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UK-Japan free trade agreement

Trade and market access

Brexit pulse alert: respond to the business impacts of Brexit

11 September, 2020

Brexit development

The UK government has announced a free trade agreement (FTA) in principle with Japan, which primarily replaces the preferential trading terms secured in the EU-Japan FTA. It also includes some additional provisions, including on services and digital trade.

Top Brexit impacts

The FTA will provide certainty to businesses that trade between the UK and Japan will continue on largely the same terms as present.

The text of the draft agreement will be published in October, but the UK government has said it will include:

  • Tariff reductions on UK goods destined for Japan, with particular gains for agri-foods producers. The FTA is expected to provide tariff-free trade on 99% of UK exports
  • Tariff reductions on some goods imported into the UK, including parts used by British automotive manufacturers
  • Liberalised rules of origin which allow more UK exports to qualify for preferential terms in the Japanese market
  • An increased number of geographical indicators which protect iconic products including English sparkling wine and Welsh lamb
  • Improved arrangements for business travel, including more support for intra-company transfers and mobility for spouses and dependents.

Of particular interest will be new provisions to support digital and services trade, which include:

  • Ensuring the free flow of data between the two territories
  • A ban on data localisation requirements
  • Network neutrality, so that the internet remains open and fair for all users
  • Improved procedures for accessing financial services licences in each territory
  • Establishing a dedicated financial services dialogue between regulators to further reduce friction between the UK and Japanese markets
  • Commitments on tackling IP infringement online.

Actions for business

Businesses trading within the UK-Japan corridor will now be able to plan for the future with greater certainty. The FTA is expected to provide terms of trade largely comparable to existing arrangements, with some additional benefits for tech and services businesses.

Firms will now have some time to understand the contents of the proposed agreement, which is due to be published in October before undergoing examination in both the UK and Japanese legislatures.

To discuss specific support with your Brexit preparations based on this latest development contact: Deloitte Brexit Insight

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