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Summary
- The economic deal with Japan is called the UK–Japan Comprehensive Economic Partnership Agreement.
- The deal will not only benefit the trading ties between the two countries but will also pave the way for the UK being able to join the Comprehensive Trans-Pacific Partnership free trade area comprising of 11 pacific countries.
- This is the first comprehensive trade deal the UK has been able to secure in 2020 since it parted ways with the European Union.
In a major success for the Boris Johnson government, United Kingdom has secured its first major trade deal with Japan since it broke away from the European Union. The deal which was signed in Tokyo on 23 October 2020, has been given the name The UK–Japan Comprehensive Economic Partnership Agreement (CEPA) and is expected to bring about trading gains to both sides in excess of £15 billion. The deal also opens the gates for the UK to expand its reach in the Pacific area by joining the Comprehensive Trans-Pacific Partnership free trade area comprising of 11 countries in that region.
Since its separation from European Union, its largest trading partner for forty-five years, the UK has been trying to forge similar alliances with other major trading blocks around the world to make up for the lost business opportunities. It is to be noted here that the UK is also trying to forge a deal with the EU to restore most of the economic privileges it enjoyed while being a part of the Union.
What the fine print of the deal says and what it means for the United Kingdom.
Before the free trade agreement was signed between the two countries on 23 October 2020, all the modalities of the deal were agreed by both parties on 11 September 2020. Soon after the deal was signed, a British government publication termed it as historical and the first the country has signed with a major trading bloc as an independent trading nation. The publication further stated that the terms of the deal provide a wider economic advantage to the British businesses that what they had when they were part of EU and will go a long way in supporting the country in its effort being undertaken to build back in the aftermath of the pandemic.
In this deal the UK has also been able to secure a commitment from Japan to support its efforts to join the Trans-Pacific Partnership which is one of the largest free trade zones in the world, commanding nearly 13 per cent of the global economy and in the year 2019 registering trade transactions in excess of £110 billion. This deal will particularly benefit the financial services, digital and data, food & drink, and creative industries.
Other Major trade deal by the UK since Brexit
Since 31 January 2020, when the UK officially separated from the EU, it has initiated several trade talks to secure trade deals which would help it to expand its trading ties around the world. The country has initiated trade talks with the United States of America, its oldest strategic ally and the worlds largest economy. The negotiations that have seen a few rounds of talks by now will provide the UK with the largest economic benefit of all the trade deals it is pursuing should it succeed.
Other than the United States, the country has also initiated trade negotiations with Australia and New Zealand, which has a large number of British Expats, culturally closest to the United Kingdom and still holding allegiance to the British Monarchy. Both Australia and New Zealand were the first of the countries that were able to control the pandemic to a large extent and can be ready markets for British goods and services while being less risky for British travellers. There are several large companies from both these countries that have raised capital on the London Stock Exchange, and both these countries also host to several large British corporates who have expanded their businesses there.
Other than the above the British Government has also been holding talks with smaller east Asian countries, like Malesia and Thailand which were its former colonies, and are now large economies commanding a major part of global trade and commerce.
Trade deal negotiations with the European Union post Brexit
The most important trade negotiations that the UK is undertaking post-Brexit is to forge a follow-on trade deal with the EU itself. Breaking up of ties with the EU would bring about major business disruptions in the country post 31 December 2020 when the common economic area regulations cease to apply to the United Kingdom. This will cause an immediate loss of business activity in the country, which cannot be replenished by any of the new trade deals it signs in the short run.
Right when the country is starting to recover from the economic damage caused by the COVID- 19 pandemic, this economic jolt could prove to be fatal to a large number of companies in the UK and would also cause major structural damage to its economy, which would take a long time to recover.
Plan to transform the British economy
Boris Johnson during his poll campaign for the second term had promised that when his government would take the oath, it will initiate an expansionary economic policy regimen that would seek to enhance the countries engagement with the rest of the world.
The policies it seeks to pursue would bring about increased business growth and employment opportunities for the country and would put it in an upward trajectory matched by only a few select emerging economies in the world.
