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Japan rushes UK to agree first post-Brexit trade deal

Japan has given the UK just six weeks to strike a post-Brexit deal, putting Boris Johnson’s government under pressure to agree one of the fastest trade negotiations in history — and Britain’s first in more than 40 years.

Time is so short that both sides will need to “limit their ambitions”, warned Hiroshi Matsuura, Tokyo’s chief negotiator, in comments that dash UK hopes of winning deep trade liberalisation from Japan.

While meeting the timetable would hand Mr Johnson an early trade victory, it also highlights the risk of the UK being bounced into bad deals before the Brexit transition expires at the end of the year.

Striking a trade agreement with Japan is one of the main priorities for Liz Truss, the UK’s trade secretary, who hailed the start of talks as a “historic moment” for both countries. When the talks began two weeks ago, she said the UK and Japan had signed up to an “ambitious timeline” to complete the negotiations.

Most comprehensive free trade deals normally take years to agree, but Mr Matsuura said there was almost no time left if Japan was going to ratify a deal this year.

“To avoid a gap in January, we must pass this in the autumn session of the Diet [the Japanese parliament],” he told the Financial Times. “That means we must complete negotiations by the end of July.”

Last year’s “mini-deal” between Japan and the US took six months to negotiate, although it was not finalised until September and still passed the Diet by December. That suggests there may be some flexibility in Mr Matsuura’s July deadline.

Both sides have agreed to base a deal on the existing EU-Japan agreement — which took effect last year — but the UK has set out further goals, including the “reduction or elimination” of Japanese tariffs on goods and agriculture and “ambitious commitments on market access” for UK services.

However, Mr Matsuura suggested there would be little time for talks on contentious areas such as tariffs and quotas. “The shortage of time means that both sides will have to limit their ambitions,” he said.

His comments raise the risk that the UK will not secure any meaningful quotas to sell agricultural goods such as beef or cheese in the Japanese market. Agriculture was one of the most contentious areas in EU-Japan trade talks.

Instead, one of the UK’s priorities is likely to be rules of origin that let British exporters continue to include European components in products they sell to Japan. Mr Matsuura declined to comment on the content of a UK-Japan deal.

In response to Tokyo’s comments, an official at the UK’s Department for International Trade said: “We will be fighting for British farmers’ access to the Japanese market as part of a deal along with ambitious digital and data chapters.”

Another senior DIT official added that data and digital services was the UK’s primary focus in the negotiations. Last month, Ms Truss said she hoped for a “comprehensive” UK-Japan agreement that “goes further than the deal previously agreed with the EU”.

Tokyo is dangling the prospect of a second chance for more leisurely negotiations if the UK applies to join the Trans-Pacific Partnership trade deal with 11 Pacific nations, including Japan, Canada, Malaysia and Vietnam, adding to the pressure for a quick deal now.

With work on other trade deals largely complete, Japan has put almost all of its veteran negotiators to work on intensive talks with their British counterparts. “We are doing this deal differently to the usual style. Instead of rounds of talks, we are negotiating every single day,” Mr Matsuura said.

Since travel is not possible because of Covid-19, the negotiations are taking place on video calls between private houses in the UK and Japan, making them unusual in format as well as speed.

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