Japan trade deal is a win for UK car and rail manufacturing

The free trade deal signed by the UK and Japan last week could increase trade between the two countries by £15.7 billion.

The deal is the first agreement secured by the UK that goes beyond the existing EU deal.

For the UK manufacturing industry, the trade agreement will reduce tariffs on parts coming from Japan, streamline regulatory procedures and provide greater legal certainty for manufacturing operations from Japanese investors such as Nissan and Hitachi.

Nissan is the second largest automotive manufacturer in the UK, producing 346,535 cars last year according to industry body, the Society for Motor Manufacturers and traders (SMMT).

In March, the car firm unveiled a new £52 million XL press line as it prepares to ramp up production of the new Qashqai. The press is part of a £400 million investment plan in Nissan’s UK facilities.

Nissan started production of the new Juke at its Sunderland plant a year ago, following a £100 million investment in training and upgrading the manufacturing site.

Designed, engineered and manufactured in the UK, the new Juke is developed specifically for European markets, with Sunderland the only production location for this second-generation compact crossover.

Meanwhile rail industry giant Hitachi, which recently celebrated five years of manufacturing at its Newton Aycliffe site, has built 192 trains to date.

The trains produced include the UK’s new intercity train of choice, which have transformed travel on the Great Western and East Coasts, as well as the award-winning Class 385 regional trains for Scotland.

As a result of the factory’s success, the initial investment of £82 million has now increased to over £110 million. The most recent upgrade sees the creation of a brand new facility to weld and paint train carriages – the first of its type in the UK for a generation – which will increase the sophistication and capability of manufacturing at the site.

Hitachi Rail has also localised its supply chain in the UK, spending £1.8 billion in it since 2013, including over 130 separate North East suppliers.

UK exports to Japan have been growing by an average of 8.2% year-on-year over the previous five years. With this free trade deal in place, potential benefits include better jobs, higher wages, more choice and lower prices.

The agreement also includes a strong commitment from Japan to support the UK joining the Trans-Pacific Partnership (TPP), one of the world’s biggest free trade areas, covering 13% of the global economy in 2018 and more than £110 billion in trade in 2019.

Stephen Phipson, CEO of Make UK, the manufacturers’ organisation commented on the new trade deal: “New trade opportunities to boost business as we come out of the current COVID crisis will be welcomed by British industry.

“We must continue to place the emphasis on giving the UK’s smaller businesses access the opportunities of international trade particularly in liberalising access for UK manufacturing services. This will give a welcome helping hand to some of the country’s most innovative companies, which sometimes struggle to navigate the complexities of breaking through into new markets. Business looks forward to being directly and closely involved in the ongoing programme of trade negotiations to ensure the best possible outcomes.”

Make UK www.makeuk.org

DIT www.gov.uk/dit