In a historic deal, United Kingdom (U.K.) has struck its first free trade agreement post-Brexit with Japan, which aims to increase trade between the two nations by £ 15.2 billions.
The deal allows U.K. to export 99% of its good to Japan without any tariff. Japan is U.K.’s 11th biggest trading partner.
Financial services firms, food producers, coat-makers and biscuit bakers and cheese producers would benefit from the agreement. Trade barriers in financial services and digital sector will also be reduced, primarily through increased coordination between regulators.
The agreement is seen as an important step towards the U.K. joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in the Asia-Pacific region. Japanese firms in U.K. such as Nissan and Hitachi would benefit from reduced tariffs on parts coming from Japan and streamlined regulatory procedures.
Speaking on the occasion, the International Trade secretary of U.K. – Liz Truss said, “The agreement we have negotiated – in record time and in challenging circumstances – goes far beyond the existing EU deal, as it secures new wins for British businesses in our great manufacturing, food and drink, and tech industries.”
“From our automotive workers in Wales to our shoemakers in the North of England, this deal will help build back better as we create new opportunities for people throughout the whole of the UK and help level up our country,” added Truss.
The British Prime Minister Boris Johnson also hailed the development and said that Brexit gives U.K. the freedom to strike trade deals with other countries around the world.
Taking it to twitter, Boris Johnson tweeted, “The UK has just signed a major Free Trade Agreement with Japan. Congratulations to @trussliz and all who took part in these negotiations. We have taken back control of our trade policy & will continue to thrive as a trading nation outside the EU.”
Talking about the deal, the Prime Minister of Japan –Shinzo Abe tweeted (translated from Japanese), “We had a telephone conversation with Prime Minister Johnson the other day, and Japan and the United Kingdom, which are partners who share universal values, will promote free trade through stronger cooperation than ever before. We will spread the economic rules of the new era to the world. It sends that powerful message.”
Shinzo further tweeted (translated from Japanese), “The Economic Partnership Agreement with the United Kingdom has just reached a general agreement.”
The deal is equally important for Japan as it wanted to finalise the agreement before a change in Japanese Government. It is to be noted that Shinzo Abe had announced to resign from the post of Prime Minister citing health reasons. There were speculations that the new leader may not give much importance to this deal.
The U.K. Government is now trying to replicate dozens of similar trade deals with third countries before its transitional agreement with the bloc expires. If the deals don’t materialize, British companies could face barriers to doing business in most of the foreign markets. If a U.K.-E.U. trade deal were agreed, growth is still expected to decline by about 4.4% in the long run compared to what it would have been had Britain remained in E.U.
