The UK has officially sealed its first post-Brexit trade deal, after signing an economic partnership agreement with Japan in a move that will cut tariffs on nearly 99% of products traded between the two countries.
The UK-Japan Comprehensive Economic Partnership Agreement (CEPA) is expected to take effect from 1 January 2021, and replaces the EU-Japan Economic Partnership Agreement.
The trade agreement was signed by international trade secretary Liz Truss and Japan’s foreign minister Motegi Toshimitsu in Tokyo this morning (23 October), after being agreed in principle on 11 September.
Japan is the UK fashion and textile industry’s third-largest export market after the EU and the US. For many brands, especially those manufacturing in the UK, Japan is the number one export market and the first market to buy their products, according to the UK Fashion & Textiles Association (UKFT).
In 2019, the UK exported around US$94m worth of apparel to Japan, whereas Japan exported US$42m apparel to the UK. A good proportion of these apparel products are in the luxury segment of the market.
The pact includes “new and more liberal rules of origin” for knitwear, among other products, which could potentially expand apparel trade between the two sides.
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By GlobalData“In particular, the FTA will allow clothing producers to undergo a single process in the UK and then export to Japan under tariff preference, as long as 50% of the inputs are sourced domestically. This is a positive change from the EU-Japan deal which required several processes to take place in order to confer origin,” UKFT adds.
According to the FTA, examples of the arrangements include zero tariffs on coats at entry into force as compared to 9.1% under the WTO’s Most Favoured Nation (MFN) rate and 0% from 2028 onwards on leather footwear under the FTA as opposed to the 21.6% MFN tariff.
The trade agreement provides a stepping stone on the UK’s path to joining the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), a more significant free trade agreement among 11 countries in the Asia-Pacific region, including Japan.
