Tokyo will need to know what EU-UK relationship will be, experts warn
Cabinet ministers agreed this week to aggressively pursue a trade pact with Tokyo by the Autumn in an attempt to demonstrate the UK’s ability to thrash out new deals post-Brexit.
A decision was made at the so-called EU Exit Strategy (XS) Committee, chaired by the Prime Minister, to make a Japanese trade deal a priority for Westminster.
Anand Menon, director of The UK in a Changing Europe, an academic think-tank, described the move as “sensible” due to the amount of Japanese investment and trade that comes into the UK.
But he warned the chances of the Government agreeing a deal with Tokyo will be entirely reliant on the type of arrangement London agrees with the EU.
“It is possible [to agree a deal within the year] but 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,” Prof Menon said.
“All of these trade deals are interlinked,” he added.
The President of the European Commission, Ursula von der Leyen, has insisted that negotiating a full, free trade agreement with the UK before the end of the year is “impossible”.
Those comments were echoed last week by EU trade commissioner Phil Hogan, who warned the timetable set by Downing Street was too tight.
It means the chances of Mr Johnson nailing down a Japanese trade deal before one is agreed with Brussels appear slight.
Japan has been identified by Whitehall as a Tier 1 nation in terms of starting trade talks, along with the US, Australia and New Zealand, while the likes of Canada is regarded as a Tier 2 nation where deals are expected to take longer.
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According to reports, Number 10 has stepped up its plans to begin talks with Japan after the country’s Prime Minister Shinzo Abe signalled that he was willing to push for a deal.
It marks a significant change of heart from the Japanese leader, who refused to roll over the terms from Japan’s existing EU trade deal with the UK. The country was particularly opposed to Brexit because it exposed several of the country’s car plants to significant risk and relations had become strained between the two nations.
Takaaki Hanaoka, the secretary general of the Japanese Chamber of Commerce and Industry in the UK, welcomed the suggestion of trade talks.
“If an FTA with Japan can be agreed in the near future, it will of course be welcome news for Japanese businesses in the UK,” he said.
Q&A — Possible partners
Why does Boris Johnson want a trade deal with Japan?
The PM believes it will be a signal of the UK’s intent post-Brexit to hammer out deals unimpeded by the EU. Japan also happens to be the third-biggest investor in the UK after the EU and the US, meaning it makes financial sense.
What areas most interest the UK?
Obviously, the UK has several Japanese car plants which will need to maintain access to the EU if they are to stay in Britain and continue providing jobs. The UK will hope to open up markets in digital and financial services sectors.
What might prevent a deal?
Much will depend on the type of agreement the UK signs with Brussels. If there is to be as little friction in trade as possible for Japanese cars made in Britain going into the EU, both sides will need to be closely aligned. But Boris Johnson has repeatedly said the UK will not align itself with the EU post-Brexit. This could be a stumbling block.