Article

Japan’s New Graduation Requirements of the GSP

Japan:Inbound Tax Alert March 2017, No. 20

In December 2016, Japan Customs announced that they would review the graduation requirement of the generalized scheme of preferences (GSP). (Japan:Inbound Tax Alert March 2017, No. 20)

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In Brief

In December 2016, Japan Customs announced that they would review the graduation requirement of the generalized scheme of preferences (GSP). The new requirement will enter into force from April 2019 for entire graduation and April 2018 partial graduation. China and Brazil, with which Japan does not conclude FTAs, are likely to be newly graduated countries.

Graduation Requirement of the GSP

In Japan’s GSP, a country shall be excluded from the list of beneficiaries as “Entire Graduation” or “Partial Graduation” when it achieves a certain level of economic development. The GSP rate will not be able to be applied to all items from entirely graduated countries and specific items from partially graduated countries.
Since over 90% of the GSP applied on imports to Japan is from high-middle income countries such as China, the original aim of the GSP, which is to help developing countries by making access to Japan’s market easier, does not seem to have been achieved. To make the GSP more efficient, Japan Customs decided to implement a review of the graduation requirement of the GSP.

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