Japan and the UK have finalized the free trade deal which is projected to rise the trade between the two countries by £15.2 billion. The UK-Japan Comprehensive Economic Partnership Agreement was approved by Toshimitsu Motegi, Japan’s Foreign Minister, and International Trade Secretary, Liz Truss.
The UK government’s Department for International Trade (DIT) stated that the agreement is tailored to the UK economy and saves the extra benefits beyond the EU-Japan trade deal which gives the UK companies that export to Japan, a competitive advantage in numerous areas. Along with creating jobs, it will drive economic growth throughout the UK.
As per the Society for Motor Manufacturers and Traders (SMMT), last year over 143,000 vehicles registered in the UK, and those were imported from Japan and valued approximately £1.5 billion. On the other hand, in 2019, 33,500 UK-built cars were exported to Japan that valued over £1 billion.
Additionally, the SMMT reported that the trading relationship in components and parts is noteworthy, with Japan enjoying an extensive trade surplus in mutual exchanges of parts, components, and engines.
SMMT confirmed that while the UK imports parts, components, and accessories worth £458m and engines worth £120m, it exports automotive accessories, components, and parts worth £65m and engines worth £16m to Japan.
It anticipates that the deal with Japan will gradually eliminate the duties on all automotive products and circumvent WTO tariffs. In terms of regulatory restrictions, the UK’s automotive industry is aiming to maintain important elements of the present automotive annex in the EU Japan EPA and update it where appropriate.
The UK businesses will get an advantage from the tariff-free 99% of exports to Japan, according to DIT. Government study shows that a contract with Japan would provide a £1.5 billion boost to the UK economy and increase the worker’s wages by £800m in the long run.
The UK government confirmed that the agreement will support the car and rail manufacturing of the UK, backing the major investors like Hitachi and Nissan via reduced tariffs or parts delivered from Japan, efficient governing procedures, and better legal certainty for their operations.