Xinhua Net - 26 July 2020
Interview: UK-Japan speedy trade deal not easy, says expert
Despite Japan’s efforts to seek closure in post-Brexit trade talks with Britain by the end of this month, the pathway to reaching an agreement is complicated, a trade expert has said.
The two countries kicked off trade talks last month, based on the existing EU-Japan Economic Partnership Agreement (EPA) with additional benefits, while Japan’s aim is speedy negotiations within six weeks — by the end of July.
Not a simple question
"It isn’t simply a question of cutting and pasting commitments over from the EU-Japan EPA," Amar Breckenridge, senior associate at the Frontier Economics (Europe), told Xinhua in a recent interview.
For Britain, he said, it would like to get from Japan "more liberal commitments" than from the European Union (EU), noting that is "very unlikely".
Breckenridge explained that if Japan makes any more favourable commitments to Britain, the EU would require Japan the same under the EU-JAPAN FTA (free trade agreement).
Meanwhile, for Japan, he noted that a central issue is that the outcome of the Britain-EU talks will have an important bearing on how it appraises a deal with Britain. Five rounds of the Britain-EU talks have concluded, with significant divergence remaining between the two sides.
The former staff economist at the World Trade Organization (WTO) explained that is because of the question of rules of origin.
"When the UK was in the EU, it was part of the single customs territory, so once Japanese imports arrived in the EU or the UK, they could circulate between the EU and the UK without any further formalities," he said.
"But now that the UK is outside the common customs territory, that seamless movement may not be possible: it depends on what deal the UK and EU can negotiate not just on tariffs, but also on rules of origin," the expert continued.
"From Japan’s perspective, therefore the size of the agreement prize with the UK is thus connected to the UK-EU negotiations," he concluded.
A pathway to CPTPP
Some experts believe that Japan might seek a minimalist agreement in the first instance and save the deeper negotiation for the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a replacement pact after the United States exited the Trans-Pacific Partnership (TPP) agreement, as Britain also sees talks with Japan as a logical step in its CPTPP accession.
"Negotiations with Japan are an important step in CPTPP accession, a key UK priority, which will help us diversify our trade and grow the economy," said British Secretary of State for International Trade Elizabeth Truss.
"I can see why accession to the CPTPP seems attractive," said Breckenridge, "it seems a one stop solution to some of the problems that the UK is trying to or needs to solve."
He noted that those problems include negotiating replacement FTAs with Canada and Japan; negotiating new ones with Australia, New Zealand and Vietnam, and deepening ones it has with the likes of Chile and Peru.
Breckenridge also pointed out there are specific aspects of the CPTPP that may be particularly attractive to Britain, such as the digital provisions in the CPTPP, which it believes would "go further than those negotiated by the EU in its FTAs with Japan and Singapore."
More broadly, he believes Britian sees itself as engaging with the Asia-Pacific region, a particularly dynamic part of the world, by accession to the CPTPP.
"Membership of (the) CPTPP would hitch the UK to the fast-growing Pacific region," said Truss earlier this month at the Policy Exchange webinar event.