The UK has agreed a trade deal with Japan today – its first major trade agreement as an independent trading nation for nearly 50 years.
The government says the agreement, which replaces the UK part of the EU’s trade deal with Japan, will increase UK trade with the country by an estimated £15.2bn.
The majority (99%) of UK exports to Japan will be tariff-free, the government claims, with English sparkling wine, Yorkshire Wensleydale and Welsh lamb officially recognised and sold in Japan.
Welcome relief
The deal was agreed in principle by International Trade Secretary Liz Truss and Japan’s Foreign Minister this morning (Friday 11 September).
Its timing provides relief for the government as the UK’s talks with the EU on a free trade deal could break down over Boris Johnson's plan to overwrite parts of the Withdrawal Agreement on Northern Ireland – a move that would break international law.
Gains from Japan deal
The Financial Times says the deal “will largely replicate the existing EU-Japan free trade agreement”, which will no longer apply to the UK when transition ends in December.
However the government press release highlights the following gains from the deal:
- Digital & data provisions “that go far beyond the EU-Japan deal”. The agreement introduces a ban on data localisation, which will save UK firms operating in Japan, such as fintech businesses Revolut and Transferwise, the extra cost of setting up servers in Japan
- Tariff reductions for UK pork and beef exports – tariffs will fall on pork, beef, salmon and a range of other agricultural exports
- Improved market access forUK financial services – the UK’s biggest export to Japan, accounting for 28% of all UK exports
- Tariff-free access for more UK goods. The government says new Rules of Origin will allow producers of coats, knitwear and biscuits to source raw materials from around the world for their exports to Japan
- New protection for iconic UK goods – increasing geographical indications (GIs) from just seven under the EU-Japan deal to potentially over 70, covering goods including English sparkling wine, Yorkshire Wensleydale and Welsh lamb
- New protections for UK creative industries with provisions that tackle online infringement of IP rights, such as film and music piracy
- Support for Japanese investors in the UK such as Nissan and Hitachi, including reduced tariffs on parts coming from Japan.