The British-shaped deal is the first agreement that the UK has secured that goes beyond the existing EU deal, with enhancements in areas such as food and drink, creative industries, digital and data.
Last year over 1,000 East of England businesses exported goods to Japan with annual goods exports worth £870 million. This deal secures major wins that would be impossible as part of the EU and brings together two of the world’s most technologically advanced nations, placing the UK at the forefront of shaping new global standards on digital trade.
International Trade Secretary, Liz Truss said: “Today is a landmark moment for Britain. It shows what we can do as an independent trading nation, as we secure modern and bespoke provisions in areas like tech and services that are critical to the future of our country and the reshaping of our economy.
“Trade is a powerful way to deliver the things people really care about. At its heart, this deal is about creating opportunity and prosperity for all parts of our United Kingdom and driving the economic growth we need to overcome the challenges of coronavirus.
“The agreement also has a much wider strategic significance. It opens a clear pathway to membership of the Trans-Pacific Partnership – which will open new opportunities for British business and boost our economic security – and strengthens ties with a like-minded democracy, key ally and major investor in Britain.”
The food and drink manufacturing sector employed 36,000 people across the East of England in 20181. Last year, the value of food and drink exports to Japan was worth £311.52 million and agreed liberal Rules of Origin (ROO) terms will allow exporters to source ingredients from the EU and rest of the world.
Customs costs and procedures for UK exporters will be more straightforward and the deal makes it simpler for UK businesses to meet Japanese safety regulations for manufactured products including human medicines.
Award-winning medical engineering company, Seers Medical has been exporting its medical treatment tables to Japan for a decade and offers a lifetime frame warranty on its products with accredited electrical and mechanical safety guarantees.
Founded in 2008 and based in Debenham, Suffolk, the business has 55 employees and exports to 90 countries. Seers Medical receives around three orders a month from Japan, especially for its physiotherapy couches, and manufactures all products in the UK using hi-tech machinery.
Seers Medical Sales Director John Mason said: “Japan has a unique trading culture and is a market which we definitely want to keep growing in, so a free trade agreement that reduces red tape and certain costs would help make us more competitive.”
Seers Medical has been supported by the Department for International Trade (DIT) which helped the business travel to Japan last year to meet potential and existing clients.
Head of Trade for DIT East of England, Alan Pain said: “I’m delighted that East of England businesses like Seers Medical have a strong trading relationship with Japan and this trade deal could boost the region’s economy by helping our innovative SMEs to win more business in the Japanese market.
“I would encourage businesses in the East of England to contact our team to see how we can help you explore new exporting opportunities and grow your business in Japan.”
UK exports to Japan have been growing by an average of 8.2% year-on-year over the previous five years and this free trade deal will provide additional opportunities, with potential benefits including higher wages, and lower prices for all parts of the UK.
This UK-Japan deal makes it easier for small and medium-sized enterprises (SMEs) to trade with one of the world’s largest economies and could grow UK-Japan trade by £15.7 billion, giving a £1.5 billion boost to the UK economy and increase UK workers’ wages by £800 million in the long run.
The removal of several trade barriers aims to assist the UK's 8,000 SMEs already exporting goods to Japan, by offering tariff-free trade on 99% of UK exports to the country in the long term.
Other key benefits of CEPA include:
- Cutting-edge digital & data provisions that go far beyond the EU-Japan deal, including enabling free flow of data, a commitment to uphold the principles of net neutrality and a ban on unjustified data localisation that will prevent British businesses from having the extra cost of setting up servers in Japan
- Supporting UK car and rail manufacturing jobs at major investors in the UK like Nissan and Hitachi through reduced tariffs on parts coming from Japan, streamlined regulatory procedures and greater legal certainty for their operations
- Strong tariff reductions on key agricultural products like pork, beef and salmon will benefit farmers and food exporters
- A boost for UK brands with protections for more iconic UK agricultural products, from just seven under the terms of the EU-Japan deal to potentially over 70, including English sparkling wine
- British consumers to benefit from cheaper, high-quality Japanese goods - from udon noodles to Bluefin tuna and Kobe beef.
Dame Carolyn Fairbairn, CBI Director-General, said: “The signing of the UK’s first independent trade agreement is a milestone for our economy and will be welcomed by businesses in many sectors.
“This deal has the potential to support jobs across the country through lifting British farming exports and supporting our manufacturing and services sectors. Consumers will also benefit through greater choice.
“Ultimately, trade is a powerful lever of economic growth. The CBI and its members will now work with government to take full advantage of the opportunities and ensure the benefits are felt in all parts of the UK.”
The UK stands firm in trade negotiations to ensure any future trade deals protect our NHS and maintain all existing protections for our high standards of food safety and animal welfare.
Once signed, the final agreement text will then be laid in Parliament for 21 sitting days for scrutiny under the Constitutional Reform and Governance (CRaG) Act.
A full parliamentary report will also be published on the agreement, providing an explanation of the CEPA, including any significant differences or enhancements between the UK-Japan CEPA and the EU-Japan Agreement.
[1] ONS Business Register and Employment Survey, accessed October 2020
[2] HMRC Oversees Trade Statistics, August 2020.
Businesses looking for support can contact eastinfo@mobile.trade.gov.uk or visit great.gov.uk, which has business support and export information.