Tokyo: Japan and the United Kingdom are scheduled to sign a bilateral free trade agreement on Friday, the UK's first major trade deal as an independent trading country.
The UK-Japan Comprehensive Economic Partnership Agreement is expected to increase trade between the two countries by an estimated Є16.8 billion ($19.9 billion), according to the UK Department for International Trade. The new deal takes effect when the UK formally leaves the European Union (EU) at the start of 2021 and will guide the two countries' post-Brexit trade relationship.
After launching negotiations in June, the deal was agreed in principle by International Trade Secretary Liz Truss and Japan's Foreign Minister Motegi Toshimitsu on a video call on 11 September. Topics of negotiation included the import of Japanese cars – with the UK agreeing to gradually lift tariffs until they reach zero in 2006 – and exports of British foodstuffs to Japan.
Noriko Hama, a professor of economics at Kyoto's Doshisha University, said both London and Tokyo went out of their way to "avoid the difficult issue" and swiftly reached an agreement on bilateral trade – something that has benefited both nations' leaders politically.
"The agreement was crafted very carefully and does not include agricultural products, for example, so there were not too many bumps in the road before both sides could ratify the deal," she said.
"And it is good for Tokyo and London as it does emphasise the 'special relationship' again and works to a degree as a propaganda exercise as well, showing to the UK that Brexit is a positive," she added.
Martin Schulz, chief policy economist for Fujitsu Ltd's Global Market Intelligence Unit, said the discussions on trade went "smoothly" because both governments stepped back from initial plans for a wide-ranging agreement to meet the time constraints.
"It would have been very easy for them to effectively roll over the EU-Japan free trade agreement, but at the outset, both Japan and the UK said they wanted a much more interesting and forward-looking agreement," he said. "Those are the reasons that the UK has cited for leaving the EU, it wanted tailor-made trade agreements that went beyond EU deals."
And while the final version of the Japan-UK deal may not be ground-breaking, he said, there is now the possibility of more opportunities once the fundamentals are in place and a chance for more innovative approaches to trade after the deadline has been met.