The UK has agreed in principle its first trade deal since leaving the European Union with Japan, with the Westminster government saying it will increase trade by an estimated £15.2m.
The UK-Japan Comprehensive Economic Partnership Agreement was struck by International Trade Secretary Lis Truss and Japan’s foreign minister, Motegi Toshimitsu, in a video call earlier today.
Ms Truss said: “This is a historic moment for the UK and Japan as our first major post-Brexit trade deal.
“The agreement we have negotiated – in record time and in challenging circumstances – goes far beyond the existing EU deal, as it secures new wins for British businesses in our great manufacturing, food and drink, and tech industries.”
“From our automotive workers in Wales to our shoemakers in the North of England, this deal will help build back better as we create new opportunities for people throughout the whole of the UK and help level up our country.
“Strategically, the deal is an important step towards joining the Trans-Pacific Partnership and placing Britain at the centre of a network of modern free trade agreements with like-minded friends and allies.”
UK businesses will benefit from tariff-free trade on 99% of exports to Japan. Government analysis shows the deal will deliver a £1.5bn boost to the UK economy and increase UK workers’ wages by £800 million in the long run.
The deal includes:
- New protection for more iconic UK goods – increasing geographical indications (GIs) from just seven under the terms of the EU-Japan deal to potentially over 70 under our new agreement, covering goods including English sparkling wine, Yorkshire Wensleydale and Welsh lamb. This would lead to improved recognition of key UK brands in the Japanese market.
- Supporting major investors in the UK like Nissan and Hitachi through reduced tariffs on parts coming from Japan, streamlined regulatory procedures and greater legal certainty for their operations.
- Improved market access for UK financial services – including greater transparency and streamlined application processes for UK firms seeking licences to operate in Japan.
Director-general of the CBI, Carolyn Fairbairn said: “The signing of the UK-Japan trade deal is a breakthrough moment. It will be welcomed by businesses across the country. The Government and business now need to work together to make the most from the deal. It’s a huge opportunity to secure new Japanese investment across a wider range of sectors and UK regions.
“Business will help support the Government in its efforts to secure more trade deals around the world and promote their benefits to communities. The Japan deal can be the first of many.”
CEO of TechUK, Julian David said: TechUK welcomes the conclusion of the UK-Japan Economic Partnership Agreement with its comprehensive digital trade chapter. Today’s agreement improves an already flourishing relationship between the UK and Japan tech sectors and creates significant opportunities for trade and investment for both our countries.
Jim Walker, managing director of Walkers Shortbread, said: “We welcome the news that a UK-Japan agreement has been agreed. Japan remains one of Walkers’ most important markets and sales have grown steadily there since first launching in Japan over 40 years ago.
“This deal will help provide certainty and create more opportunities to continue building sales in the future in a market where our products already enjoy success.”
However, there are growing concerns as to whether a free trade deal can now be reached with the European Union.
Negotiations are continuing with both sides still wide apart of a number of issues including fishing rights and state aid rules. Moreover, the EU said it could take legal action if the UK Government, as outlined in its draft Internal Market Bill, goes through with plans to change aspects of the legally binding Withdrawal Agreement with regards to custom and trade arrangements between Northern Ireland and mainland Britain.
The transition period between the UK and EU ends of January 1, 2021.
Speaking on ITV’s Good Morning Britain, the former Prime Minister Gordon Brown said: “You can’t expect to have a decent negotiation with the European Union if you start by breaking a treaty that you signed yourself and negotiated only a few weeks ago.
“And I think Boris Johnson’s got to wake up to the fact that it’s in the national interest – and I’m talking about national unity and how we can make the economy do better – that we don’t have a clean break, that we have, actually, something other than a no-deal.
“And I think it can be negotiated – we’ve got a problem over fishing rights, state aid, it can all be dealt with – but my fear is not just a no-deal; my fear is we’ll have such a minimal deal that we’ll be in battle with Europe for years ahead and that really does not make sense if we want people to have jobs in our economy.”
BCC director general Adam Marshall said: “Businesses will warmly welcome this milestone free trade deal with Japan, which provides access to a major market for traders across the UK.
“Chambers of Commerce stand ready to work with government to ensure that the benefits of this agreement are felt by businesses on the ground. Firms will want to see the specific provisions to support small businesses replicated in future trade deals to help business communities thrive and grow in future.
“Whilst this agreement is undoubtedly cause for celebration, securing a Free Trade Agreement with the EU remains critical to the future of businesses in the UK. We urge Ministers to redouble their efforts to reach a comprehensive partnership with our largest trading partner at a crucial time in the negotiations.”