While still wrangling with the EU on the future of its post-Brexit trade relations, the UK has announced that it secured the first post-Brexit pact with Japan, which will make almost all British exports to the country tariff-free.
The British government announced on Friday that the UK-Japan Comprehensive Economic Partnership Agreement was agreed in principle during a video call between the UK’s International Trade Secretary Liz Truss and Japan’s Foreign Minister Motegi Toshimitsu.
“This is a historic moment for the UK and Japan as our first major post-Brexit trade deal. 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,” Truss said in a statement.
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. https://t.co/2wgFAjC5T3
The deal, meant to boost trade with Japan by some £15.2 billion ($19.5 billion), can also help UK businesses gain a foothold in the Asia-Pacific region as it became an “important step” towards joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The CPTPP accounts for about 13 percent of world GDP and is supported by 11 countries around the Pacific Rim, and the UK has been planning to join the bloc after the Brexit transition period ends.
The UK says that domestic manufacturers, financial services firms, food and drink producers, as well as tech companies will benefit from the tariff-free access to the Japanese market. London says that 99 percent of British exports to Japan will not be subject to tariffs. It also noted that the UK economy will enjoy a £1.5 billion boost thanks to the deal, while British workers’ wages may increase by £800 million “in the long run.”
Britain had to seek new trade agreements with its overseas partners as previous deals will no longer apply from December 31, when the Brexit transition period ends. While the deadline is looming, London and Brussels are still at loggerheads over the terms of their bilateral agreement.
The UK added fuel to the fire earlier this week as it published the draft “United Kingdom Internal Market Bill.” The legislation, which is in breach of the withdrawal deal it agreed and signed with the EU last year, has drawn the ire of EU officials. European Commission president Ursula von der Leyen said that move “undermines trust,” while Commission Vice-President Maros Sefcovic later signaled that trust is necessary if talks on a future trade deal were to continue.
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