UK and Japan agree substance of deal: Truss resists concessions on automotive and agriculture

Mon 10 Aug 2020
Posted by: William Barns-Graham
Trade News

japan trade deal

The UK and Japan have reached “substantial” agreement in most areas of the negotiations for what looks likely to become the UK’s first post-Brexit trade deal.

Japan’s foreign minister, Toshimitsu Motegi, was in London last week where he met with UK trade secretary Liz Truss to move the talks into their final stages.

Truss said there was a broad consensus between the countries and the BBC reports that the rest of the negotiations will now focus on the finer details of the deal.

Quick deal

Japan has been pushing for a quick deal to ensure continuity in trade with the UK once the country leaves the EU.

A UK-Japan deal will need to be finalised by early autumn to ensure there is enough time for ratification in Japan’s parliament before the start of next year.

The UK will cease trading under EU rules and agreements on 31 December 2020 – including the EU-Japan deal which came into effect in 2019.

Should the UK not secure a deal with Japan this year, trade would revert to WTO rules.

Starting point

The new deal will largely build upon the existing EU-Japan deal, though the UK is pushing for extra regulatory alignment and market access in financial services, digital and ecommerce.

The UK also hopes the deal will be a launching pad for joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) – a multilateral agreement between 11 Pacific nations also including South Korea and Australia.

However, despite having the EU deal providing a strong basis, automotive tariffs and market access for agricultural products had become sticking points in the talks.

Automotive tariffs pushed back

Japan has conceded ground on its attempts to accelerate the lifting of tariffs for Japanese cars and car parts entering the UK.

Currently, under the EU-Japan deal, a 10% EU tariff for automobiles will be reduced to zero over a period of eight years.

The UK has resisted Japan’s push for the tax to be reduced more quickly, with Nikkei Asian Review reporting that the duties will be phased out by 2026, in line with the EU deal.

No roll-back on agriculture

Japan has also pushed for reduced access to its markets for UK farmers.

Liz Truss resisted these moves, with an ally telling the FT, “Liz stood firm on UK interests and it was clear that we wouldn’t accept a rollback on the EU-Japan deal.”

One further win for the UK could be reduced tariffs on British bacon, according to a report in the Sun last week.