Trade deal to be wrapped up by the end of August . . .
On August 7, Japan and the U.K. reached an agreement on most aspects of a free trade agreement (FTA). The two-day negotiations were held in London between Japan’s Foreign Minister Motegi Toshimitsu and the U.K.’s International Trade Secretary Liz Truss. The deal is intended to ensure uninterrupted trade and investment between the two countries after the Brexit transition period ends on December 31, 2020. Talks first started on June 9 via video conference, and now both parties are aiming to seal the bilateral FTA by the end of August in an effort to ratify the trade deal by January 1, 2021. Truss said the proposed deal would have ambitious provisions in data, digital, and financial services, beyond those contained in the EU-Japan Economic Partnership Agreement.
Trade deal implications . . .
The U.K. government says a UK-Japan FTA could increase annual bilateral trade by C$26.54 billion in the long run (compared to 2018’s total of C$51 billion) and increase U.K. workers’ wages by C$1.4 billion. London estimates an increase in British exports to Japan of 21 per cent and a rise in Japanese exports to Britain of 79 per cent. One of Japan’s main goals has been to get the U.K. to eliminate auto tariffs earlier than 2026, while the U.K. has hoped to widen its access to Japan’s agriculture market. London has also been asking Tokyo to provide special tariff-free conditions for some commodities, including butter and malt. However, Tokyo is wary of granting preferential treatment to London, as the U.S. could ask for the same under the terms of their trade deal.
The U.K. to join the CPTPP?
This trade deal will provide a stepping stone for the U.K. to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), in which Canada is a partner. The U.K. has announced its interest in seeking membership in the CPTPP, and Canadian and British trade ministers spoke in June about the U.K.’s CPTPP ambitions. Canada has expressed interest in welcoming Britain to the CPTPP, as Brexit-ed Britain will no longer be bound by Canada’s existing Comprehensive Economic and Trade Agreement with the EU. However, if the U.K. does not succeed in its CPTPP aspirations, its bilateral deal with Japan could be a model for next steps for Canada.