Welsh businesses are set to benefit from the historic UK-Japan Comprehensive Economic Partnership Agreement (CEPA) to be signed by International Trade Secretary Liz Truss and Japan’s Foreign Minister Motegi Toshimitsu in Tokyo today (Friday 23 October).
The deal could increase UK trade with Japan by £15.7 billion, giving a £1.5 billion boost to the economy and increasing UK workers’ wages by £800 million in the long run. This could benefit over 200 businesses in Wales that exported £295.9 million in goods to Japan last year and help even more local businesses sell their goods and services to the Japanese market.
Farmers and food producers could particularly benefit, with a way for iconic Welsh products including Welsh Lamb to be protected in Japan for the first time under a new agreement on Geographical Indicators (GIs).
The food and drink industry, which employed 23,000 people in Wales in 2018, will also benefit from a reduction in tariffs on beef, pork and salmon. Last year, agricultural exports from Wales to Japan were worth £2 million.
Rhug Estates, based in Corwen, is one Welsh farm keen to export its lamb to Japan. One of the biggest organic farms in Wales, its commitment to farming methods which embrace the highest animal welfare standards has led to exporting success around the world, in countries such as Singapore, Hong Kong and the UAE.
The Welsh Lamb brand is globally recognised for its premium quality, and Rhug Estates is the only UK farm to have been granted a royal warrant.
Rhug Estates Owner, Lord Newborough, said:
“Our organic Welsh meat is used in Michelin-starred restaurants, and renowned for its quality around the world.
“Japan is a market of interest to us, having the second highest number of Michelin stars and strong market demand for Welsh Lamb and chicken.
“We would welcome a UK-Japan trade agreement which could make it easier for us to trade there.”
Gwyn Howells, Chief Executive of HCC (Meat Promotion Wales), said:
“Trade was successfully established for PGI Welsh Lamb into Japan last year, following the lifting of restriction at the start of 2019, and we took advantage of Wales’ presence at the Rugby World Cup to organise high-profile promotions.
“Agreements with Japan for continued free trade and recognition of our brand could enable us to build on this successful start over the next few years.
“Japan is a small export market at present, but there is undoubtedly a demand for high-quality products such as Welsh Lamb.”
The deal is the first agreement that the UK has secured that goes beyond the existing EU deal, with enhancements in areas such as digital and data, financial services, food and drink, and creative industries.
It 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 the UK. 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 UK business and boost our economic security – and strengthens ties with a like-minded democracy, key ally and major investor in the UK.”
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 UK 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 agreement also includes a strong commitment from Japan to support the UK joining the Trans-Pacific Partnership (TPP), one of the world’s biggest free trade areas, covering 13% of the global economy in 2018 and more than £110 billion in trade in 2019.
UK exports to Japan have been growing by an average of 8.2% year-on-year over the previous five years. With this free trade deal in place, potential benefits include better jobs, higher wages, more choice and lower prices for all parts of the UK.
This agreement also makes it easier for British and Japanese professionals to work in each other’s countries, with Japan making it easier to obtain travel visas and work permits.
Other benefits include:
- 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
- UK consumers to benefit from cheaper, high-quality Japanese goods, from udon noodles to Bluefin tuna and Kobe beef
- 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 UK businesses from having the extra cost of setting up servers in Japan
Secretary of State for Wales, Simon Hart, said:
“The agreement signed today marks a huge step forward in the UK’s trading relationship with Japan which will bear fruit for Welsh companies operating in a wide range of industries from financial services to food and drink.
“Wales’ goods exports to Japan were worth nearly £300 million in 2019. Today’s development will see that relationship go from strength to strength, improving access to vital markets for our fantastic Welsh businesses.”
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.