The U.K. has one of the largest economies in the world. This fact once more underlines the importance of the local economy. However, there are certain challenges as well. For example, the trade agreement between the U.K. and the European Union (EU). Another issue is the coronavirus pandemic and its impact on the economy. The pandemic caused serious damage and it could take years to return to pre-coronavirus levels.
Hopefully, the U.K. and Japan on Friday agreed in principle to a trade deal. This trade deal is very important for both countries and especially for the U.K as this is a first major agreement after Brexit. Importantly, it is hard not to mention all issues that accompanied Brexit.
It is worth noting that, the U.K. described this agreement as a historic moment. People should take into account that, the trade deal with Japan comes at a time when Britan struggles to secure an agreement with the European Union.
Based on the information provided by Britain’s trade department, local companies would benefit from tariff-free trade with Japan. Importantly, the deal applies to 99% of exports to Japan. Moreover, the trade department suggested the deal would help to increase the trade with Japan. According to the department, this trade could increase by $19.5 billion.
Also, the deal would include digital and data provisions that go far beyond the EU-Japan trade deal according to Britain. Furthermore, the deal enables the free flow of data without jeopardizing personal data.
Trade deal and its importance for the economy
Interestingly, both the U.K. and Japanese parliaments must approve the tentative agreement. The deal is scheduled to come into the force at the end of 2020. As mentioned above, the trade deal represents a historic moment for both countries. It is the first major post-Brexit trade deal.
The deal between Japan and the U.K. is an important step forwards when it comes to joining the Trans-Pacific Partnership. Moreover, thanks to this deal Britain will be in the centre of a network of modern trade agreements with countries and allies.
As a reminder, U.K.’s Prime minister Boris Johnson made an interesting comment earlier this year. According to Jonhson, Britain could become the Superman of global trade, by striking lucrative agreements on its own terms following the country’s exit from the EU in January.
The world’s fifth-largest economy signed a trade deal with the world’s third-largest economy. This fact highlights the significance of this deal. Moreover, this is not the end of the story. Business is ready to support the government in its efforts to secure more trade deals around the globe.
Nevertheless, there are some challenges as well. For example, free trade agreements with countries around the world are unlikely to offset exports lost to the EU. As a result, without a trade deal with the EU, it would be difficult to boost the local economy. However, it won’t be easy to secure this deal, due to the so-called Internal Market Bill. This bill seeks to amend part of the country’s Brexit deal with the EU. Thus, the Internal Market Bill has the potential to jeopardize the trade deal. Lawmakers in the U.K. should not approve this bill. Moreover, both sides should work together to solve all topics.