Japan-Britain FTA contains more strategic significance than economic meaning
Source: Xinhua| 2020-10-26 00:32:15|Editor: huaxia
The post-Brexit bilateral free trade agreement (FTA) between Japan and Britain, formally signed in Tokyo on Friday, is the first major trade deal since Britain left the European Union (EU) and the deal could convey more strategic significance than economic meaning for both sides, experts have said.
Britain formally left the EU on Jan. 31 this year, and will exit from the EU-Japan Economic Partnership Agreement (EPA) at the end of this year when the transition period of Brexit ends. Japan and Britain started trade negotiations in June, hoping to reach a bilateral trade agreement based on the reference of the EU-Japan EPA. In September, the two sides announced that they had basically reached agreement on the negotiations.
Experts believe that for Japan, the signing of the agreement further advanced its long-term international economic strategy, expanded its network of economic and trade partners around the world, especially in Europe, and strengthened its ties with European countries in terms of economic and trade rules. For Britain, the quickness of trade negotiations with Japan demonstrated its ability to negotiate independently after Brexit.
The Japanese side said that the free trade agreement between the two sides roughly followed the content of the EU-Japan EPA in terms of tariff reduction, and minimized the impact of Brexit on Japanese companies. When the agreement comes into force, tariffs will be removed on about 94 percent of Japanese imports from Britain and about 99 percent of Japanese exports to Britain.
However, Japan is currently only the 11th largest export market for Britain. Japanese trade statistics show that Japanese exports to Britain in 2019 stood at about 1.5132 trillion yen (14.44 billion U.S. dollars), while British exports to Japan amounted to 887.5 billion yen (8.47 billion dollars). In terms of trade volume, the agreement is not that significant and the economic benefits are expected to be relatively limited, analysts said.
In the field of digital trade, the relevant provisions of the FTA went beyond the scope of the EU-Japan EPA and may affect future cooperation in digital trade, e-commerce and other fields between Japan, the United States and European countries.
In addition, Britain is Japan's second largest investment destination and many Japanese companies have extensive and tightly linked supply chains between Japan, Britain and the EU. Britain's decision to leave the EU has left Japanese companies worried about the impact on their supply chains.
The rapid signing of the agreement has effectively eased Japanese investors' concerns about the British economy and finance, and helped to restore and strengthen their confidence in the British market.
Tomohisa Ishikawa, a researcher at the Japan Research Institute, said that the signing of the FTA between Japan and Britain is conducive to pushing Britain to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership as soon as possible, which is what Japan wants.
In addition, Britain has a deep market relationship with India and Africa, two markets with great growth potential. Japan may consider using the FTA as a springboard to accelerate the development of Indian and African markets, he said.
