Earlier this week the UK Government has released its negotiating objectives for a free trade agreement (FTA) with Japan. The Government has published data that suggests the UK economy could benefit from a £1.5 billion boost by having an FTA with Japan, as a UK-Japan trade deal could increase trade flows between both countries by £15.2 billion.
Trade Secretary Liz Truss stated that manufacturers of textiles and clothing, and professional and financial services providers are among the UK industries expected to be the biggest winners of a comprehensive FTA with Japan.
We expect that automotive products will be one of the key areas for the Japanese government to look for a similar or better deal to the existing Japan-EU Economic Partnership Agreement (EPA).
The automotive industry is an important industry for the UK with employment of 823,000 (in 2018, according to SMMT) and the UK government has repeatedly mentioned the importance of Japanese car manufacturing. However, European car manufacturers are equally important and therefore, we expect the EU-UK negotiation on the automotive products will have some influence on the UK-Japan negotiation or vice versa.
UK-Japan trade talks are also a necessary precursor to the UK joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The Japanese government has already welcomed the UK to join the CPTPP during ministerial visits between 2017 and 2019.
This is a very positive development in UK-Japan trade relations and companies in both countries could come to benefit from the reduced, or zero tariffs resulting from an FTA.
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