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Our Japanese trade deal – the first proof of a poorer Britain after Brexit

International trade secretary Liz Truss - Credit: Parliament TV

DR ROB DAVIDSON, director of Trade Deal Watch, says the UK’s government new trade deal with Japan is far from a cause for celebration. It is the first sign of our poorer future following Brexit.

In the suburbs of Tokyo, it is unlikely that many people will be celebrating the hard fought terms for Stilton cheese in the new UK-Japan trade deal. Seven out of ten Japanese people are lactose intolerant so cheese generally is not such a big deal. And yet, at Conservative Party Conference this year, with “no deal” Brexit back on the table and a US trade deal vulnerable again, expect a lot of talk about Stilton in the Zoom webinars and press briefings. Symbolically, the cheese and the trade deal mean a lot to the Brexit faithful but, like when selling cheese to a lactose intolerant market, it amounts to a lot of hot air. 

One of the promises of Brexit, or at least pro-Brexit MPs, has always been that the UK will be able to sign better, faster, more tailored and UK-centric trade deals than anything negotiated in our name by that big, cumbersome, European Union. Whether inspired by Adam Smith or Rule Britannia, ‘Global Britain’ has been a rallying cry over the past five years. So far, the closest that we’ve come is the new UK-Japan deal.  

And for those that have seen the government’s recent announcements about the Japan deal, emotional responses may have ranged or careened through surprise, relief or even vindication to see reports that this new, independent, sovereign deal will mean a “boost to the UK economy and increase [to] UK workers’ wages.”  

Or, some might have taken such declarations of success with a pinch of salt, given that this is the new, law breaking, rule breaking, fingers-crossed government that appears to prefer the days of ‘perfidious Albion’ to the days of “Britain does not break treaties.” 

So which is it? Does the Japan deal herald a new dawn, the first of Brexit’s promised bespoke trade deals, or is it just another piece of Johnsonian theatre: like claims of “more nurses” that we already had or the “world-beating” track and trace system that we’ve still never had? 

Well, Stilton aside, those claims about boosts to the economy and wages sound pretty straightforward but, that doesn’t mean they’re true in any normal sense of the word.  

Let’s look at the ‘boost to UK economy’ that the government announced will be £1.5bn over the next ten to fifteen years. First, ignore the fact that this is a small amount relative to the overall economy or that it might take some time to materialise because, in fairness, any such increase could mean a significant boost to small firms, especially in the ‘left behind’ or ‘levelling up’ parts of the country. Instead, the big, billion pound question is, how does it compare to the EU-Japan trade deal that we could have had? 

By this measure, the UK government’s new deal is a failure. It makes our country poorer than it could have been. The government has published an impact assessment for the EU-Japan deal as well as their ‘scoping assessment’ for the UK-Japan deal. The government’s own best guess for the EU-Japan deal was that it would boost our economy by £2.1 to £3 bn. In recent announcements then, the government has been claiming a Brexit victory despite surely seeing that £1.5bn is less than £2-3bn.  

To my knowledge, the government hasn’t been challenged on these figures directly in the press or Chamber but from other questions and answers their reasoning is fairly clear: the UK is leaving the EU and therefore the UK cannot have the EU-Japan trade deal, and subsequently any boost from the UK-Japan deal is more than we would have had.  

There is a certain dark logic about this. Brexit is happening and it’s damaging our country so any damage limitation is a win. Where the logic twists is when they present a damage limitation ‘win’ as proof that Brexit promises are coming true.  

And so what about “UK workers’ wages” where the recent announcements say we will benefit from an £800 million increase over the coming years? Well that segues us nicely onto another big issue for this Brexit government: transparency.  

It’s not clear what the government means when it says “UK workers’ wages.” In the impact assessment for the EU-Japan deal, ‘national income’ was predicted to increase by £2.9 to £4.7 billion but that’s not likely to be comparable with the new “workers’ wages” statistic. The government isn’t saying how it’s come by the new figure and so we can’t really compare. Which may be the aim. 

Last week MPs from the Lib Dems and Labour asked the Department for International Trade when it would release the full details and methods behind these claims and the answer was always the same: after the deal is signed and as it is presented to Parliament.  

Not for the first time, the government is keeping MPs and the public in the dark about how damaging their negotiations and deals are. Worse, it may be part of the cliff-edge strategy that has become the hallmark of Brexit. The government will wait until maybe October or November, perhaps with Brexit negotiations further collapsed, and then say to Parliament, you have a choice: no deals at all or this Japan deal.  

If any MP has the time to notice that the new deal is worth less than the old EU-Japan deal, they won’t be able to raise much opposition because the cliff-edge will be so close: ratification at gunpoint. And from then on, opposition or complaint is impossible because the government will respond by saying, “you voted for it.” 

There are other claims in the recent announcements and reporting on this UK-Japan deal but sadly for us all they amount to little more than Stilton. Claims about having ‘gone further’ than the EU in trade terms for ‘digital’ aren’t expected to mean anything much in practice. Nor does it really indicate a victory for British negotiators. The Japanese have pushed to have more data flow across borders and other ‘digital trade’ improvements in other recent negotations so the UK has just given Japan what it wanted rather than bartered hard for a concession. It’s not bad for the UK it’s just not a significant win.  

The UK’s new deal is, in fact, largely just a case of rolling over what the EU and Japan had agreed and then adding some press spin about interesting or symbolic sounding things. That shouldn’t come as a surprise: any truly ‘new’ deal would have taken many years to negotiate.  

So what, if anything, can we say about the potential of post-Brexit trade deals? In the Japan deal, the UK has managed to secure a ‘rollover deal’ with some minor modifications and it’s not as good as what the EU had negotiated for us. Impact assessments on other somewhat novel deals with Australia and New Zealand have shown ‘success’ to be almost completely negligible in terms of benefits to our country (and in some scenarios also make us poorer.) And all the while, our international reputation has been shattered and any future claim to negotiate in ‘good faith’ will be met with ridicule and disbelief. The outlook is not good.  

The government still has around twenty ‘rollover’ deals to conclude before December 31st. It seems, going by all the evidence, that the best we can hope for is our negotiators stick to rolling over the EU’s deals and don’t try to ‘go further’ any more. With a coronavirus recession and ‘no deal’ Brexit on the way, our country just can’t afford it. 

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