With Japan remaining the third largest economy in the world it should be no surprise that both the EU and the UK view it as an important trading partner. Prime Minister Theresa May's three day visit to Japan will be looking to lay the foundation for a post Brexit trade agreement, yet she only needs to look at the vaunted Japan-EU Economic Partnership Agreement (Jeepa) to appreciate how difficult any future talks may be. Negotiations on Jeepa began in 2013 and have still only been agreed on at a political level with details yet to be finalised.
Mutually Beneficial Trade
A trade deal between Japan and the UK is mutually beneficial, but uncertainty over future Brexit negotiations with the EU could delay any meaningful talks. The UK already has good trading levels with Japan and reasonably low existing tariff levels, averaging at 4.2%. This saw the UK export £11.6 billion worth of goods and services to Japan in 2016. Therefore a focus on non-tariff barriers to build on existing trade would be good for both parties. Japan in turn invests heavily in the UK, giving it access to the EU market, but it's the uncertainty over this future access for Japanese businesses that could prove a stumbling block on early talks.
Cars For Cheese
Japan's attention could also be more focussed on finalising Jeepa with the larger bloc of nations under the EU banner. Dubbed the “cars for cheese” deal, countries like Ireland could see agricultural and food tariffs slashed on exports to Japan, with 10% tariffs on Japanese cars to Europe lowered over 7 years. The UK has the benefit of only one parliament needing to ratify any future deal, yet such a trade deal with Japan may depend first on the outcome of the UK's exit from Europe.