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Analysis

Japan-EU trade deal shows what we’ll be missing out on

by Milo Mallaby | 18.07.2018

Japan and EU leaders have just signed the largest free trade deal of all time. Nearly a third of the world’s GDP and more than 600 million people are encompassed by the agreement, finalised on Tuesday. While Boris Johnson and his ilk imagine a “Global Britain” outside of the EU, it is clear that if we want to trade globally, the best way to do so is from within the EU.

The benefits for the EU are clear. Almost all of the £900 million of customs levies paid annually to Japan by EU businesses will be removed. In particular, notoriously high Japanese tariffs on the beef and cheese industries, which currently reach up to 40%, will go. With £52 billion worth of EU goods exported yearly to Japan, this will provide a significant boost to EU companies. Moreover, complex Japanese regulation, including on data transfers, crucial to the modern digital age, will be matched with EU standards, making it easier for European companies to export services to Japan.

If we were to stay in the EU, the UK would benefit as well. Japan is our eleventh largest export market, worth £12.5 billion  in 2016. British industries ranging from machinery manufacturing to pharmaceuticals would profit from tariff reductions with their important Japanese market. That means better paying jobs for Brits as well as more tax revenue for the government, which could go to supporting our NHS.

Brexit risks foregoing these economic advantages, as it does the advantages from other free trade deals the EU has with more than 60 countries. Unlike Liam Fox’s untested, yet still somehow flailing, negotiating team, the EU has been regularly concluding trade deals – most notably one with Canada finalised last year.

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But the significance of the Japan-EU trade deal is not only economic. It also represents a stand of solidarity. At the signing, in a clear attack on Trump’s attempts to start a trade war, Donald Tusk said: “It’s a light in the increasing darkness of international politics… We are predictable… and will come to the defence of a world order based on rules, freedom and transparency and common sense.” This was echoed by Toshimitsu Motegi, Japanese minister for economic revitalisation, who added that “the signing of the Japan-EU deal today will show the world once again our unwavering political will to promote free trade.”

For the UK, being an important voice at the EU table is the best opportunity to remain that “light in the darkness”. The world is increasingly becoming dominated by aggressive autocrats: Putin in Russia, Xi in China, Erdogan in Turkey.  To best defend our values of liberal democracy, free trade and internationalism, we must remain in the EU. Brexit, meanwhile, means pushing ourselves closer to protectionist Trump. Is this really sensible?

The Japan-EU trade deal represents the opportunities of staying in the EU: record breaking trade deals and the political clout to stand up for what we believe in. Why throw this all away for no gain? If we really want to be a Global Britain, Brexit will make that harder. If the British public don’t like the sound of that, then they need a People’s Vote on the final Brexit deal.

Edited by Luke Lythgoe

8 Responses to “Japan-EU trade deal shows what we’ll be missing out on”

  • Well when we leave we can have our own free trade deal with the EU and Japan, I don’t think we will miss out on much

  • Oh look, an EU trade deal that has:

    No trade tariffs.
    No membership of the Single Market.
    No membership of the Customs Union.
    No Free Movement of People.
    No ECJ oversight – an independent mediating panel will arbitrate any disputes.
    Only partial alignment of regulatory requirements e.g. car safety standards, medical labelling requirements.

  • So I take it Japan has signed up to pay huge sums, free movement and abide by EU rules decided by EU courts then, since this is the only way to have access to eu markets

  • I wonder why this deal has not been mentioned strongly in our wonderful impartial media? While the UK has descended over the last couple of weeks to a state reminiscent of a group of crazed baboons, our foes over the Channel appear to be steaming ahead.
    Is the UK amongst the negotiators, and will this country see any of the fruits of the trade deal, or have the Europeans already edged us out? As things are going we either stay in the EU or face the world on WTO terms; either way our reputation and future prosperity seem to have been thrown out of the balloon.

  • The response to DJjazzyJeff , John and Brian (above) is that a Free Trade deal is much better than what went before (and better, incidentally, than UK would be able to negotiate for itself without the weight of the EU) but not even CLOSE to being as advantageous as being within a Single Market.

  • In response to John. Yup a trade deal is fine. However the SM and the CU are a much closer relationship which brings MUCH greater benefits. You see freedom of movement and the ECJ as a problem: I don’t.

    We will lose out when we leave and we will NOT get better deals than within the EU.

    And we will lose out on a lot of non-economic benefits which you don’t even realise you have at the moment, until you lose them.

  • our wonderful media didn’t mention Australia buying submarines from France DCNS either. E Macron said…..when the UK leaves the EU there will be no reason for us not to do deals with its trading partners as we will will see the UK as a rival rather than a partner.