The UK Government has secured a free trade agreement with Japan making it the UK’s first major trade deal as an independent trading nation as it leaves the EU. The deal will help to increase UK trade with Japan by roughly £15.2 billion, according to the government.
The UK-Japan Comprehensive Economic Partnership Agreement was agreed via video by International Trade Secretary Liz Truss and Japan’s Foreign Minister Motegi Toshimitsu on 11 September. The deal is said to enable UK companies to gain a competitive analysis in several areas whilst creating more jobs and driving economic growth throughout the UK.
Liz Truss, the UK’s International Trade Secretary 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.”
The deal will also work to support UK car and rail manufacturing. Major UK investors such as Nissan and Hitachi will benefit from reduced tariffs on parts coming from Japan, streamlined regulatory procedures and greater legal certainty for their operations.
Mike Hawes, SMMT Chief Executive said, “SMMT welcomes today’s agreement in principle of a Japan-UK Free Trade Agreement. This agreement should help foster a mutually beneficial automotive trade and investment relationship between the two countries, building on a shared automotive history that stretches back more than 40 years. While we await the full terms of the agreement and, in particular, evidence that it will deliver in full on industry’s priorities for the progressive lifting of tariffs and reduction of regulatory barriers, the conclusion of such an FTA represents a significant milestone for our industries.
"We hope the deal can be ratified swiftly but, for both sides to benefit fully, we still need to urgently complete an ambitious and tariff-free UK-EU deal – and time is rapidly running out”, Hawes adds.
The government said the deal is also an important step towards joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). This will give UK businesses a gateway to the Asia-Pacific region and help to increase the resilience and diversity of its supply chains.
UK businesses will benefit from tariff-free trade on 99% of exports to Japan. Government analysis shows that a deal with Japan will deliver a £1.5 billion boost to the UK economy and increase UK workers’ wages by £800 million in the long term.
Carolyn Fairbairn, Director General of the Confederation of British Industry 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.”
