Brexit Bombshell: Plummeting Exports to Japan Following ‘Groundbreaking’ Free Trade Accord
In a twist of fate, the inaugural bilateral trade agreement sealed by Britain post-Brexit has been dubbed a debacle as fresh statistics reveal a decline in exports since its inception.
Back in October 2020, Liz Truss, then serving as the trade secretary, inked what was hailed as a “historic” pact with Japan, touting it as a pivotal juncture for Britain. Projections painted a rosy picture of a multibillion-pound trade upsurge, purportedly aiding the UK in its post-pandemic recovery.
However, data compiled by the Department for International Trade paints a starkly different reality: exports to Japan dwindled from £12.3 billion to £11.9 billion in the year leading to June 2022. Goods exports nosedived by 4.9%, amounting to £6.1 billion, while services plummeted by 2% to £5.8 billion.
This downturn deals a severe blow to Brexit proponents who championed expanded global trade with non-EU nations as a counterbalance to any setbacks incurred from departing the single market.
A notable example, the trade deal with Australia, drew flak earlier this month from George Eustice, the former environment secretary, who deemed it “not actually a very good deal for the UK.”
Labour’s shadow secretary for international trade, Nick Thomas-Symonds, minced no words, asserting, “Falling trade with Japan incontrovertibly demonstrates ministers’ failure to serve UK exporters.”
This regression is a glaring testament to the absence of a coherent trade policy under the Conservatives, exacerbating the already substantial economic fallout inflicted by their actions.
In tandem with this, Britain’s economic outlook appears bleak in comparison to its global peers. Save for Russia, it is slated to emerge as the weakest performer among the world’s major economies next year, according to the Organisation for Economic Co-operation and Development.
Amidst this backdrop, Chancellor Rishi Sunak finds himself besieged, facing internal and parliamentary pressure over his Brexit strategy. Recent speculations about his inclination towards a softer, “Swiss-style” Brexit have further stoked the flames of controversy.
Yet, he now confronts calls from within the ranks to abandon proposals that would unilaterally annul EU-derived legislation by the year’s end, underscoring the mounting disarray within the corridors of power.
The performance of the Japan deal only compounds skepticism surrounding the government’s assertions of a post-Brexit windfall. Department for International Trade officials, back in 2020, extolled the UK-Japan Comprehensive Economic Partnership Agreement (CEPA) as a harbinger of substantial benefits surpassing its EU predecessor. However, initial trade data fails to inspire confidence.
Minako Morita-Jaeger, a senior research fellow in international trade at Sussex University business school, asserts that the government overhyped the UK-Japan trade pact, asserting it conferred minimal economic advantages over its EU antecedent. An analysis conducted by Morita-Jaeger and colleagues corroborates this, highlighting inferior trade performance vis-à-vis the EU and the rest of the world.
Economic experts now grapple with the undeniable reality of Brexit’s adverse repercussions on international trade, as businesses contend with heightened customs scrutiny and bureaucratic hurdles.
The Office for Budget Responsibility’s recent report concedes a significant downturn in UK trade, with projections indicating a 15% reduction in trading intensity in the long run.
In light of these challenges, whispers of a Swiss-style relationship with the EU have emerged among senior government figures, although Prime Minister Rishi Sunak remains steadfast in his rejection of any alignment with EU laws.
While the Japanese Embassy in London maintains that the deal furnishes stability for bilateral trade post-Brexit, the Department for International Trade remains resolute, asserting that the UK-Japan CEPA holds the promise of bolstering trade and augmenting wages in the years to come.