The UK/Japan trade deal
The UK has struck a new deal with Japan, making it the country's first noteworthy trade agreement since leaving the European Union (EU). Read our blog to see what this new deal holds for both countries.
In September 2020, International Trade Secretary Liz Truss and Japan's Foreign Minister Motegi Toshimitsu signed the UK-Japan Comprehensive Economic Partnership Agreement, making it the UK's first significant trade deal as an independent trading nation.
Since Japan is the UK's 11th largest trading partner, the UK government believes that trade between the two countries will receive a boost of £15 billion over the next 15 years. Included in the agreement is Japan's commitment to helping the UK join the Trans-Pacific Partnership (TPP), which is a trade pact among 11 pacific countries with a GDP of £110 billion that came into effect in January 2021.
The agreement will also remove most tariffs on UK goods exporting to Japan. To maintain its investments in the UK's automotive industry, Japan has made it clear that it must be able to keep its supply chains even after the UK-EU deal is over as well. Overall, the agreement is similar to the existing EU-Japan deal, except that it includes additional digital provisions and a compromise on agricultural trade.
Although the UK government has been touting the agreement as a success, critics believe otherwise. According to the Independent, many zero-tariff goods, such as eggs, rawhides, fur skins, handbags, and alcohol, are not significant exports for the UK. Of the 9,444 products listed, only ten will benefit from zero tariffs, which are products the UK has not exported to Japan in at least three years. Additionally, there are even increasing concerns that the UK-Japan agreement could result in UK data being sold to American companies via Japan, leaving many skeptical of the new deal.
The UK government has admitted that 83% of the gains from this new trade deal would go to Japanese exporters, with only 17% going to the UK. Although the government is under pressure to show its citizens that Brexit will give an economic boost, the new deal will most likely bring an economic growth of only 0.07%, which is a fraction of the 5 to 8% loss expected from Brexit.
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