The UK has formally signed a trade agreement with Japan, signaling the first major post-Brexit deal for Great Britain.
The trade agreement, now signed by the UK and Japan, makes all UK exports to Japan to tariff free while British tariffs on Japanese cars will be removed by 2026.
While UK International Trade Secretary Liz Truss referred to the agreement as a "ground-breaking, British-shaped deal", critics argued that the deal with Japan would only increase the country's gross domestic product (GDP) by 0.07%, a small percentage of what it risks losing with the European Union (EU).
UK-Japan deal
In September, the two countries struck a broad agreement that was expected to increase the amount of trade between them by around £15 billion.
Truss called it a "historic moment" and claimed that it would bring "new wins" for UK businesses in manufacturing, food and drink, and tech industries. Under the UK-Japan Comprehensive Economic Partnership Agreement, 99% of exports to Japan will be tariff-free.
She explained: "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."
"From our automotive workers in Wales to our shoemakers in the North of England, this deal will help build back better as we create new opportunities for people throughout the whole of the UK and help level up our country," she continued.
Truss also pointed out the strategic importance of the deal in joining the Trans-Pacific Partnership and positioning the country at the center of a network of free trade agreements.
On the other hand, major Japanese businesses in the UK, such as Nissan and Hitachi, would benefit from reduced tariffs on parts being imported from Japan. The trade department also said it will streamline regulatory processes.
Reaction to the agreement
According to Prime Minister Boris Johnson, Brexit grants the UK the freedom to make trade deals with other countries globally.
Dr. Minako Morita-Jaeger, an international trade policy consultant and fellow of the UK Trade Policy Observatory at the University of Sussex, argued: "Given that Japanese FDI (Foreign Direct Investment) has been playing an important role in the UK economy and retaining its existing investment in post-Brexit is crucial, the UK government should have shown a strong commitment to Japanese investment by including a comprehensive investment chapter encompassing investment protection and dispute settlement."
Morita-Jaeger also emphasized that Japan was the world's largest investor abroad, comprising 14% of the global total in 2018.
Meanwhile, Adam Marshall, director general of the British Chambers of Commerce, said: "Whilst this agreement is undoubtedly cause for celebration, securing a Free Trade Agreement with the EU remains critical to the future of businesses in the UK."
"We urge ministers to redouble their efforts to reach a comprehensive partnership with our largest trading partner at a crucial time in the negotiations," Marshall added.
Japan's Foreign Minister Toshimitsu Motegi explained that a deal between the UK and the EU was still important to Japanese firms, especially automobile manufacturers like Nissan and Toyota who use parts from across Europe in assembling vehicles in the UK.
