UK secures first major trade deal post-Brexit with JapanPrint publication
On Friday 11 September the UK and Japan agreed a free trade deal, which is the first major trade deal secured by the UK as an independent nation. The deal took just over three months to conclude and the full text will be available in October.
The UK Government has published a press release here. Here are the highlights of the key points to note.
The newly-agreed deal between the UK and Japan is bespoke to the UK economy, and will be welcome news to UK businesses exporting to Japan, including companies operating within the manufacturing, financial services, technology and food and drink industries.
The Government has reported that UK businesses will be able to benefit from tariff-free trade on 99% of exports to Japan, and is being (perhaps overly) optimistic that the agreement could result in an economic boost of £1.5 billion to the UK economy.
Although Japan currently makes up around 2 per cent of British trade, the deal will undoubtedly see an increase in trade over the coming years. We have summarised some of the key highlights of the deal below:
- Digital and data provisions – the UK has committed to uphold the principles of net neutrality, as well as introducing a ban on data localisation, which will prevent British businesses from having the extra cost of setting up servers in Japan. It has been reported that this could be useful for UK fintech firms in particular operating in Japan.
- Improved market access for UK financial services – the deal creates a streamlined application process for UK firms seeking a licence to operate in Japan along with an annual dialogue between Her Majesty’s Treasury, UK financial regulators and the Japanese FSA that will explore ways to further reduce regulatory friction. Financial services are the UK’s biggest export to Japan, accounting for 28% of all UK exports.
- Tariff free access for more UK goods – the introduction of new and more liberal Rules of Origin will allow producers of coats, knitwear and biscuits to source imports from around the world for their exports to Japan.
- Geographical indications (GIs) – new protection for certain iconic UK goods, increasing GIs from just seven under the terms of the EU-Japan deal to potentially over 70 under the new trade agreement.
- New copyright protections – new protections for UK creative industries which go beyond the EU on provisions that tackle online infringement of IP rights, such as film and music piracy.
- Immigration – more flexibility for Japanese and British companies to move talent into each country, covering a range of UK skilled workers to enter Japan, from computer services to construction. This includes commitments that go beyond the EU-Japan deal, for investors, spouses and dependants, and a wider range of intra-company transfers. Requirements for visas will be clear and transparent, and with an aim that they be processed in 90 days. A worker transferring from their UK HQ to the Tokyo office will be able to take their spouse and dependants and stay for up to five years.
- Supporting UK car and rail manufacturing – supporting major investors in the UK like Nissan and Hitachi through reduced tariffs on parts coming from Japan, streamlined regulatory procedures and greater legal certainty for their operations.
- More generous market access for malt producers – Japan has guaranteed market access for UK malt exports under an existing quota which is more generous and easier to access than the EU quota. The UK is the second biggest exporter of malt to Japan, with UK producers exporting £37m there each year.
- Strong tariff reductions for UK pork and beef exports – tariff reductions on pork, beef, salmon and a range of other agricultural exports. Low tariffs will continue for key food and drink products covered by quotas, such as Stilton cheese, tea extracts and bread mixes. This forms a pathway to further market access under the comprehensive and progressive agreement for trans-pacific partnerships (CPTPP), which has been committed to by Japan as part of the agreement.
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