UK to begin trade talks with Japan, experts predict a significant impact on food trade

Talks between the UK and Japan are set to begin next week to outline a post-Brexit trade agreement between the two nations. Experts predict that companies operating in food trade will be significantly impacted.

Trade deal must be struck to avoid reliance on WTO regulations

Following its exit from the European Union, the UK will cease to share its trade policy with the economic union. Consequently, the UK is required to reach trade deals with individual countries, which British businesses hope to benefit from, so long as desirable terms can be agreed upon.

A deadline of January 1st, 2021, has been set for the UK to reach a trade deal with Japan, and negotiations will begin next week. This deal will be particularly significant due to the high level of trade between the two countries, which totaled to £31.4 billion in 2019, making Japan the UK's fourth-largest trading partner outside of the EU. Additionally, Japan currently takes third place globally in terms of its size, and 9,500 UK companies contribute to it annually via the export of goods.

Failure to reach a new deal by the deadline will leave the UK following trading terms laid out by the World Trade Organization (WTO). These terms would see tariffs and other obstacles hindering trade between the two nations, which would be detrimental to businesses in both countries.

Growing food trade must be protected

The UK food industry, in particular, is expected to be significantly impacted. As of September 2019, Japan imported around £14.8 billion worth of goods from the UK, representing 7.6% from the previous year. The food industry accounted for a major portion of this trade, which was significantly boosted following the lifted ban on UK lamb and beef exports into Japan in January 2019. Experts estimated that beef and lamb exports to Japan alone could equate to £127 million over the first five years, with Japan expected to import around £75 million in beef and £52 million in lamb.

Additionally, exports of salmon from the UK to Japan have increased, showing a 71.8% increase between October 2018 and October 2019, with 1,060 tonnes of fish worth £8.07 million imported into Japan from the UK.

Scotch whisky has also been growing in popularity in Japan in recent years, with imports of the product rising by 20.9% between October 2018 and October 2019, representing £147.2 million. 

The new trade deal must secure regulations that limit boundaries to food trade to enable this thriving sector to continue to grow. If these parties don't reach an agreement and WTO rules are used to move forward, the future of food trade between the UK and Japan will be jeopardized.

The UK hopes to secure a favorable trade deal, not only to secure the future of its major trading industries but also to act as a step toward joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Membership of this agency, which currently involves 11 countries, will facilitate trade between the UK and countries in the Asia-Pacific region, an alliance that will no doubt benefit UK businesses.

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