UK-Japan trade deal could be in place before 2020 ends - so what will it involve?

Brexit | | MIC Customs Solutions |

Boris Johnson is reportedly eager to rush through a trade deal with Japan, but is this going to be possible in practice?

Britain is keen to have a new trade deal in place with Japan as soon as possible - and this could mean before the end of this year, it has been claimed. So, what exactly would this involve and how could it be negotiated so quickly?

Here, we'll take a closer look at the latest news and potential terms and conditions the two nations may be interested in implementing.

Blazing a trail with a new deal

Britain's prime minister Boris Johnson is eager to pursue an agreement with Tokyo ahead even of those with the European Union and the US, in a bid to demonstrate the UK can still work efficiently after Brexit, it was reported by the Sun this week.

It is being referred to as 'EU Plus Plus' because it aims to go further than the recent trade agreement negotiated between Japan and the EU.

A Whitehall source told the newspaper: "The PM is very keen on the Japan deal now, and thinks we can use it as a bit of a trailblazer. It will really help to show Brussels as well as the rest of the world we're ready to go."

In Japan, prime minister Shinzo Abe's cabinet is also said to be keen on putting trade talks with the UK in place as soon as possible, particularly to benefit the digital and financial services sectors.

Priorities after Brexit

Britain has already made clear that its priorities for new trade deals after Brexit are Japan, the US, Australia and New Zealand, with talks on all of them likely to begin by spring this year.

However, news that Japan is at the top of the list may surprise some, with US president Donald Trump's commerce secretary Wilbur Ross recently saying he believes an agreement with Washington "should be much easier to do mechanically" than the others.

Under the rules of the transition period set to begin on January 31st 2020, Britain can negotiate and sign new trade deals but not implement them.

What a deal with Japan may include

Experts have already been predicting what a UK-Japan trade deal would involve, with auto tariffs suggested as being high on the agenda. Tokyo is likely to request that car tariffs be cut out immediately, while the UK is sure to seek protection for its own automotive industry.

Other hot topics that have been put forward are measures to resolve investment disputes.

Currently, the UK is bound by the EU-Japan Economic Partnership Agreement (EPA) and both nations have agreed to use this as the basis for any future FTA.

However, it was reported by the Financial Times last year that Japan is seeking tougher concessions from Britain than it did the EU.

Indeed, Mr Abe has already said that a simple 'copy and paste' would not suit the UK and Japan's relationship, while a report from the Initiative for Free Trade recently estimated that the EU-Japan EPA has not been as beneficial for Japan as it has for European nations.

Writing for City AM, director of the European Centre for International Political Economy Hosuk Lee-Makiyama said an agreement with Britain could improve on market openness without having to make concessions imposed by France and Germany.

However, since the Japan-EU EPA includes a 'most-favoured nation' clause, Tokyo may not be able to offer anything better to Britain than it has to the EU.

Trade with Japan - is a rapid new deal possible?

Japan is certainly an important trading market for the UK and, among non-EU countries, Japan is Britain's largest investor.

The UK's biggest exports there include power generation equipment, machinery, chemicals, pharmaceuticals and scientific equipment.

If Mr Johnson is successful, an envisaged trade deal could be in force by January 2021, but director of The UK in a Changing Europe Anand Menon told iNews he thinks this is unlikely if one is not in place with Europe first.

"Japan will need to know what kind of relationship we will have with the EU, as much of the business they do with us is linked to the EU. The difficulty of accessing the EU from the UK will be a key consideration," he added.

It will certainly be interesting to see how this situation works out and if Japan does indeed end up being fast-tracked.