UK Signs Major Post-Brexit Trade Deal With Japan
Under terms of the deal, virtually all British exports to Japan will be free of tariffs
The trade deal will take effect on Jan. 1, 2021
Critics pointed out that the trade deal with Japan will increase U.K. GDP by only 0.07%.
The U.K. has formally signed its first post-Brexit trade deal – not with Europe, but rather with Asian economic powerhouse Japan.
U.K. Secretary of State for International Trade Liz Truss, who signed the pact with Japanese Foreign Minister Toshimitsu Motegi in Tokyo, called it a "ground-breaking” deal.
Under terms of the deal, virtually all British exports to Japan will be free of tariffs, while the U.K. will remove its own tariffs on Japanese auto imports by 2026.
“It used to be said that an independent U.K. would not be able to strike major trade deals or they would take years to conclude,” Truss said at the joint press announcement with Motegi. “But today we prove the naysayers wrong with this groundbreaking, British-shaped deal that was agreed to in record time.”
The trade deal will take effect on Jan. 1, 2021.
Motegi also said a deal between the U.K. and the EU was still necessary for Japanese businesses, especially automakers such as Nissan and Toyota (TM) which use parts from Europe in vehicles they manufacture in the U.K.
Motegi added he had “high hopes” that a deal would be struck between the U.K. and EU.
The new U.K.-Japan deal is very similar to Tokyo’s existing trade pact with the EU, except that it includes language on digital trade and lacks quotas for some agricultural exports.
Moreover, critics pointed out that the trade deal with Japan will increase U.K. GDP by only 0.07%. Some analysts said the pact should have been more comprehensive.
Minako Morita-Jaeger, international trade policy consultant and fellow of the U.K. Trade Policy Observatory at the University of Sussex, told BBC: "Given that Japanese [foreign direct investment] has been playing an important role in the U.K. economy and retaining its existing investment in post-Brexit is crucial, the U.K. government should have shown a strong commitment to Japanese investment by including a comprehensive investment chapter encompassing investment protection and dispute settlement."
Nonetheless, both the U.K. and Japan hope this deal will facilitate Britain’s eventual entry into the Trans-Pacific Partnership, or TPP, a regional trade zone that includes Australia, New Zealand, Canada, Malaysia and other Pacific Rim nations.