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‘Zero chance’ of UK trade deal with Japan until Brexit negotiations are complete

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Japan is the latest nation with which the UK has come to the table, and the Department for International Trade last month drew up a mammoth 96-page policy paper setting out why this is a good idea.

What’s more, the government thinks a deal could be secured before the year is out.

But Bill Emmott, chairman of the Japan Society of the UK and former editor-in-chief of The Economist, has a more cautious view – starting with this ambitious date of completion.

He told Express.co.uk: “There is zero chance of a UK-Japan trade deal until the EU-UK trade arrangements have been agreed.

“Japanese companies have in the past treated the UK as a gateway to Europe, as well as buying a lot of components from EU suppliers for their UK operations, so they have to treat the UK and EU markets as being essentially connected.”

Whether this intricate relationship with the EU – as far as Japan is concerned – will throw a spanner in the works remains to be seen.

Japanese and EU officials at a meeting

Whether a Japan trade deal happens this year could depend on EU negotiations. (Image: Martin Bureau / AFP / Getty)

Clearly, it depends on how UK-EU trade negotiations go, but as things stand Brexit trade deal talks have been essentially at an impasse for months, with competition rules – or a ‘level playing field’ – a key sticking point.

Emmott suggests that it would be frustrating for the UK’s financial services sector if the Japan deal were to be in any way affected by Brexit, since this industry stands to make important gains.

But it’s also worth considering what exactly Japan would want as part of its terms. In other words, what can the UK offer that Japan needs or wants? And, conversely, what can the UK promise to buy the Japanese exporters would like to sell?

As far as Emmott is concerned, the EU already plugs a lot of Japan’s gaps.

READ: Brexit Britain embarks on landmark Japan trade deal 

a combine harvester in the UK

Agriculture is one UK industry Emmott said may be of interest to Japan. (Image: Scott Barbour / Getty)

“For Japanese exporters, the EU is a much bigger and more important market than the UK. So the EU-Japan FTA (“Economic Partnership Arrangement”) that was agreed last year is their model,” he explained.

“For the UK, there could be some gains in agri-food exports, because Japan’s food market is quite closed so a direct negotiation may make it possible to secure access for particular meats or cheeses, for example, and perhaps English wine too.

“But this is small. I can’t see much chance of gains in automotive exports to Japan either, given that Japan is one of the world’s biggest and most competitive auto producers. Here, Japan will be aiming to maintain the access to the UK market that they currently enjoy.”

In any case, the government has said that the “free flow of data” is one area in which it hopes to make some progress in a free trade deal with Japan, which could mean support for the field of AI.

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Japan's PM Shinzo Abe shakes hands with Europe's Donald Tusk

Japanese Prime Minister Shinzo Abe (middle) and Donald Tusk (L) sign an agreement in 2018. (Image: Martin Bureau / AFP / Getty)

One company that is hoping to benefit from this more liberal flow of data is NTT Data, a global IT services business with a significant presence in the UK.

Simon Williams, CEO of the firm, explained in a statement why this would be the case.

“The data mobility elements of the free trade agreement discussions are of particular importance as they will provide for the free flow of ideas and innovation between Japan and the UK.

“This ensures we are able to best utilise NTT Data’s R&D efforts in Japan for our work with UK industries.”

We asked NTT Data what it is about the UK’s current data mobility relationship with Japan that prohibits such innovation at the moment, but they were unable to comment.

In any case, the negotiations come at an opportune time for the firm; NTT Data last year announced a £68 million investment into its UK operations, including a new London ‘innovation centre’ plus expanded presence in Scotland and Birmingham.

Another area of interest for some is air travel. This is obviously relevant at the moment given the international travel restrictions in place amid the Covid-19 pandemic, and American Express Global Business Travel (GBT) explained the importance of this in relation to the FTA.

The travel management firm is understood to be working with the government currently, lobbying and advising on ways in which it can open up ‘travel corridors’.

liz truss walking outside number 10

International Trade Secretary Liz Truss kicked off Japan negotiations on June 9. (Image: Wiktor Szymanowicz / Barcroft Media / Getty)

The firm’s idea is that trips booked through travel management companies could be made exempt from the UK’s 14-day quarantine rule, and Martin Ferguson, head of public affairs, explained why.

“Business travel is the engine room of the UK economy. It is responsible for generating £220 billion of GDP while helping businesses grow, creating jobs and generating tax receipts. As an island we need international travel and air lift if we are to prosper.

“Japan is already an important trade partner for the UK. We saw business traffic across the finance, technology, manufacturing and professional service sectors increase by 10 percent in 2019.”

And creative industries is also a sector that the government claims will benefit. TMF, a film and publicity company looking to help Japanese media producers and animation studios build their presence in the UK, could be one set to benefit from this latter aspect.

Xander Ross, head of TV and Entertainment at Percy and Warren Media Consultants on behalf of TMF, told Express.co.uk: “Japan is renowned for having brilliant, unique, and incredibly high quality productions across film, TV and animation.

“Likewise, having the chance to showcase the best of British content to the Japanese market offers the chance for our production industry to further enhance its position as truly world leading in entertainment.”



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