The UK’s first major post-Brexit trade deal


This week the UK and Japan formally signed a free trade agreement (The UK–Japan Comprehensive Economic Partnership Agreement or CEPA), following the broad agreement that was reached in September. The deal will take effect from the 1st January 2021.

What are the economic benefits?

The deal, whilst not a huge boost to the UK’s GDP, is a positive in a whole host of negatives surrounding current Brexit proceedings between the UK and EU. The deal will boost trade between the two nations by an estimated £15.2 billion, but this only equates to a 0.07% increase to the UK’s GDP. Although, it marks a political shift in international trade, with the deal being the first agreed by a post-Brexit UK. It also comes with a boost to trade and secures some additional benefits that go beyond the current trade deal between the EU and Japan.

  • The deal provides some security for businesses exporting to and importing from Japan. It provides continuity in trading conditions from the start of next year and will be extremely comforting for the 8,000 UK SME’s that are already exporting to Japan.

  • The deal also sees UK businesses benefitting from tariff-free trade on 99% of exports to Japan. This deal is crucial for Japanese companies like Nissan, Toyota and Hitachi who will benefit from reduced tariffs on car and rail parts.

  • UK goods will also benefit from greater protection in the form of geographical indications as these increase from 7 under the current EU-Japan deal, to 70 under this new deal. This would lead to improved recognition of key UK brands exporting to Japan such as Welsh Lamb and English Sparkling Wine.

  • Services will also benefit from improved market access. For instance, UK financial services will benefit from greater transparency and a streamlined application process for UK firms seeking licences to operate in Japan. The deal creates an annual dialogue between Her Majesty’s Treasury, UK financial regulators, and the Japanese FSA that will explore ways to further reduce regulatory friction - something that would be impossible if the UK was in the EU. Financial services are the biggest export to Japan, accounting for 28% of all UK exports.

  • Greater mobility for workers. The deal secures more flexibility for Japanese and British companies to move talent into each country, covering a range of UK skilled workers to enter Japan, from computer services to construction. 

  • Arguably the most important benefit the UK gains from this deal is a strong commitment from Japan to support the UK joining the Trans-Pacific Partnership (TPP), which covers 13% of the global economy and accounted for more than £110 billion of trade in 2019.

The trade is not all good though as UK business could take a hit if they fail to negotiate a positive deal with the EU. Many Japanese businesses, such as Nissan and Toyota, use parts from across Europe and assembly takes place in the UK, therefore it is extremely important that the supply chain go uninterrupted to avoid increased costs and time waste.

What are the implications for the legal sector?

According to the Law Society, CEPA could open up the Japanese legal market for UK lawyers. The deal is seen as a platform for future profession-to-profession discussions that would see the current regulatory barriers facing foreign-qualified lawyers lowered. Currently, Japan’s 1986 Foreign Lawyers Act excludes foreign lawyers from appearing before Japanese courts and limits the provision of legal opinions to those relating to a foreign lawyer’s jurisdiction of qualification. The law also places onerous experience requirements on foreign lawyers before they are allowed to practise in Japan.

Although, earlier this year Japan amended the act, which eased the experience requirements for registration as a foreign lawyer and clarified the scope of representation by foreign lawyers in international arbitration proceedings. This coupled with Improved mobility for business people as a result of the trade agreement could mean a new market for UK legal services.

Abu Sattar

Abu is a law graduate with aspirations of becoming a commercial solicitor. His legal interests are in property, data protection and technology, but with enough information he can have an opinion on anything. He also wants to see and work towards greater diversification of the legal sector, particularly of more senior roles.

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