The UK and Japan could help shape the future digital trade system and play a key role in closing Asia’s infrastructure gap, according to a new report by Asia House.
‘Japan-UK Relations After Brexit – Looking Towards a Closer Economic Partnership’ highlights a range of opportunities emerging for the UK and Japan as their economic relationship evolves post-Brexit.
The report, which comes at an important time in the relationship – with Brexit presenting challenges for Japanese firms in the UK, and London seeking accession to the CPTPP – outlines two key opportunities to grow the economic partnership: first, through the existing free trade agreement, signed between London and Tokyo last year, and, second, by improving the international trade environment.
Given the partners’ strengths in innovation and the rapidly expanding digital economy, the report identifies digital trade as a key area where the UK and Japan can emerge as global leaders. It recommends partnering on a Joint Statement Initiative (JSI) on the development of digital trade policy at the WTO level to better encourage multilateral engagement on this issue, and furthering work at the G20 on digital policy, including on digital tax.
The status of London and Tokyo as global finance and services hubs also presents an opportunity to address Asia’s infrastructure gap, which would in turn unlock growth opportunities for both partners, the report says.
‘The UK can offer capital and an investor base; expertise in the world’s leading speciality risk insurance market, including in infrastructure; and specialist advisory services to support infrastructure financing. Japan has similar expertise, including on the infrastructure development side, with extensive experience around the Asia region and beyond.’
The report, produced by Asia House Advisory and supported by the Government of Japan, also outlines the role the UK and Japan can play in bolstering the international rules-based order. Ed Ratcliffe, Head of Advisory at Asia House and report author, said: “This report outlines several areas for the UK and Japan to focus cooperation for mutually beneficial outcomes, both in terms of growing bilateral trade and investment, and creating opportunities at the global level by shoring up the rules-based international order.
“The UK and Japan both enjoy privileged positions in key global institutions and groups. This provides the opportunity to defend global trade rules, as well as play a major role in developing the global framework for digital trade which will define global commerce over the next decade.
“The report recommends that the UK and Japan continue to cooperate on upholding a rules-based international order from which both economies benefit. This means on-going commitment to the G7 and other multilateral forums as well as coordination in areas like WTO reform which may be back on the agenda in the coming year under the new Secretary General.”
Providing support for businesses to take advantage of the UK-Japan trade deal was also a key theme that emerged during the research for the report, Ratcliffe said.
“The UK and Japan should expand support for companies – in particular SMEs – to leverage the new trade agreement and build trading partnerships between the two countries. At the policy level, in the future the UK and Japan can consider expanding the investment chapter and should ensure that the digital chapter is kept up-to-date as digital trade continues to develop.”
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