(Bloomberg) -- The U.K. is set to sign a trade deal with Japan in Tokyo on Friday, its first with a major economy since Brexit, as the clock runs down on British efforts to reach an agreement with the EU by the end of the year.
U.K. International Trade Secretary Liz Truss and Japanese Foreign Minister Toshimitsu Motegi will attend a ceremony to mark the deal, which was reached in principle in September about three months after formal negotiations began.
The deal largely preserves the terms under which the U.K. traded with Tokyo as part of the EU, according to Japan’s Ministry of Foreign Affairs. It’s expected to boost Britain’s GDP by 0.07% compared to 2018 levels over the next 15 years, the U.K. government has said.
The agreement “has a much wider strategic significance,” Truss said in a statement late Thursday in the U.K.. “It opens a clear pathway to membership of the Comprehensive Trans-Pacific Partnership -- which will open new opportunities for British business and boost our economic security.”
The pact improves access to the U.K. market for Japanese train, cars and some auto parts, and adds rules on digital trade and financial services. The U.K. Department for International Trade said it provides bespoke benefits that go beyond the EU deal, including in areas such as digital and data, financial services, food and drink, and creative industries.
While the economic impact is modest -- the U.K. is Japan’s 18th-largest trade partner -- the accord with the world’s third-largest economy is a bright spot for Prime Minister Boris Johnson, who promised that Brexit would be an opportunity for Britain to strike better deals as an independent country.
The signing was expected to come hours after Johnson’s government re-started negotiations with the EU Thursday, in a bid to avoid tariffs and quotas being reimposed when the U.K. departs from the single market and customs union on Dec. 31.
Japan publicly opposed Brexit ahead of the 2016 referendum and has lobbied against anything damaging the interests of the 1,000 or so Japanese businesses in the U.K., including carmakers like Nissan (OTC:NSANY) Motor Co. and Honda Motor Co. that rely heavily on trade with the EU.
The U.K. said 99% of exports to Japan will be tariff-free under the deal, which will add 15.2 billion pounds ($20 billion) to annual trade with the Asian nation.
The Japan-U.K. agreement is set to be approved by Japan’s parliament in a session starting next week, enabling it to come into effect Jan. 1.
(Updates with comment from U.K.’s Truss in fourth paragraph.)
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