Britain and Japan signed a free trade agreement (FTA) on Friday which the UK hailed as its first major deal as an independent trading nation.
“The UK has officially signed an economic partnership agreement with Japan marking an historic moment, as the UK”s first deal as an independent trading nation and offering a glimpse of Global Britain’s potential,” the UK government said in a statement.
It added that the UK-Japan Comprehensive Economic Agreement “goes beyond the existing EU agreement”.
Japan is the UK’s 11th largest export market with the value of trade between the two countries reaching £29 billion (€32 billion) in 2018. The UK estimates the FTA will increase that amount by £15.2 billion (€16.8 billion).
Financial services make up Britain’s biggest export to Japan, now at 28 per cent. English sparkling wine, made-in-Britain coats and shoes, Stilton cheese, as well as pork and biscuits from Britain, will become cheaper in Japan.
It will also make it easier for British companies to operate in Japan.
The trade deal now needs parliamentary approval in both countries.
Japanese Foreign Minister Toshimitsu Motegi told reporters that it will be presented to lawmakers very quickly in order to come into force on January 1, 2021.
The Brexit transition period will have expired by then which means Britain will be excluded from the EU-Japan agreement it is currently under.
Motegi said the new deal ensures continuity from the preceding European agreement while adding new areas for cooperation such as e-commerce and financial services.
Japan already exports about 1.5 trillion yen (€12 billion) of goods to Britain, mostly autos, auto parts and other machinery, while importing nearly 1 trillion yen (€8.1 billion) of goods from Britain, including pharmaceuticals, medical products and cars, according to the Japanese Foreign Ministry.
Tariffs on Japanese autos are removed gradually and won’t become zero until 2026, the same as the terms of the deal Japan has with the EU.
Japan has repeatedly expressed concern about Japanese businesses in Britain, which include Hitachi, with plants making railway cars for East Coast trains, and Nissan Motor Co., employing several thousand workers at its Sunderland auto plant.
David Hening, director of the UK Trade Policy Project, had previously told Euronews that while it is positive a deal has been reached in time for the UK’s departure from the EU, the agreement in itself “is mostly an extension of what is already there.”
Iana Dreyer, funder of European trade policy analysis website Borderlex, had concurred, saying: “Fundamentally, this is an exercise in keeping the status quo and in damage limitation.”