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Japan’s EU deal ‘threatens post-Brexit UK industry’

Japan’s EU deal ‘threatens post-Brexit UK industry’

Experts have warned that a new EU-Japan trade deal could pose a post-Brexit threat to British industry in the wake of Nissan’s decision to backtrack on expanding its Sunderland plant.

The world’s biggest free trade deal came into force on 1 February and there are fears that Japan will stop using the UK as a manufacturing base, especially with a 0% tariff on car imports built into the EU-Japan agreement.

Meredith Crowley, a trade specialist economist at Cambridge University, said: “The risk is that the free trade agreement between the EU and Japan plus the uncertainty about the relationship between the UK and the EU will mean that the Japanese will ship things to the European and cut Britain out of the loop.”

Business groups estimate that the potential benefit of the EU-Japan deal to the UK would be £3bn a year if Britain stayed in the EU. “It could be a huge lost opportunity, which is why manufacturers are so keen to avoid a cliff-edge Brexit,” said Seamus Nevin, the chief economist at the UK manufacturers’ body, the EEF.

Other experts believe the EU-Japan deal will make it harder for the UK to attract inward investment. The gradual tapering of car tariffs from 10% to zero within seven years would make it easier to produce in Japan and then export to the EU, said David Bailey, the professor of industrial strategy at Aston business school.