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Trade agreements with Japan
The UK has 2 Free Trade Agreements (FTAs) with Japan:
- the UK-Japan Comprehensive Economic Partnership Agreement (CEPA) henceforth referred to as the UK-Japan FTA, which entered into force on 1 January 2021
- the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a trade agreement including 12 countries (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the UK and Vietnam) which entered into force between the UK and Japan on 15 December 2024
The following Parliamentary Report provides information about significant differences between the UK-Japan FTA and the EU-Japan FTA.
The UK-Japan FTA will remain in force alongside CPTPP. At times, you will need to specify which agreement you choose to trade under (notably when applying rules of origin), but benefits from either agreement will mostly apply automatically.
CPTPP entry into force and ratification
As of 15 December 2024, CPTPP is in force between the UK and:
- Brunei
- Chile
- Japan
- Malaysia
- New Zealand
- Peru
- Singapore
- Vietnam
This means that the UK can access CPTPP provisions with said countries.
On 24 December 2024, CPTPP will enter into force between the UK and Australia; this means that the UK will be able to access CPTPP provisions with Australia from and including 24 December 2024.
The following countries have not yet ratified the terms of the UK’s accession:
Canada and Mexico.
This means that the UK cannot yet access CPTPP provisions with those countries.
This guidance will be updated following each of the remaining countries’ ratification of the terms of the UK’s accession to CPTPP and will include when CPTPP will enter in force between the UK and the relevant remaining country.
Japan investment climate
Japan and the UK have a strong investment relationship across many sectors. In 2021, outwork stock of foreign direct investment (FDI) from the UK in Japan was £3.1 billion, while inward stock of FDI was £92.0 billion from Japan in the UK.
Sectors of shared interest include technology, energy and infrastructure, as Japan looks to move towards objectives of providing services to an aging population, carbon neutrality, and upgrading their infrastructure. You can find out more about key investment sectors for Japan in our Technology and Energy sector explainers.
More information about investing in Japan can be found on the Japan External Trade Organisation website.
The UK’s free trade agreement commitments
Our FTA commitments give investors 2 main areas of benefit:
- Investment protections that guarantee the treatment investors can expect to receive, which includes protection from discriminatory, unfair, or arbitrary treatment.
- Guaranteed market access that will ensure openness to investment and provide investors with certainty and transparency .
CPTPP’s provisions are backed by a modern and transparent Investor-State Dispute Settlement (ISDS) mechanism. This provides UK investors with recourse to an independent tribunal should any of the CPTPP members breach their commitments. This has been disapplied with Australia and New Zealand. The UK also has bilateral investment treaties with ISDS with a number of CPTPP members.
The UK’s bilateral FTAs and CPTPP co-exist alongside each other, and investors will be able to benefit from the provisions in both. This means that UK investors will benefit from an investment commitment as long as it is contained in one of the agreements.
See the CPTPP investment chapter for the full range of provisions. Please note that this link directs you to the New Zealand Foreign Affairs and Trade Ministry which is responsible for the CPTPP agreement text.
Agreed outcomes for UK investors
Equal and open access
We have committed to not discriminate on the basis of nationality, between our own investors and investors of a CPTPP Party. In addition, we have committed that if either of our countries choose to provide more generous treatment to investors from a third country in the future, that we will extend this treatment to each other. We have also committed to not quantitively limit investments through restrictions such as:
- equity caps
- joint venture requirements
- economic needs tests
Reduced investment requirements
We have committed to not impose certain requirements on foreign investors that would adversely affect their investment. Such requirements include:
- export requirements
- local content requirements
- forced technology transfer as a condition of investment
We have also committed to prohibit some nationality and residency requirements for senior managers and boards of directors.
Reservations
In some cases, countries specify where their investment market access commitments should not apply, these are commonly known as reservations. They are set out by each CPTPP Party in its Services and Investment Schedule found in Annex I and Annex II. Annex I lists existing areas where the country is not applying its investment commitments, and Annex II lists areas where the country is reserving its right to retain or introduce new measures to which investment commitments do not apply in the future. Both CPTPP and the UK-Japan FTA are negatively listed agreements, meaning that Japan has listed only the areas they want to exclude, and everything else is open to foreign investment. In the UK-Japan FTA, Japan’s commitments can be found in Annex 8-B.
Free movement of capital
We have committed to ensure that investors can easily make monetary transfers including capital, profits, interest, dividends, and royalty payments. We have agreed that these transfers should happen without delay and should be permitted in a freely usable currency.
Treatment and compensation
We have committed to guarantee a minimum standard of treatment to investors in line with customary international law. We have also committed to protecting investors from expropriation and losses as a result of armed conflict or civil strife in member states and have agreed principles for how any compensation should be paid.
Investor-state dispute settlement
We have committed to a modern and transparent Investor-State Dispute Settlement (ISDS) mechanism. This will ensure that UK investors can access an independent form of legal redress should they not receive guaranteed standards of treatment. This mechanism has been disapplied for Australia and New Zealand.
Department for Business and Trade support
The Department for Business and Trade (DBT) helps businesses export, drives inward and outward investment, negotiates market access and trade agreements, and champions free trade. Helpful links, tools and services available from DBT and wider government include:
Export Support Service (ESS) team
Get support on how to do business abroad. You may also be eligible for 1-2-1 support from a local International Trade Adviser. Businesses in Wales can also access support from Business Wales.
Export Support Service – International Markets (ESS-IM)
DBT's overseas in-market export support service for SMEs with high-export potential. Our International Market Advisers provide tailored support and market introduction information to new and current UK exporters looking to enter or expand into new markets. The service may be accessed globally with International Markets teams in South Asia, China, the Middle East, Africa, Eastern Europe, North America and Latin America.
Sign up to access free training on how to grow your international sales.
Information on finance and insurance for UK exports.
Trade and investment factsheets
The latest statistics on trade and investment between the UK and individual overseas partners.
Overseas business risk profiles
Information for UK businesses on political, economic and security risks when trading overseas.
Advice and warnings about travel abroad, including entry requirements, safety and security, health risks and legal differences.
Check or report a trade barrier
If you encounter an issue when exporting to any country – report the issue and UK government officials will be able to assess the issue and consider the options we have open to addressing it as appropriate
Search for your specific product to find applicable tariffs for each market, explore rules of origin and step-by-step help on customs procedures
Check import duties and allows you to check the status of available tariff rate quotas
Useful resources
You can find more information about export opportunities, business culture and any existing trade barriers on our Japan market guide.
Prior to export, you must be aware of local regulations and import conditions in Japan that apply to your goods or services. This can include tax considerations, labour laws, intellectual property rules, labelling and packaging regulations, among others.
To seek further information related to local regulations, business culture, or to find a local lawyer, translator, importer or distributor, you can use the following contacts:
- DBT’s Export Support Service International Markets team
- get in touch with DBT at the local British Embassy
- get in touch with the British Chamber of Commerce in Japan
To see information on political, economic and security risks when trading with Japan, please see: