UK’s ‘historic’ trade deal with Japan promises advantages to tech industry, says TechUK

TechUK was among the organisations to welcome the “historic” trade deal announced on 11 September between the UK and Japan that is expected to boost trade by £15bn a year.

The deal replicates the arrangement which the UK already has with Japan, but, according to reporting in the Financial Times, “adds new digital provisions such as a ban on data localisation that will allow British Financial services companies and Japanese game makers such as Sony to operate from offshore servers”.

The agreement will be completed in October, subject to ratification by the Japanese Parliament in January 2021.

Julian David, CEO of TechUK, said, in a Department for International Trade statement: “TechUK welcomes the conclusion of the UK-Japan Economic Partnership Agreement with its comprehensive digital trade chapter. Today’s agreement improves an already flourishing relationship between the UK and Japan tech sectors and creates significant opportunities for trade and investment for both our countries.”

Liz Truss, International Trade secretary, hailed the agreement as “historic”, adding: “The agreement we have negotiated – in record time and in challenging circumstances – goes far beyond the existing EU deal, as it secures new wins for British businesses in our great manufacturing, food and drink, and tech industries.”

Japan expert Duncan Bartlett, editor of Asian Affairs magazine, told Gordon Brewer on BBC Radio Scotland’s Good Morning Scotland programme on 12 September that although the deal would only boost UK GDP by 0.07%, it was seen as important in Tokyo.

“Previously, trade arrangement were covered by the deal that Japan had made with the European Union,” he said, but that is now replicated by the new bilateral deal between the UK and Europe.

Bartlett added that “it’s better than having a no deal with Japan”, and could be a prelude to the UK joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, alongside Japan, Australia, Canada and Mexico, among others.

The agreement was announced in principle by Truss and Japan’s foreign minister Motegi Toshimitsu on a video call on 11 September.

UK businesses will benefit from tariff-free trade on 99% of exports to Japan. Government analysis shows, said the statement, that “a deal with Japan will deliver a £1.5bn boost to the UK economy and increase UK workers’ wages by £800m in the long run”.

One set of provisions of the agreement relevant to digital and data are said to “go far beyond the EU-Japan deal”.

“These will enable free flow of data while maintaining high standards of protection for personal data. We have also committed to uphold the principles of net neutrality, as well as introducing a ban on data localisation, which will prevent British businesses from having the extra cost of setting up servers in Japan. This will help UK fintech firms operating in Japan – like Revolut and Transferwise – to innovate and grow,” said the agreement.

There will also be what is described as an “annual dialogue between Her Majesty’s Treasury, UK financial regulators, and the Japanese FSA that will explore ways to further reduce regulatory friction – something that would be impossible were the UK still in the EU. Financial services are our biggest export to Japan, accounting for 28% of all UK exports.”

There also said to be “new protections for UK creative industries – British businesses can now be confident that their brands and innovations will be protected. We have gone beyond the EU on provisions that tackle online infringement of IP rights, such as film and music piracy.”

Director general of the Confederation of British Industry, Carolyn Fairbairn, said: “Since 2018, in partnership with JEITA, we have run a successful UK-Japan Tech Forum to enable our members to develop a closer relationship with Japan, and we look forward to working with the government and our partners in Japan to assist the tech sector in taking full opportunity of this agreement.”