The United Kingdom has secured its first trade deal with Japan after leaving the European, the accord boosting the profile of embattled Prime Minister Boris Johnson-already facing a Brexit rebellion from his own political camp.
The trade agreement is expected to increase between the UK with Japan by US$19.5 billion.
The deal, which is expected to boost Britain’s GDP by 0.07% compared to 2018 levels over the next 15 years, was agreed in principle by International Trade Secretary Liz Truss and Japanese Foreign Minister Toshimitsu Motegi on Friday, 11th September, 2020.
Striking an accord with the world’s third-largest economy has been a priority for Johnson, who is eager to demonstrate the ability to sign trade deals as an independent country — a key plank of the Brexit campaign he led.
The U.K. benefited from the EU-Japan free trade agreement and needed a deal to avoid tariffs on commerce with Japan at the end of the year.
Its timing is also useful to Johnson. Trade talks with the EU, Britain’s largest trading partner, have deteriorated sharply in recent times. This is amid a U.K. plan to break international law over the Brexit divorce treaty.
That move has soured negotiations and increased the prospect of no trade deal being reached by Dec. 31, when Britain exits post-Brexit transition arrangements.
The U.K. said 99% of exports to Japan will be tariff-free under the deal, which will add 15.2 billion pounds to annual trade with the Asian nation.
It marks an “important step” toward joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the government said.
The deal affords the UK a better one than that it has with the European Union, including better data flows and market access for financial services.
UK sectors poised to reap the most benefits from this trade deal include businesses in manufacturing, food and drink and tech industries.
The agreement allows British and Japanese companies to maintain business continuity after Brexit and provide greater opportunities for investment.
This trade deal was struck after three months of negotiations resulting in more progressive rules than the Japan EU trade deal. This is especially on issues such as electronic commerce.
The Brexit divorce bill includes a deal for the UK to pay the EU a series of payments before it finally leaves the union at the end of this year.