Notwithstanding the recent imposition of punitive tariffs between the world’s largest economies, the UK remains a steadfast champion of global free trade. The nation’s stance is reflected in its wholehearted commitment to the EU–Japan Economic Partnership Agreement (EPA).
The EPA will enter into force following ratification by Japan, and approval by the European Council and European Parliament.
Although ratification by the British parliament is not required, the EPA has recently been the subject of scrutiny and debate by UK lawmakers.
As part of this process, Minister for Trade Policy George Hollingbery called on members of parliament to support the EPA in a speech on 26 June. Without losing sight of the fact that Japan and all EU members stand to benefit, the minister’s speech provided a timely summary of the anticipated gains from a British perspective. Quoting from the government’s impact assessment, the minister indicated that the EPA is expected to boost UK exports by £5.4bn each year. This is due largely to the elimination of existing tariff barriers, with 91% to be removed as soon as the EPA goes into force.
Sectors primed to increase export volumes include chemicals, automotive, food and drink.
Beyond the trade in goods, the EPA also includes a chapter on corporate governance in which Japan and the EU reaffirm their commitment to the Organisation for Economic Co-operation and Development’s Principles on Corporate Governance. These are principles that the UK played a key role in agreeing at the G20 summit in 2015.
As with all aspects of the UK’s future international relations, we must be cognizant of the impact of Brexit. In this respect, it is welcome that the European Council has determined that EU agreements, such as the EPA, should continue to apply to the UK throughout the transitional period of its departure from the EU.
Beyond that, the UK will need to focus on its bilateral relationship with Japan. We are fortunate that this is anchored by shared values, and that there is the highest level of political commitment from Japanese Prime Minister Shinzo Abe and UK Prime Minister Theresa May to work quickly to establish a new Japan–UK economic partnership based on the terms of the EPA.
The opportunity lies ahead, therefore, for both countries to be ambitious and creative about seeking further trade-offs that unlock areas of mutual advantage. In addition to tackling remaining tariff barriers, it is to be hoped that they will address regulatory alignment and the removal of non-tariff barriers.
For UK exporters, prized access to the Japanese market on an increasingly level playing field awaits. Local competition, however, is world class, with Japanese firms ranking among the fittest and most skilful in the world.
Football metaphors come easily to those of us revelling this month in the excitement of the 2018 FIFA World Cup, and so, in sporting parlance, there has never been a more important time for UK firms to raise their game.
A commitment to understanding the Japanese market and a willingness to finesse a product, service or business model for the Japanese consumer are key. Opportunities abound, and with the right tactics, UK firms can find fans aplenty here in Japan.