The Japanese and British governments have started negotiations on a new trade agreement following Britain's departure from the European Union.
The two sides hope to reach an agreement by the summer for the pact to go into effect by the end of this year. The focus will be on tariff rates for automobiles and the other items exported from Japan to Britain as well as the deregulation of financial services.
Foreign Minister Toshimitsu Motegi and British International Trade Secretary Liz Truss held a teleconference on Tuesday where Truss said an agreement will further expand trade between Britain and Japan. Motegi said the agreement would "contribute to the economic growth of both countries after the coronavirus crisis [has passed]."
Japan and Britain currently have an economic partnership agreement (EPA), which was signed between Japan and the EU, but a new bilateral trade agreement needs to be signed by the end of December. The Japanese government aims to get approval during an extraordinary Diet session in autumn.
Japan's annual exports to Britain total about 1.5 trillion yen (14 billion dollars), making it the second-largest export market in Europe after Germany. The automobile-related sector, in particular, accounts for about 20% of the total.
The tariff on passenger cars exported to Britain was reduced to 7.5% because of the EPA between Japan and the EU, but if the U.K. had not withdrawn, the tariff would have been 0% in the eighth year of the treaty going into effect.
"Through our negotiations, we hope to decrease the amount of time until tariffs can be eliminated," said Economy, Trade and Industry Minister Hiroshi Kajiyama.
Discussions regarding information technology will also be on the agenda. Prior to the talks, the British government announced it would seek a deeper agreement on digital and data than what currently exists. It is especially willing to ease regulations on financial technology, or fintech.
The U.K. is also interested in joining the Trans-Pacific Partnership (TPP), which comprises 11 countries, including Japan and Australia. Japan also hopes to bring Britain in to revive the TPP, which has lost its presence since the United States left.
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