WORLD TRADE  
ORGANIZATION  WT/REG244/2 
4 September 2009 
 
 (09-4180) 
Committee on Regional Trade Agreements Original:  English 
  
 
ECONOMIC PARTNERSHIP AGREEMENT BETWEEN BRUNEI DARUSSALAM  
AND JAPAN (GOODS AND SERVICES) 
 
Questions and Replies
 
 
 
 The following communication, dated 2 September 2009, is being circulated at the request of the delegations of Brunei Darussalam and Japan.   This document reproduces the questions addressed to the Parties and the responses submitted. 
 
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Questions from the Delegation of Australia
 
 1. We note that Japan will retain duties on appr oximately 12% of its total tariff lines, most 
of which are agricultural products.  The average  final tariff on dutiable agricultural products 
ranges from 13.6% to 22.2%.  Are there any provi sions to revisit these lines either during or 
after the implementation period with a view to liberalization? 
 All lines under category R of which commitment is  stipulated 1.(g) of General Notes, Part 1 
of Annex 1 are subject to line-by- line based renegotiation in the fifth year.  
 
2. Has the Sub-Committee on Customs Proced ures met? What issues with regard to 
customs procedures have been identified for further action? 
 The Sub-Committee on Customs Proc edures has not been held yet. 
 
3. Has the Sub-Committee on Trade in Services  met? What conclusions has it reached 
regarding the current operation of the EPA provisions on trade in services? Have issues been 
identified which are likely to be taken up in the two year review provided for under Article 88 of the EPA? 
 The Sub-Committee on Trade in Services met on 15 April 2009.  Both Parties exchanged 
general information on recent liberalization in their services sectors. 
 
4. We note that lines under HS Sections I to IV that will retain duties at the end of the 
implementation period will have a combination of both ad valorem  and specific duties.  Is there 
any scheduled reduction in the ad valorem  or specific duties for these lines? 
 There is no line subject to tariff reduction among such lines.  
 
5. How were the average final tariffs (dutiable) in HS Sections I through IV calculated?  
What price data/series was used?  Was this a peri od of high or low prices for those commodities 
that retain specific duties? WT/REG244/2 
Page 2  
 
   The final tariff rates were calculated by th e CRTA based on the tariff data provided by the 
Parties;  thus the Parties do not have information on the specific methodologies of processing the tariff data upon preparation of the Factual Presentation. 
 
Questions from the Delegation of Brazil
 
 6. Are the preferences granted for goods prod uced with materials imported with 
suspension or elimination of duties and taxes? 
 Whether materials are exempted from customs duty or not at the time of importation does not 
affect the determination of the origin status of the final goods.   Preferential tariff treatment will be applied to originating goods which satisfy all the 
requirements of Chapter 3 (Rules of Origin). 
 
7. Are there any plans to implement digital certificates of origin, with digital signature? 
 There is no plan to implement digital certificates of  origin, with digital signature at this stage. 
 Questions from the Delegation of the European Communities
 
 Liberalization of trade and tariff lines
 
 
8. The Factual Presentation indicates th at Brunei Darussalam liberalizes by 2018 
(ten-year-transition period) 99.4% of tariff lin es, corresponding to 99.9% of Brunei's imports 
from Japan during 2005-2007. Japan liberalizes by 202 3 (15-year-transition period) 87.4% of its 
tariff lines, corresponding to 99% of Japanese impo rts from Brunei in the period 2004-2006 by 
2023.  
 Could the Parties elaborate on the reaso ns for this asymmetrical liberalization? 
 
 The figures concerning the liberalization commitm ents reflect the results of the negotiations 
between both Parties, taking into consideration each Party’s specific interests or concerns.  Japan’s 
liberalization commitments are substantial a nd high-level and are consistent with the 
WTO benchmark, i.e. liberalization of “substantially all the trade.”  
9. These figures show that during the period 2004-2006 there was virtually no trade for the 
Japanese remaining dutiable lines, a total of 12.6% of total lines.  
 Does Japan consider that liberalizing some  of the remaining dutiable lines could 
promote trade in those lines, and create thus new trading opportunities amongst the Parties? 
 
 The figures reflect the result of the negotiations conducted by both Parties, taking into 
consideration each side’s specific interest and concerns.  
 
10. Chart III.2 in page 12 seems not to match Brunei Darussalam's tariff liberalization 
commitments described in the Factual Presentation.  
 Could Brunei Darussalam clarify the content of the above-mentioned Chart?  
  It is just an example of Chapter 36, which in  the factual presentation in paragraph 28 states: 
"As can be seen from Chart III.2, tariff lines in HS  Chapter 36 retain the same duties as those on an 
MFN basis.  "And it is clearly stated in the note in  the corresponding Table III.2 for that particular  WT/REG244/2 
 Page 3 
 
 
  Chapter 36.  (In Chapter 36, there are only 2 lin es which are dutiable MFN rates (30%) and both of 
them are subject to X category in the Agreement).  
Rules of origin
 
 
11. Could the Parties explain the criteria and legal basis for determination of origin, 
certification requirements and customs control proce dures in relation to processes that might be 
performed in a non-Party which is a member country of ASEAN? 
 As for the criteria of origin and legal basis for determination of origin, please refer to each 
rule of PSR which allows usage of a material of a non-Party of the ASEAN, such as 0403.10, 11.05 
and 1106.20. 
  Regarding certificate requirements, exporters should indicate relevant information such as the 
name of a non-Party in their certificates of or igin for originating goods in the above cases.  
 
 Please see Operational procedures: 
 ( http://www.mofa.go.jp/region/asia- paci/brunei/epa0807/index.html
). 
  As for customs control procedures, the customs authority of the importing Party grants preferential tariff treatment on the basis of certificat es of origin for originating goods.  If there is 
reasonable doubt regarding certificates of origin , including the information above, the customs 
authority may conduct verification process pursuan t to Article 40 to 42 of the Agreement. 
 
12. Does de minimis  principle apply in case of a change in tariff classification (CTC) and in 
relation to agricultural goods (HS Chapters 1-24)?  If so, why?  
 De minimis  only applies in case of a change in tariff classification.  It does not apply to 
agricultural goods (HS chapter 1-24). 
 
Provisions on trade in services and investment
 
 
13. The Factual Presentation shows that this Agreement does not provide for ambitious 
commitments in trade in services, which seem not to go beyond GATS commitments.  
 Could the Parties explain in detail the reasons for this limited level of ambition?  
 
 Under this EPA, Japan and Brunei Darussalam have made improvement in the specific 
commitments compared to those under the GATS.  Under the EPA, Japan liberates more sectors than 
it does under Japanese schedule of specific commitmen ts of the GATS, and it also has made full 
commitments in more than 30 sectors.  This dem onstrates the high level commitments that this EPA 
provides for. 
 
 Therefore, we are of the view that this EPA conforms to Article V of the GATS. 
 
14. How do the Parties consider this limited lib eralization in terms of GATS Article V 
compatibility?  
 Please refer to the reply to the previous question. 
. 
 
  WT/REG244/2 
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  Questions from the Delegation of the United States
 
 Goods
 
 15. According to Paragraphs 24 and 25 and Annex 1 of the Factual Presentation, 
Tables A.1-A.2:  
 Brunei
 eliminates tariffs on 99.4% of all tariff lines covering 99.9% of imports from 
Japan under the Agreement.  99.8% of Brunei’s industrial tariffs are duty-free and 98% of its 
agricultural tariff lines are duty-free under the Agreement. 
 
 Japan  eliminates duties on 87.4% of all tariff lines covering 100% of imports from 
Brunei under the agreement.  However, though 94. 0% of industrial tariffs are duty-free, only 
59.4% of Japan’s agricultural tariff lines are duty-free under the Agreement. 
  How does Japan explain the disproportionate  tariff elimination between its industrial 
and agricultural sectors?  
 
 The figures concerning the liberalization commitm ents reflect the results of the negotiations 
between both Parties, taking into consideration each Party’s specific interests and concerns. Japan is 
of the view that the liberalization commitments  should be substantial and high-level which are 
consistent with the WTO benchmark, i.e. liberali zation of tariffs on “substantially all the trade.”   
With this principle in mind, certain tariff lines we re excluded from the elimination given the possible 
impacts on domestic industries.  
 
16. Could Brunei please explain why it accepte d from Japan a disproportionately lower 
level of tariff elimination in agriculture?   
 Brunei and Japan negotiated the BJEPA as a single undertaking and hence were able to 
achieve an overall balance of interests for both parti es in the Agreement. In this context, the BJEPA 
offers various programs which address the gap in capacity.  
 17. Could the Parties please explain how Japan ’s tariff elimination commitments in 
agriculture achieve the “substantially all trade”  standard set out in GATT Article XXIV?  
 Pending agreement between WTO Members, GATT Article XXIV paragraph 8 does not 
specify a quantitative benchmark for assessing “substa ntially all the trade” and moreover does not 
mandate a sector by sector assessment.  The onl y condition regarding sectors that is clear in 
GATT Article XXIV is that no exclusion of a major sector is allowed, although Members’ views also differ on what constitutes a major sector.  With r espect to this Agreement, it does not exclude any 
major sector, therefore, Japan is of the view that  this Agreement complies w ith the “substantially all 
trade” standard set out in GATT Article XXIV.  
 
18. According to paragraphs 24 and 25 of the Factual Presentation, Japan’s implementation 
period is five years longer than Brunei’s. Coul d Japan please explain why it requires a longer 
implementation period than Brunei?  
 The figures reflect the result of the negotiations conducted by both Parties, taking into 
consideration each side’s specific interest and concerns. 
 
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