Response to FTAs: Formulation of guidelines for rules of origin

Japan has been actively promoting its EPA policy since the Japan-Singapore EPA came into effect in 2002. Currently, there are 18 EPAs in force (as of December 2019) and the "FTAs" include mega-FTAs such as the EU-Japan EPA and TPP11, which are used through a self-declaration system. As the effects of the FTA/EPA are expanding, the automotive industry is also beginning to make active use of the FTA/EPA.

n  The challenges of proving country of origin in the automotive industry

In order to export products using the FTA/EPA, it is necessary to prove that the products "meets" the rules of origin, which is stipulated for each export item in the respective agreements.

For example, in the case of an automobile manufacturer exporting a vehicle, it could use the FTA/EPA to export the product by requesting a survey of origin from the parts manufacturer and having the parts manufacturer certify that it is in compliance with the rules of origin.

In the automotive industry, as the use of FTAs and EPAs became more active, the frequency of origin surveys increased, and automobile manufacturers and parts manufacturers are forced to conduct surveys using different methods, it placed a large burden on the supply chain.
 

n  Efforts to address the issues

In light of this situation, JAPIA, in cooperation with JAMA, formulated the Guidelines for EPA Origin Surveys and launched three initiatives: standardization of operations related to origin surveys, streamlining of standardized operations, and dissemination of standardized and streamlined operations in the supply chain.

 

JAPIA has published the "Guidelines for EPA Country of Origin Survey" on its website. This includes an agreement with JAMA on certification methods, leveling and burden reduction, and role sharing.

1) Standardization activities:

As for standardization activities, JAPIA developed a format and an operation manual in accordance with the guidelines and started to utilize them in the parts supply chain. This activity aims to standardize Country of Origin Survey operations in the automotive industry, thereby reducing the burden on the entire supply chain, with the aim of reducing errors and improving survey accuracy by standardizing operations.

2) Efficiency improvement activities:

JAPIA and JAMA have agreed to jointly launch a industry standard system in order to further improve the efficiency of the standardized operations. This system was designed to respond to the increase in the volume of surveys associated with the use of mega-FTAs, etc., and was intended to dramatically improve the accuracy of surveys. The Working Group jointly organized by JAPIA and JAMA has been working on the same functional requirements for the system and cost sharing were discussed and determined.

 3) Promotional activities:

With the cooperation of the Ministry of Economy, Trade, and Industry (METI), JAPIA will continue discussions in the joint JAMA/JAPIA WG and is considering to encourage second and third tier suppliers to participate in the system.