Two-way trade between ASEAN and Japan reached $239 billion in 2015, or 10.5% of ASEAN`s total trade. Meanwhile, Japan`s foreign direct investment (FDI) to ASEAN amounted to $17.4 billion, or 14.5% of ASEAN`s total FDI flows. Japan is ASEAN`s second largest trading partner and the source of direct investment for ASEAN. The AJCEP agreement offers Malaysian distributors the advantage of accumulating in compliance with ROO. This means that distributors can benefit from a larger supply base, i.e. they can use raw or intermediate materials from any part of the AJCEP and benefit from preferential rates. The ASEAN-Japan Comprehensive Economic Partnership (AJCEP) is a comprehensive agreement comprising trade in goods and trade in services, investment trade, rules of origin (ROO), the health and plant health system (SPS), technical barriers (OTC), the dispute settlement mechanism (DSM) and economic cooperation. For Malaysia, AJCEP offers additional benefits in terms of the immediate and accelerated removal of tariffs on products compared to the gradual liberalization under the bilateral agreement with Japan, i.e. the Malaysia-Japan Economic Partnership Agreement (JEPA). Some of the products that were not proposed by Japan under the MJEPA and were liberalized under the AJCEP agreement. Chapter 2 (trade in goods) of the AJCEP agreement provides for trade in goods, which covers the following main elements: the free trade agreement allows ASEAN and Japan to share the enormous resources available through joint cooperation in order to continue to stimulate growth in both the manufacturing and services sectors. Comprehensive Economic Partnership Agreement between Japan and the Member States of the Association of Southeast Asian Nations Simplification and harmonization of customs procedures and exchange of information on laws and regulations relating to this transparency regime. Negotiations on trade in services, including the “telecommunications and telecommunications” and “Movement of The Physical People” (MNP) chapters, as well as the ASEAN-Japan investment negotiations, have been concluded.
ASEAN and Japan are currently finalizing the legal instrument to carry out trade in services, including annexes for financial services and telecommunications, the free movement of individuals (MNP) and investment chapters in the AJCEP agreement. The signing is expected by the end of 2017. eliminating non-tariff measures, including quantitative restrictions on the importation of a commodity from other contracting parties or for the export or sale of products for export to other contracting parties (to the extent that it is not permitted under the WTO agreement); ASEAN and Japan first began informal dialogue relations in 1973, formalized later in March 1977 with the convening of the ASEAN-Japan Forum. Since then, considerable progress has been made in all areas of economic cooperation. As part of the goods trade, Malaysia has so far eliminated tariffs on 93.57% of normal-going goods. With regard to the products on the highly sensitive list, the sensitive list and the exclusion list, the modality varies and tariff reductions have been negotiated bilaterally between the ASEAN Member States and Japan, taking into account the sensitivities of the parties. To qualify for the preferential withdrawal rates provided by the AJCEP, it is necessary to respect the rules of origin established in the agreement and to use the certificate of origin in accordance with the AJCEP. The benefits to Malaysian consumers and the business community will be significant, with Japan being Malaysia`s fourth largest trading partner in 2016. The AJCEPs ROO has a general rule of RVC (Regional Value Content) 40% or CTH (Change in Tariff Heading), which offers exporters/manufacturers flexibility in choosing the applicable rule.