Not content with launching trade deal negotiations with the United States and the European Union simultaneously, the UK has just published its negotiating objectives for a free trade agreement with Japan.
Talks are to begin shortly, said the UK’s Department for International Trade (DIT).
London’s trade negotiators are scouring the globe for deals in the wake of the country’s withdrawal from the EU – the world’s largest trading bloc.
“Japan is one of our largest trading partners and a new trade deal will help to increase trade, boost investment and create more jobs following the economic challenges caused by coronavirus,” International Trade Secretary Liz Truss said in a statement.
Japan is Britain’s 11th-largest trade partner, with exports to Japan in 2018 worth 13.8 billion pounds ($17bn) of the country’s total exports of 642 billion pounds ($787bn), and imports from Japan worth 15.4 billion pounds ($18.9bn) of the UK’s 680 billion pounds’ ($834bn) worth of global imports.
“Both sides are committed to an ambitious timeline to secure a deal that goes even further than the existing [EU-Japan] agreement, especially in digital and data,” added Truss.
“Negotiations with Japan are an important step in CPTPP accession, a key UK priority, which will help us diversify our trade and grow the economy.”
The CPTPP is the Comprehensive and Progressive Agreement for Trans-Pacific Partnership – a trade deal signed by Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
The UK government will set out its negotiating objectives for Australia and New Zealand shortly, with the aim of having 80 percent of total UK external trade with countries covered by free trade agreements by 2022, said the DIT.
“So in addition to wanting to complete trade agreements with two of the three largest global trade powers [the US and EU] in the next year or so, we’re also going to start talks with the fourth largest,” trade expert David Henig, the UK director of the European Centre For International Political Economy said.
“You can’t fault the ambition, but such a programme before we’ve taken time to consider what we want looks reckless. The risk is that by the time we know what we really want from trade agreements, we’ll have given away the access to our own market which we could have traded.”
London has vowed that the National Health Service would not be up for negotiation, and wants the deal to be based on the current EU-Japan trading agreement – but it might not be that simple.
“As Japan is an existing EU Free Trade Agreement, and they don’t want to directly roll over the agreement, it makes sense to open talks,” added Henig. “The cumulative effect of all of the talks is the major concern.”
There are around 8,000 small and medium-sized British businesses currently exporting to Japan, said the DIT.
“It’s an ambitious timeline, but not an impossible one,” former diplomat and trade negotiator Dmitry Grozoubinski said.
“As with all trade negotiation timetables, the major obstacles are likely to be political,” Grozoubinski said. “The more the UK concedes and the less it seeks in areas of sensitivity for its partners, the more likely it will be swiftly concluding its various deals.”
Government analysis suggests the UK economy could increase trade flows with Japan by 15.2 billion pounds. By way of comparison, in 2018, UK exports to the EU were worth 291 billion pounds and imports from the EU amounted to 357 billion pounds.
Speaking about the news Ian Wright CBE, Chief Executive, Food and Drink Federation said: “We are pleased to hear the International Trade Secretary’s announcement this morning that talks will soon begin on a new UK-Japan preferential trade agreement. Japan is the world’s largest net importer of food and drink and offers significant growth potential for UK exports of value-added food and drink. This deal could make a huge contribution towards the UK’s economic recovery. It is also essential that this agreement is in place to deliver continuity of application of the existing EU-Japan Economic Partnership Agreement (EPA) and on terms that are at least as generous for trade in agrifood and drink.
“Delivering improved regulatory cooperation and avoiding tariffs that may apply after our access to the EPA ends on 1 January 2021 is vital to ensure continued growth in trade in both directions and to ensure UK exports can compete effectively. However, the timing presents unique challenges for the capacity of both Government and industry given the wide-ranging impacts of COVID-19. We also do not yet know what tariffs the UK will apply at the end of this year to our essential imports. Clarity on this will needed to quickly advance these negotiations. As the talks proceed, regular, open and transparent consultation with our industry will be crucial to ensure the best possible outcome for the UK’s largest manufacturing industry.”
