t is a testament to the strength of the historical relationship between Japan and the United Kingdom that on September 11 both countries successfully agreed on the outline of a trade agreement after just three months of negotiation. It is the UK’s first major trade deal as an independent trading nation since it left the European Union on January 31, 2020.
Both countries are at a crossroads, with Brexit negotiations continuing to dominate the day-to-day political machinations of the UK, while former Chief Cabinet Secretary Suga’s swift election as Japan’s Prime Minister after Abe’s resignation has left many concerned at the possibility and timing of a snap election. However, with the advent of a new trade deal, Japan and the UK are set to continue a prosperous and valuable relationship, even if concerns over Brexit still abound.
Trading Places
Although the deal still needs to pass through the Japanese Diet, it marks a high point in recent Japan-UK relations. While the increase of market access for financial services will help boost UK exports to Japan, the increased guarantee for data flows with high levels of protection means that there will more opportunities for Japanese and British businesses to co-operate in the tech space, a sector with special importance considering how COVID-19 has transformed the way people interact with digital technology in their daily lives.
These developments are especially meaningful for Japan, which is eyeing to be the regional hub for tech and financial industries. Equally, the broader application of tariff elimination to automobile parts provides much needed assurances to Japanese companies over Britain’s reputation as their primary manufacturing base, especially with concerns that Brexit will threaten the viability of manufacturing’s ‘just in time’ model.
However, the spectre of Brexit remains, with many Japanese companies concerned that the tariff reductions will be inadequate compared to the increased costs of exporting their finished goods to continental Europe from the UK in the event of a ‘no-deal’ Brexit. Similarly, while there was much excitement about the start of the Government’s new “Global Britain” brand, critics have stated that the expected boost to UK GDP would only total 0.07%, a fraction of what might be lost as a result of leaving the EU or pursuing a ‘no-deal’ Brexit.
Regardless of the deal’s critics, the UK still views the agreement as a key part of its plan to join the Trans-Pacific Partnership. The day before the trade deal was announced, UK’s International Trade Secretary Liz Truss MP announced that she had begun discussions with negotiators from 11 members of the partnership to discuss the UK’s potential accession.
In the years after the Brexit vote, Abe had been a vocal advocate for Britain joining the Partnership, noting that the country would be welcomed ‘with open arms’. The bilateral deal might be a sign of things to come for Britain, especially with Japan hosting the TPP negotiations next year and Economy Minister Nishimura Yasutoshi retaining his portfolio as the minister in charge of the multilateral trade deal, keeping the same position he held in the Abe era.
Brexit, Pursued by a Bear
With the outcome of the Brexit negotiations to be determined in less than a month, Abe’s departure will be sorely felt in London. Since the beginning of the referendum process in 2016, Abe has been a consistent voice of support to the Prime Minister of the day. The relationship was considered so close that he was regularly activated by subsequent governments to endorse their referendum position, their Brexit deal, and, finally, to warn against the risks of a ‘no-deal’ exit.
However, as experienced by Theresa May, Abe’s endorsement was not as influential as they had hoped, with his support failing to save her Brexit deal – there were of course other mitigating factors. Meanwhile, neither Abe nor Suga’s opinion is likely to be the deciding factor in the negotiations with the EU. It still remains to be seen whether the strong relationship will survive the economic shock caused by a potential ‘no-deal’ Brexit’. While Suga will of course be keen to support a strategic international ally, he will also face pressure to protect Japanese businesses and their investments in the UK.
Embracing Change
Although Abe’s time on the international scene has drawn to a close, there are still many unanswered questions about what impact his departure will have on Japan-UK relations. Both countries are still trying to articulate a coherent economic recovery plan in response to COVID-19 while trying to maintain their international influence and presence. Not easy tasks.
While it is unclear whether Suga will prioritize developing the UK-Japan relationship or protecting the interests of Japanese companies, it would be misguided to discard a positive relationship with such potential. The trade deal has revealed new areas for cooperation and investment between British and Japanese companies, while the alignment of tech regulation has empowered both countries to be on the cutting edge of innovation and financial services. In an increasingly hostile world, Japan and the UK should look to each other with the aim of finding ways to further develop their long-lasting partnership.
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The Japan-UK Deal Is a Good Start, But the Threat of ‘No-Deal’ Remains
October 1, 2020
I
t is a testament to the strength of the historical relationship between Japan and the United Kingdom that on September 11 both countries successfully agreed on the outline of a trade agreement after just three months of negotiation. It is the UK’s first major trade deal as an independent trading nation since it left the European Union on January 31, 2020.
Both countries are at a crossroads, with Brexit negotiations continuing to dominate the day-to-day political machinations of the UK, while former Chief Cabinet Secretary Suga’s swift election as Japan’s Prime Minister after Abe’s resignation has left many concerned at the possibility and timing of a snap election. However, with the advent of a new trade deal, Japan and the UK are set to continue a prosperous and valuable relationship, even if concerns over Brexit still abound.
Trading Places
Although the deal still needs to pass through the Japanese Diet, it marks a high point in recent Japan-UK relations. While the increase of market access for financial services will help boost UK exports to Japan, the increased guarantee for data flows with high levels of protection means that there will more opportunities for Japanese and British businesses to co-operate in the tech space, a sector with special importance considering how COVID-19 has transformed the way people interact with digital technology in their daily lives.
These developments are especially meaningful for Japan, which is eyeing to be the regional hub for tech and financial industries. Equally, the broader application of tariff elimination to automobile parts provides much needed assurances to Japanese companies over Britain’s reputation as their primary manufacturing base, especially with concerns that Brexit will threaten the viability of manufacturing’s ‘just in time’ model.
However, the spectre of Brexit remains, with many Japanese companies concerned that the tariff reductions will be inadequate compared to the increased costs of exporting their finished goods to continental Europe from the UK in the event of a ‘no-deal’ Brexit. Similarly, while there was much excitement about the start of the Government’s new “Global Britain” brand, critics have stated that the expected boost to UK GDP would only total 0.07%, a fraction of what might be lost as a result of leaving the EU or pursuing a ‘no-deal’ Brexit.
Regardless of the deal’s critics, the UK still views the agreement as a key part of its plan to join the Trans-Pacific Partnership. The day before the trade deal was announced, UK’s International Trade Secretary Liz Truss MP announced that she had begun discussions with negotiators from 11 members of the partnership to discuss the UK’s potential accession.
In the years after the Brexit vote, Abe had been a vocal advocate for Britain joining the Partnership, noting that the country would be welcomed ‘with open arms’. The bilateral deal might be a sign of things to come for Britain, especially with Japan hosting the TPP negotiations next year and Economy Minister Nishimura Yasutoshi retaining his portfolio as the minister in charge of the multilateral trade deal, keeping the same position he held in the Abe era.
Brexit, Pursued by a Bear
With the outcome of the Brexit negotiations to be determined in less than a month, Abe’s departure will be sorely felt in London. Since the beginning of the referendum process in 2016, Abe has been a consistent voice of support to the Prime Minister of the day. The relationship was considered so close that he was regularly activated by subsequent governments to endorse their referendum position, their Brexit deal, and, finally, to warn against the risks of a ‘no-deal’ exit.
However, as experienced by Theresa May, Abe’s endorsement was not as influential as they had hoped, with his support failing to save her Brexit deal – there were of course other mitigating factors. Meanwhile, neither Abe nor Suga’s opinion is likely to be the deciding factor in the negotiations with the EU. It still remains to be seen whether the strong relationship will survive the economic shock caused by a potential ‘no-deal’ Brexit’. While Suga will of course be keen to support a strategic international ally, he will also face pressure to protect Japanese businesses and their investments in the UK.
Embracing Change
Although Abe’s time on the international scene has drawn to a close, there are still many unanswered questions about what impact his departure will have on Japan-UK relations. Both countries are still trying to articulate a coherent economic recovery plan in response to COVID-19 while trying to maintain their international influence and presence. Not easy tasks.
While it is unclear whether Suga will prioritize developing the UK-Japan relationship or protecting the interests of Japanese companies, it would be misguided to discard a positive relationship with such potential. The trade deal has revealed new areas for cooperation and investment between British and Japanese companies, while the alignment of tech regulation has empowered both countries to be on the cutting edge of innovation and financial services. In an increasingly hostile world, Japan and the UK should look to each other with the aim of finding ways to further develop their long-lasting partnership.
