union and Japan for an Economic Partnership HOW TO OBTAIN EU PUBLICATIONS Free publications: • one copy: via EU Bookshop (http://bookshop.europa.eu); • more than one copy or posters/maps: from the European Union’s representations (http://ec.europa.eu/represent_en.htm); from the delegations in non-EU countries (http://eeas.europa.eu/delegations/index_en.htm); by contacting the Europe Direct service (http://europa.eu/europedirect/index_en.htm) or calling 00 800 6 7 8 9 10 11 (freephone number from anywhere in the EU) (*). (*) The information given is free, as are most calls (though some operators, phone boxes or hotels may charge you). Priced publications: • via EU Bookshop (http://bookshop.europa.eu). Priced subscriptions: • via one of the sales agents of the Publications Office of the European Union (http://publications.europa.eu/others/agents/index_en.htm). 50 [Catalogue number] doi:[number]
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