The UK has completed its first large post-Brexit trade deal after signing an agreement with Japan that will take effect from January 1st.
Liz Truss, the UK’s international trade secretary, signed the agreement with Toshimitsu Motegi, the Japanese minister for foreign affairs, in Tokyo on Friday.
The pact, negotiated in just a few months over the summer, is seen by the UK government as an important demonstration of its ability to reach new trade deals outside the EU.
“It used to be said that an independent UK would not be able to strike major trade deals or they would take years to conclude,” said Ms Truss at a joint press announcement with Mr Motegi.
“But today we prove the naysayers wrong with this groundbreaking, British-shaped deal that was agreed in record time.”
The new deal largely replicates the existing EU-Japan deal, but has an extra chapter on digital trade and lacks the quotas for agricultural exports such as cheese that Brussels wrested from Tokyo during years of talks.
Instead, the deal allows the UK to use any agricultural quotas left over by the EU. British officials are confident there will be enough space in the quotas to maintain and increase the UK’s food exports to Japan.
“We have maintained Japan’s high level of access to UK markets . . . and for some products, such as train carriages and auto parts, we realised improved access,” said Mr Motegi.
Strategic ally
The UK was keen to strike an early deal, as it continues negotiations with Brussels on post-Brexit trade. Japan regards the UK as a strategic ally, creating the momentum for a quick agreement.
Although the UK-Japan deal will allow continuity in trade between the two countries, Mr Motegi said a deal between the UK and the EU was still crucial for Japanese business.
“To this day, many Japanese companies have expanded their business to the UK as the gateway to continental Europe,” Mr Motegi said. “It is of paramount importance that the supply chain between the UK and the EU is maintained even after the UK’s withdrawal.”
Japanese carmakers such as Nissan and Toyota use parts from across Europe in vehicles they assemble in the UK, many of which are exported back to the EU. Mr Motegi said he had “high hopes” for a deal between London and Brussels.
Both sides regard the agreement as a potential stepping-stone to UK membership of the Trans-Pacific Partnership (TPP), a regional pact that includes Australia, New Zealand, Canada, Malaysia and other countries around the Pacific Rim.
Negotiations for UK membership of TPP would allow for further trade liberalisation between London and Tokyo, potentially going deeper than the EU-Japan deal.
“Japan welcomes the UK’s interest in acceding to the TPP11 and will continue to give the necessary support,” said Mr Motegi.
The deal still needs to be ratified but passage through the Japanese Diet is expected to be uncontentious.
“Using our new-found independence as an optimistic, outward-looking trading nation, the United Kingdom is once again embracing the golden opportunities ahead,” said Ms Truss.
– Copyright The Financial Times Limited 2020
