Photo: Japan Ministry of Foreign Affairs

UK Secretary of State for International Trade Liz Truss and Japanese Foreign Minister Motegi Toshimitsu (pictured above) announced during a video call on 11 September that the UK–Japan Comprehensive Economic Partnership Agreement was agreed in principle and that businesses will benefit from tariff-free trade on 99% of exports between the countries.

In its press announcement, the Department for International Trade (DIT) said, “The deal is tailored to the UK economy and secures additional benefits beyond the EU–Japan trade deal, giving UK companies exporting to Japan a competitive advantage in a number of areas”. DIT estimates that the deal will boost UK trade with Japan by £15.2bn and noted that this is an important step towards the UK becoming part of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

Nikkei reported that the agreement provides for a staged lifting of UK tariffs on Japanese autos starting in 2021 to zero in 2026—progress on a sticking point that has long concerned the Japanese side. Some Japanese railcar exports to the UK will also be tariff-free shortly after the agreement goes into effect.

On another highly publicised matter, Japan agreed to a staged reduction of the hard-cheese tariff, down to zero by 2035.

Truss said: “This is a historic moment for the UK and Japan as our first major post-Brexit trade deal. The agreement we have negotiated—in record time and in challenging circumstances—goes far beyond the existing EU deal, as it secures new wins for British businesses in our great manufacturing, food and drink, and tech industries”.

The UK in JAPAN campaign, which launched last September, was paused while delivery partners focused on the coronavirus pandemic. The British Embassy Tokyo announced on 25 August that the campaign would be restarted. CreativeTech GREAT Season—beginning with the first ever, all-virtual London Tech Week from 1 to 11 September—kicked off the campaign which will continue into 2021. Much of the activity will focus on a green and resilient recovery from Covid-19—a particular priority as the UK prepares to host the United Nations Climate Change Conference (COP26) in Glasgow, Scotland on 1–12 November, 2021.

During his two stints as Japanese prime minister, Shinzo Abe worked with four British counterparts—three during his second, record-setting term of almost eight years. After his announcement on 28 August that he would step down due to health reasons, Abe’s service was praised by British Prime Minister Boris Johnson, who said on his Twitter account the same day that Abe “has achieved great things as PM of Japan—for his country and the world. Under his stewardship the UK–Japan relationship has gone from strength to strength in trade, defence and our cultural links. Thank you for all your years of service and I wish you good health”.

Norway, the United States, Canada, Australia and Japan topped the list of countries with a growing appetite for English wine according to data shared by the Department for International Trade and WineGB­—the national association for the English and Welsh wine industry—on 8 September. Wine exports from the UK totalled 550,000 bottles in 2019—double that of 2018—and accounted for 10% of the 5.5mn bottles sold for the year at home and abroad. Japan stood out as one of the fastest-growing markets for UK wine, with 6% of 2019 exports going to the country that is already the third-largest market for Champagne.

The coronavirus pandemic has slowed growth in many markets, but export of British red meat is not one of them, according to a 25 August story by FarmingUK. Overall numbers are down year on year, but ship­ments of beef bound for countries outside the European Union are up 21%. Japan accounts for much of the demand. Ranking third among destina­tions, the country has received 1,369t of beef from the UK so far this year, resulting in a £4.7mn boost for the industry. The 23-year ban on UK beef was lifted in January 2019.

Already working with AstraZeneca on domestic development and delivery of a Covid-19 vaccine (page 24), Japan is teaming up with the UK, as well as Germany, France and the European Union, to create an alliance aimed at securing vaccine supplies. The Nikkei Asian Review reported on 11 August that the £15.5bn pool, called Covax, is meant to assist nations that cannot nego­tiate the same kinds of one-on-one deals with drugmakers as the United States and China. About 75 countries have expressed interest in joining. The alliance aims to procure 2bn doses of corona­virus vaccine by 2021.

NEC, Fujitsu eyed for 5G

Having banned Chinese tech firm Huawei, Britain is looking to Japan for help in building its next-generation 5G wireless network. The Japanese firms will be asked to bid against others such as Sweden’s Ericsson and Finland’s Nokia Corporation. (Economic Times, 21 July)

SoftBank may lose jobs at Glasgow office

With the SoftBank Group selling its British chip­maker ARM Limited to US-based Nvidia Corporation for $40bn, 21 positions in the firm’s Glasgow, Scotland office may be eliminated. SoftBank acquired ARM in 2016 for $32bn. At the time it was the largest foreign takeover by a Japanese firm. (The Herald, 5 September)

Land Rover Defender SUV on local market

British Chamber of Commerce in Japan Platinum member Jaguar Land Rover Limited announced on 28 August that its iconic Defender SUV will now be available in Japan. (BCCJ, 28 August)

Civic move to Saitama

With Honda closing its Swindon plant in 2021, the carmaker is preparing to move portions of its Civic production to its Yorii plant in Saitama Prefecture. (Just Auto, 27 August)

Talks between the British and Japanese governments for a bilateral free trade agreement (FTA) have continued despite the coronavirus pandemic, and the two sides are aiming for a deal by the end of July, according to The Mainichi on 12 July.

Negotiations began on 9 June and are moving at a rapid pace, using the existing Japan–EU FTA as the basis. Changes being sought include removal of UK tariffs on Japanese autos as well as added benefits for UK financial and textile industries. UK–Japan trade totaled about £24 billion in 2019, making Japan the 11th largest export market for the UK, which is the 12th biggest for Japan.

Secretary of State for International Trade Elizabeth Truss described Britain’s relationship with Japan as “absolutely critical” and the UK announced on 17 June plans to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), The Diplomat reported on 24 June. Although London and Tokyo continue to negotiate a bilateral free trade agreement, the UK’s interest in being part of the CPTPP is seen as a path to strengthening relations with Japan, as Prime Minister Shinzo Abe has been a proponent of their joining.

British drugmaker AstraZeneca PLC, whose AZD1222 candidate vaccine for Covid-19 is supported by the US Government’s Operation Warp Speed, is in talks with Japanese pharmaceutical firm Daiichi Sankyo Company Limited, as well as the Japanese government, to supply the vaccine—if proved effective—for use in Japan, according to a 27 June story in The Japan Times. AstraZeneca aims to produce 2bn doses and already has deals in place to supply the European Union and the United States, which has targeted January 2021 for delivery.

Japanese e-money firm PayPay Corporation has entered into a collaboration with Boku, a world-leading payment service provider with headquarters in London, according to a 16 June story on the website Electronic Payments International. The deal will allow PayPay, which uses QR codes, to provide a card-like experience to its 28mn users in Japan.

Following the successful wizardry of Universal Studios in Osaka, Seibu Railway Company, Ltd. is planning to replace its 93-year-old Toshimaen amusement park in Tokyo’s Nerima Ward with a new park dedicated to Harry Potter. Time Out reported on 12 June that construction will begin when Toshimaen closes on 31 August and the new attraction will open in the first half of 2023. Warner Bros. Entertainment Inc., which owns the film rights to the franchise and operates an attraction entitled The Making of Harry Potter in Leavesden, will rent part of the property from Seibu while the Tokyo Metropolitan Government will purchase the rest.

Japanese architects Ban Shigeru, Kuma Kengo, Sou Fujimoto and Ito Toyo are among those whose designs will be part of the exhibition Architecture for Dogs, Japan House London announced on 14 July. Each exhibit captures the quality of the relationship between dogs and their people. The collection of 16 architectural designs for different dog breeds first launched at Design Miami in 2012 and has since received global acclaim. Japan House London will be the first destination in Europe to exhibit Architecture for Dogs with a physical and virtual experience for guests, which will run for 18 weeks starting 19 September.

Osaka hotel picks top London talent

Palace Hotel Co. Ltd., which plans to open Zentis Osaka—the first property of its new hospitality brand—in the third quarter of this year, has turned to UK designer Tara Bernerd of Tara Bernerd & Partners to create modern interiors. (Hospitality Net, 16 June)

Aeon plans new eco drive

British firm Loop, which delivers products from popular food brands in reusable packages, is collabo­rating with retail giant Aeon Co., Ltd. to bring the service to Japan. The campaign will start in Tokyo before being rolled out to about 400 Aeon stores on Honshu and Shikoku in 2021. (The Guardian, 15 July)

Scots star signs with NTT rugby team

The Japanese Top League’s NTT Shining Arcs will be the new home of former Scotland captain Greig Laidlaw when rugby play resumes in January 2021. The current season has been cancelled due to Covid-19. (The Guardian, 6 July)

Michito Tsuruoka, an associate professor at Keio University, argued in The Diplomat on 2 April that, while Japan and the UK are well placed to pursue a bilateral deal that is more ambitious than the Japan–EU Economic Partnership Agreement (EPA), the direction and para­meters of the bilateral negotiations will be affected by the state of the EU–UK free trade agreement (FTA) delibera­tions, including the length of the transition period. Here are some highlights:

Tokyo has two goals: to protect the interests of Japanese firms operating in the UK, and to avoid a no-FTA end of the transition period.

Until then, the Japan–EU EPA remains applicable to the UK, but it will end with the termination of the transition period. Unless there is a bilateral Japan–UK deal in place, trade between the two countries will be on the World Trade Organization’s terms, causing trade disruptions.

As for the Japan–UK FTA, there is a trade-off between:

• The need to ensure damage limitation and to replace the Japan–EU EPA on time
• The desire to be more ambitious, aiming to conclude the most advanced FTA in the world—something which could set a new standard for other developed economies.

Tokyo and London might need to lower their sights and focus on settling immediate problems, an idea supported by many in the business communities of both countries.

They are also perfectly placed to envision a new model of economic partner­ship between mature and advanced economies, covering not just trade in goods, but also invest­ment, services, e-commerce and new technologies such as artificial intelligence, Big Data and biotechnology.

The vast majority of readers who took part in a Daily Express survey on 14 May backed International Trade Secretary Liz Truss’ bid to strike a free trade deal with Japan which goes further than the existing EU agreement.

In the poll, 1,130 people (87%) said Britain should prioritise a trade deal with Tokyo, 133 (10%) disagreed and 44 (3%) said they didn’t know.

One reader said, “Japan will be a good market for our fish, if we are wise enough not to give it away to the pilfering EU”. Another said, “The more trade deals that the UK signs, the more pressure is placed on those negotiators who try to play hard ball with the UK over any trade deal”.

The Software Alliance, a leading industry advocate, welcomed on 13 May the release of negotiating objectives for FTA negotiations between the UK and Japan. London says a UK–Japan FTA could increase bilateral trade by £15.2bn.

“The UK–Japan FTA creates an opportunity for both countries to create jobs and value by growing digital trade,” said Joseph Whitlock, director of policy at The Software Alliance, also known as BSA. “BSA urges both countries to adopt provisions that build on prior agreements, including the Comprehensive and Progressive Trans-Pacific Partnership and the US–Japan Digital Trade Agreement”.

The award-winning Welsh-born conservationist CW Nicol, who played such an important role in UK–Japan relations through his love of nature, sadly passed away on 3 April at age 79 following a long battle with cancer. Since 1980, he had called Nagano Prefecture home and established the C.W. Nicol Afan Woodland Trust there in 2002 to help support the revitalisation of forests. He was appointed Member of the Order of the British Empire (MBE) in 2005. ACUMEN had the pleasure of speaking to him about his devotion to nature in a past issue: bccjacumen.com/wood’n-you-believe-it

Global logistics provider XPO Logistics, Inc. has reached an agreement with Japanese personal care giant Shiseido Company, Limited to provide omnichannel logistics services throughout the UK, the firm revealed in a 13 May press release. XPO will manage Shiseido’s logistics at a 7,500m² distribution centre in Derby with plans to expand to 9,300m² over the course of the partnership. Shiseido will benefit from XPO’s digital warehouse management capabilities, including rapid start-up, accelerated throughput of e-commerce orders and data-based quality control.

An XPO Logistics warehouse

Tokyo gongs experts on culture and health

Japan will confer The Order of the Rising Sun, Gold Rays with Rosette on Timothy Clark and with Neck Ribbon on Sir Jeremy Farrar (right), the Embassy of Japan in the UK said on 21 May. Clark was conferred for promoting the understanding and culture of Japan, and Sir Jeremy for his role in Japan’s Global Health Innovative Technology Fund and at the Coalition for Epidemic Preparedness Innovations.

Japan House London debuts digital stories

Virtual exhibitions are becoming more popular as Covid-19 has forced museums around the world to close. Japan House London announced on 13 May the launch of an audiovisual, 3D experience that takes online visitors into the world of award-winning Japanese storyteller and illustrator Anno Mitsumasa. Take the tour.

Central banks “near Forex deal”

Turkey is very close to securing a total of $20bn in foreign currency swaps from central banks in the UK and Japan, Habertürk news website said on 19 May. Japanese Prime Minister Shinzo Abe was set to confirm the deal soon, it said.

Statistics reported by Her Majesty’s Revenue and Customs (HMRC) show that the UK exported nearly £24bn worth of high-quality food and drink in 2019, up 4.9% over the previous year and 18% higher since 2016. Gov.uk said on 4 March that the increase had been driven by demand from non-EU markets. Japan made particularly strong purchases of UK food and drink, valued at £311.5mn, marking a 14.1% year-on-year rise. Annual UK seafood exports grew to £16.6mn, up 64.5% compared with 2018. British salmon also did well in Japan, as exports more than doubled to £13.3mn last year. The Scottish Salmon Company recently secured a deal to supply Genki Sushi Co., Ltd. with their Tartan Salmon brand.

Three global pension funds are taking a $2tn stand in favour of sustain­ability investing. Online business journal Karma Impact reported on 13 March that Japan’s Government Pension Investment Fund (GPIF), the California State Teachers’ Retirement System (CalSTRS) and the UK’s USS Investment Management Ltd. say that they should be investing with sustainability and social impact in mind, as retirement funds are invest­ments in the future.

The firms said they are not interested in investing in “companies that seek to maximise corporate revenue without considering their impacts on other stakeholders—including the environment, workers and communities”.

Spring in Japan is famous for beautiful cherry blossom, but Covid-19 means that few Brits are likely to see these delicate pink wonders.

There’s no need to travel, however, as nine National Trust sites boast sakura, allowing for viewing in the UK. The Evening Standard reported on 14 March that Hampshire, Warwickshire, Cumbria, Cornwall, West Sussex, Cambridgeshire, Norfolk, Oxfordshire and Somerset all have the flowers on display.

London-based healthcare fieldwork agency Just Worldwide Ltd. has appointed Yuichi Ohta to the newly created research manager position in their Japan division.

According to a 12 March article on market research website MrWeb, Ohta has more than 10 years of experience in Japanese healthcare market research and knowledge of field management and moderation with healthcare professionals and patients. Managing Director Janusz Domagalski said, “Yuichi is perfectly placed so that his experience and skills will help international and local clients find solutions to issues currently faced in Japan’s unique marketplace”.

SoftBank Group Corp is buying back $5bn worth of shares after their recent slump. According to a 13 March Financial Times story, the move is partly due to pressure from activist fund Elliott Management. SoftBank founder Masayoshi Son and Elliott Management both argue that SoftBank’s $72bn market capitalisation does not reflect the value of its investment portfolio, which includes majority stakes in UK chip designer Arm, and US telecoms group Sprint.

In a short statement released by Elliott Management, the activist fund said, “SoftBank’s announcement of its intention to commence an initial buyback program of ¥500bn is clearly an important first step in addressing the company’s significant undervaluation, and one that Elliott supports”.

Photo: McLaren

McLaren and Buzz sign Japan growth deal
Formula One’s McLaren Racing Team Limited have signed a multi-year partnership with Buzz & Co. Asset Management Limited to lead its growth in Japan. (SportsPro Media, 10 March)

Parasite sets records
South Korean film Parasite, winner of this year’s Oscar for Best Picture, has made box office history in Japan and the UK by becoming the highest-grossing film in both countries.

The film had a record-breaking opening day in the UK, earning £1.8mn in 137 theatres across the country. In Japan, the black comedy thriller grossed more than ¥4bn and has topped the box office four weeks in a row. (The Korea Times, 13 March)

England beat Japan in women’s football
After an opening loss to the United States, England beat Japan 1–0 in their second match as forward Ellen White scored late off the bench. The win in New Jersey keeps alive England’s hopes of defending their SheBelieves Cup title. (BBC, 8 March)

The covid-19 coronavirus, jitters over Brexit and the prospects for a UK–Japan trade deal have led to volatility in the pound sterling–yen exchange rate this month. As the financial blog ExchangeRates.org.uk reported on 16 February, the threat that the Chinese epidemic will result in a slowdown of the Japanese economy is at the heart of the fluctuations. One pound brought ¥143.462 at its high point and ¥141.296 at its low during the week of 10 February, and the instability could continue.

“The spread of coronavirus poses an emerg­ing downside risk to Japan’s economy, although the economic impact will depend on the extent of the spread of the disease and policy responses,” said Paul Cashin, the International Monetary Fund’s mission chief for Japan. “If prolonged and widespread, this would likely affect Japan’s tourism and retail activities through a decline in tourist arrivals and spending from China and elsewhere”.

The pound has weakened against about half of the top 40 currencies, with the yen being the biggest gainer. Sales in 2019 were up 42% over the year before. This has benefitted Japanese tourists to the UK, and Brits have continued to make their way to Japan, in part due to the low cost—the Post Office Long Haul Holiday Report 2019 named Japan the cheapest place to visit. But concerns of health and trade could make travel less attractive for both sides.

The yen has been seen as a safe-haven currency, but the potential trade exposure resulting from pro­longed quarantines and fear of travel has resulted in market anxiety.

Ahead of this year’s UN climate change conference (COP 26), to be held on 9–19 November in Glasgow, Scotland, members of the Paris Agreement are expected to reveal their reduction targets for greenhouse gas emissions.

According to an 18 February report by NHK World-Japan, the plans are to be announced by the end of the month. The UK has urged Japan to increase its reduction target, with British envoy to COP 26 John Murtin emphasising that Tokyo must invest in renewables to make sure that its industry has access to cheap electricity.

London-based Winch Energy, which specialises in sustainable solutions for off-grid distributed power, has received a boost from Itochu Corporation, one of Japan’s largest general trading firms. Energy Live News website reported on 18 February that Itochu intends to introduce power to non-electrified regions in Africa and Asia. The firm said in a statement that their strategic investment in Winch Energy will allow them to continue a proactive role in meeting the UN Sustainable Development Goals by providing clean energy and supporting climate action.

British Prime Minister Boris Johnson said on 3 February that, post Brexit, the UK is priori­tising free-trade agreements (FTAs) with Australia, Japan, New Zealand and the United States.

As the Asia Times wrote on 14 February, the arrange­ment reached between the UK and South Korea last August might be an ideal road­­map for Japan. Using the broad terms of the EU–Korea FTA, London and Seoul agreed a “Continuity FTA” with some modifications to take immediate effect at the end of this year, when the UK leaves the European single market.

Britain has signed continuity agreements with 48 countries, but not Japan. Now that Brexit has taken place, the path forward to a UK–Japan bilateral FTA may become clearer for Japanese Prime Minister Shinzo Abe, who seems to have been taking a wait-and-see approach.