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UK-Japan deal provides continuity but lacks ambition, report finds

20 November 2020

The International Agreements Sub-Committee has today published a new report on the UK-Japan Comprehensive Economic Partnership Agreement (CEPA), providing a first analysis of the recently agreed UK-Japan trade agreement.

The Report

In its report, the Committee finds that the CEPA “is a respectable continuity-plus agreement” that “provides valuable continuity for businesses, consumers and other stakeholders”, but that the CEPA falls short of the Government’s presentation of the deal.

The committee also point out that certain parts of the UK-Japan agreement seem to be only “a potential victory for the Government”, such as the possible new protections for UK Geographical Indications (GIs), as the added value is unclear, and the Japanese approval process may take longer than anticipated.

Whist retaining tariff reductions at the same pace as in the EU-Japan agreement ensures that UK exporters aren’t at a disadvantage versus EU exporters, the CEPA does put UK exporters behind in terms of access to tariff rate quotas, as the UK will only have second-order access to the preferential rate after EU exporters. This could compromise a small but important proportion of agri-food exports. 

The Committee finds CEPA contains welcome provisions on rules of origin and cumulation, which will help to protect existing supply chains and manufacturing. But to be most valuable to key areas, such as car manufacturing, the UK and EU also need to agree similar provisions, and this has yet to happen.

The Committee also finds it a missed opportunity not using the talks to demonstrate the UK’s international leadership in the areas of women’s economic empowerment on sustainable development. The Committee feel this might have been addressed further if there was more time for negotiation.

Chair’s Comments

Lord Goldsmith QC, Chair of the International Agreements Sub-Committee, said:

“CEPA is a respectable continuity-plus deal that provides many UK businesses exporting to Japan with the certainty they desperately need and avoids reverting to WTO terms for trade. But in some areas, it will require the UK to agree further provisions with the EU for it to be a success.

“We welcome parts of agreement that have gone further than the EU-Japan deal, such as on digital and data. However, because of the required pace of negotiations, it has not been possible to achieve some of the objectives of key stakeholders, such as the creative industries, which might have required primary legislation on either side. In seeking to present a rollover agreement as entirely fresh and new, the Government has raised unrealistic hopes in these areas, but we hope the Government can be more ambitious in this area in future talks.

“In trying to promote CEPA as a new deal, the Government has oversold many of its provisions. We hope that that does not undermine the important continuity for businesses and consumers that has actually been achieved.”

Further information