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Scrutiny of international agreements: UK-Japan Comprehensive Economic Partnership Agreement Contents

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Appendix 4: Ministerial correspondence

Letter from Lord Goldsmith QC to the Secretary of State for International Trade on trade negotiations between the UK and Japan, dated 31 July 2020

Thank you for coming to speak to us on 23 July 2020 about the negotiations for free trade agreements with both the US and Japan. I am writing to you about the trade agreement with Japan.

As you know, our inquiries into FTA negotiations will run until the conclusion of the CRAG scrutiny period for any agreed deal. We have a number of questions for you, covering the process that DIT is following in negotiating with Japan, DIT’s engagement with Parliament in its scrutiny, and points brought forward by stakeholders in evidence gathered to date. We will hold oral evidence sessions with stakeholders and experts in September.

We are grateful for your written submission to a subset of the questions in our Call for Evidence, and we have included the remaining questions at the end of this letter in Annex A. We look forward to receiving your responses, along with your replies to the points in this letter, set out in bold, by no later than 1 September. Given the pace of the negotiations with Japan and the short timescale for concluding an agreement, it is crucial that we receive responses to these questions promptly so that we can prepare for the short CRAG-scrutiny window that will follow. I am sure you will understand that and so I hope you will be able to comply.

The scrutiny process

We discussed on 23 July the approach that the Government intended to follow in engaging with Parliament when an agreement was reached with Japan. We agreed that the Government would give the Committee the final agreement text in advance of laying it before Parliament under CRAG procedure, time permitting. You also told us that you, Minister Greg Hands, or the chief negotiator would be happy to provide the Committee with private briefings to ensure that we have the relevant information ahead of reporting on the agreement. We welcome these commitments and look forward to the Government upholding them. You told us that the Government is seeking an “enhanced agreement”156 with Japan or “a deal that is EPA-plus in many areas”.157 This implies that the agreement may, in some areas, diverge from the existing EU-Japan Economic Partnership Agreement (EPA), which the UK will leave at the end of the transition period. It is thus, particularly crucial for Parliament to be able to conduct sufficient scrutiny. If the UK-Japan FTA is a continuity agreement, we expect the Government to uphold its commitment to provide a Parliamentary Report along with an Explanatory Memorandum.

We ask the Government to uphold its commitment to provide the Committee with the initialled agreement in advance of it being laid before Parliament under the CRAG procedure to ensure sufficient time for parliamentary scrutiny, and to do so no later than the point at which the agreement is provided to the Japanese Diet.

Devolved administrations and regional bodies

We discussed with you on 23 July how the Government is ensuring that the devolved administrations are reflected in the UK’s trade objectives and outcomes of negotiations, and you stated that Minister Greg Hands meets regularly with a group of ministers across the UK to make sure they are involved.

We encourage a real and meaningful consultation process with the devolved administrations and Parliaments to ensure that international agreements reflect the interests of the constituent parts of the UK. As I am sure you appreciate, there are some regions which will be particularly significantly impacted by a UK-Japan trade agreement, especially the North East of England, where the automotive industry is heavily concentrated, and a large number of jobs are dependent on Japanese car manufacturers. We ask the Government to engage with the devolved administrations as well as with the appropriate regional bodies in England, where there is no devolved administration. Will you do so?

Crown Dependencies and Overseas Territories

We would also encourage a thorough consultation process with the Crown Dependencies and Overseas Territories (CDOT), as the Government can extend the application of treaties to the CDOT at the time of ratification or at a later date. In particular, we are aware that a trade agreement between the UK and Japan may not be extended to Gibraltar. I was grateful for a private briefing from Lord Grimstone, but we would welcome an explanation that can be made public regarding the Government’s intentions towards the Crown Dependencies and Overseas Territories, which have been automatically included in previous rollover agreements.

Evidence from stakeholders

Our Call for Evidence remains open, and we will continue to gather evidence about how the UK-Japan deal might affect stakeholders over the summer. Thus far in our inquiry, we have heard from stakeholders through informal discussions about their interests and concerns.

We share the concerns of some stakeholders that the Government has not provided adequate information on what the trade-offs are in the negotiations, what areas are being prioritised, and how the Government might provide support to areas that might be impacted negatively by a UK-Japan FTA. Generally, stakeholders have found it extremely challenging to follow the trade negotiations and provide timely input to the Government, particularly under the circumstances of the COVID-19 pandemic, in which many individuals and organisations are struggling financially and in terms of capacity. They have found the pace and sequencing of trade negotiations with Japan, the US, Australia and New Zealand to be especially challenging as they try to keep up with negotiations and understand how they may be affected by these FTAs.

Automotive sector

Ensuring business continuity for the automotive sector is crucial and it is highly dependent on the outcomes of the UK’s trade negotiations with both Japan and the EU. Japanese owned plants made up nearly half of the UK’s car production in 2017 and Japan has invested heavily in the UK factories as a gateway to the EU market and integrated supply chains across the UK and EU.158

As you know, the current arrangements in place under the EU-Japan EPA will come to an end on 31 December. On 23 July, we asked you whether you anticipate a comprehensive FTA to be agreed with Japan in time for it to be in place before the end of the transition period, and you responded, “I am not going to set a deadline and say that we must meet that deadline”. 159 You further stated, “There is a real chance to get a very positive deal with Japan, but again I will not be pushed or bounced into agreeing a deal that is not in Britain’s interests just because of time constraints”.160 We agree that the UK should not enter any deal that is not in its interests. However, we note that this time constraint is not imposed by our negotiating partner, but is a consequence of the transition period coming to an end and is a matter of great importance for the automotive sector and other industries. Failure to conclude trade agreements with Japan and the EU before the end of the transition period would mean reverting to WTO rules. This would lead to a sudden reintroduction of tariffs and barriers and would have significant negative impacts on the UK automotive sector.

Given the high level of integration of supply chains in the automotive sector, the agreements between the UK, Japan and the EU must work together and any gaps between the agreements will have major consequences for businesses.161 Automotive stakeholders have asked the UK Government to maintain the basic conditions in the existing EU-Japan EPA rules of origin and to allow the extended cumulation of EU inputs of production in future UK-Japan automotive trade.162 We discussed this on 23 July and you stated, “It is a key negotiating objective with Japan to get at least what we’ve got in the EPA on automotive rules of origin, but we also would like to see more. As far as we are concerned, the status quo is a baseline, but EU content being counted is absolutely critical.”163 Could you tell us how the Government will ensure that there will be no disruption to UK automotive trade, including clarifying whether cumulation will be extended to the EU in a UK-Japan FTA and whether a UK-EU trade agreement will include extended cumulation to Japan? What would the effect be on UK-EU trade if the automotive rules of origin in a UK-Japan FTA differed from those in the EU-Japan EPA?

A clear ask from Japan has been the accelerated liberalisation of UK automotive tariffs in a UK-Japan FTA, faster than the liberalisation schedule set out in the EU-Japan EPA.164 Considering the possible increased competition from Japanese automotive companies, stakeholders have noted that a support scheme would be helpful for the UK auto sector.165 In its written response, DIT acknowledged it was aware of Japan’s demands and stated, “The UK wants to secure broad liberalisation of tariffs on a balanced and mutually beneficial basis, taking into account UK product sensitivities”.166 We understand that this is a sensitive area in negotiations, but we share stakeholders’ concerns regarding the potential impacts of increased competition on the UK automotive sector, particularly under the circumstances of the COVID-19 pandemic and uncertainty regarding the outcomes of other ongoing trade negotiations. What would be the impact on the UK if it agreed to an accelerated liberalisation of UK automotive tariffs and how would the Government respond?

Agriculture and food sectors

There have been suggestions that the short timescale for concluding negotiations might lead to a limited UK-Japan FTA, in which Japan may seek reduced access for UK agriculture and food going into its markets. Considering that Japan recently gave significant concessions on agriculture in the EU-Japan EPA, as well as in other deals with the US, CPTPP, it is a particularly sensitive area.167 The agri-food sectors have identified potential opportunities for exporting to Japan168 and some businesses have already invested significant time and effort into extensive relationship building that is often required to gain ground in Japanese markets. The DIT stated in its written response to our call for evidence that the UK “will not accept rollbacks on key UK market access” and that it will “aim to preserve and build on gains from the EU-Japan EPA for the sector”.169 Could you clarify how the Government intends to negotiate no rollbacks on key UK market access and what might be the trade-offs involved?

The Japanese agri-food industry has indicated strong opposition to allowing the UK further access to its market beyond what it has given to the EU.170 In particular, it is opposed to the Japanese government providing additional tariff rate quotas (TRQs) for UK agri-food, on top of what it has already given the EU. There may be a risk that the UK agri-food industry could lose some of the access to the Japanese market that was gained through the EU-Japan EPA once the transition period comes to an end.171 Stakeholders have identified some agricultural products which potentially have a significant opportunity in the Japanese market, in particular, malt, skimmed milk powder, butter and whey, for which the EU had negotiated significant TRQs. You told us on 23 July, “We certainly do not want to see any rollback in existing provisions, particularly on agriculture. That is very important. Clearly, if we can make further progress in liberalisation, we will look at that”.172 Could you tell us what you are doing to ensure that the UK will secure tariff rate quotas for key agri-food products in a UK-Japan FTA that are proportional to what it gained in the EU-Japan EPA?

The Government’s negotiating objectives state that an FTA with Japan represents significant opportunities for UK agriculture173 and you have highlighted potential opportunities for British beef.174 However, the EU-Japan EPA includes Most Favoured Nation (MFN) provisions for goods, services and investment, which effectively prevents Japan from allowing the UK greater market liberalisation than it has given the EU in these areas.175 If Japan allows more favourable treatment to a third country than it has to the EU, including faster or higher tariff reductions or larger quotas, a review must be held within three months of the UK-Japan FTA entering into force, with a view to offer the EU the same conditions and to conclude the review within six months. Does this not make it difficult to envisage the UK getting greater access to the Japanese market than the EU?

Investment

As the automotive sector clearly demonstrates, Japanese investment in the UK is significant and its total value is in the tens of billions. However, Japanese businesses have faced a high level of uncertainty since the Brexit referendum in 2016. Some have suggested that Japan wishes to secure greater legal certainty for their investments in a post-Brexit UK. This may be in the form of stronger investor protection mechanisms in a UK-Japan FTA, including investor-state dispute settlement.176 The investment chapter of the EU-Japan EPA did not include investment protection mechanisms,177 so this could be an area where a UK-Japan FTA may diverge significantly from the EPA. On 23 July, when we asked you about investor protection mechanisms within the context of UK healthcare and a potential FTA with the US, you stated that, “on the subject of investor state dispute mechanisms, the fact is that the UK has never lost a case on any of those dispute mechanisms and we will maintain our right to regulate.”178 However, you did not tell us what the UK’s position is on investor protection mechanisms and we would welcome further detail. Could you tell us how the Government would ensure that the UK would continue to encourage Japanese investment and what its position is on investor protection provisions in FTAs, in terms of the guarantees for inward investors and the mechanisms for dispute resolution it would prefer?

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)

We understand that the Government is seeking to use the UK-Japan FTA as a stepping-stone to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Given that the CPTPP is an agreement which has already been negotiated by its current members and has entered into force, it seems clear what provisions the UK would be asked to sign up to.179 These provisions could set a precedent for what the UK may need to agree to in its other bilateral FTA negotiations. We asked you on 23 July about how the potential membership of the CPTPP is impacting the UK’s objectives and compromises in its current bilateral negotiations but you did not tell us how the UK is managing this.180

We would like to know how the prospective membership of CPTPP might affect the objectives that the UK is setting for itself in its bilateral talks and what it can achieve. Additionally, more broadly, given that the UK is negotiating with Japan, the US, Australia, and New Zealand at the same time, there are key areas and issues where there is significant overlap, such as digital trade negotiations with the US and Japan. How is the Government managing the sequencing of negotiating with multiple countries, so that it will be able to achieve its objectives and get the best deals for the UK? Could the Government use the CPTPP to negotiate provisions with Japan that might not be concluded in the current bilateral UK-Japan negotiations due to time constraints? Moreover, what sectoral analyses has the UK conducted on the impacts of tariff elimination in the CPTPP?

We will be publishing this letter on our website. We would be grateful for a detailed response to this letter’s conclusions and requests for clarification, set out in bold, by no later than 1 September 2020.

Annex A

We would like a written response to the following remaining questions.

Call for Evidence: UK-Japan trade negotiations inquiry

General

1. Does the Department for International Trade (DIT)’s strategic approach, published on 13 May 2020, set out the right objectives for negotiations? How effectively does that strategic approach represent the interests of different groups and regions across the country, including the devolved nations, businesses, civil society, and individuals?

2. How reliable do you find the DIT’s assessment of the potential impacts of the proposed agreement with Japan, either as set out in the strategic approach or elsewhere?

3. Although both countries have expressed their aspiration for reaching a comprehensive FTA before the end of the Brexit transition period, they face significant time constraints Japan has suggested that both sides would need to limit their ambitions in negotiations. In what circumstances might the UK and Japan pursue a limited version of a trade agreement, which covers only a handful of industries, instead of a comprehensive FTA? What areas are most likely to be included in any initial ‘mini-deal’?

4. What are some of the major points of disagreement that have emerged in Japan’s recent trade negotiations that the Committee should be aware of when scrutinising UK-Japan negotiations?

5. What effect could a UK-Japan trade deal have on the UK’s future ability to negotiate deals with other countries?

7. How might Japanese investment in the UK be impacted by a UK-Japan trade agreement? What provisions should be included in order to maintain or attract Japanese investment?

8. What rules of origin and cumulation requirements are necessary in a UK-Japan trade agreement, and how might they play into the UK’s trading arrangements with the EU?

Impact on the devolved nations and UK regions

9. Do the devolved nations of the UK have any specific interests that need to be protected as part of the negotiation of a UK-wide trade deal with Japan?

10. What are the costs and benefits of a UK-Japan trade deal to the various regions of the UK? We would be especially interested in detailed economic analyses on this point.

11. The Department for International Trade (DIT) has conducted a preliminary impact assessment that outlines the gross value added (GVA) of a UK-Japan trade deal on regions in the UK, as part of its negotiating objectives. How do you evaluate the economic analysis behind the DIT’s the impact assessment? The impact assessment suggests that the trade deal could increase GVA in London, the East Midlands, and Scotland in particular. How do you evaluate this assertion? We would particularly welcome evidence specifically from representative bodies in London, the East Midlands and Scotland, and any case studies considering the impacts on those regions.

12. The impact assessment does not take into account the dynamic effects of a UK-Japan trade deal on the regions. What are some possible economic assessments of the dynamic effects of the trade deal, over time, on regions or on the UK as a whole?

13. Japan is a part of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which includes an investor-state dispute settlement (ISDS) mechanism. What ISDS arrangements do you think would be appropriate in this deal? What are the possible risks or opportunities for the UK in negotiating any ISDS arrangements?

Automotive sector

18. Should electric and hybrid vehicles be differentiated from other motor vehicles when setting tariff rates in a UK-Japan trade agreement?

Digital goods and services

The Government has indicated both its intention to maintain the UK’s high standards in data protection and protection against online harms and its ambition to “promote a world leading eco-system for digital trade that supports businesses of all sizes across the UK”.

19. How might negotiated digital trade provisions serve as enablers for businesses in the UK? What provisions would bring the most benefit and so should be the highest priority in this area?

20. What might be the trade-offs for the UK in agreeing ambitious digital trade provisions with Japan? How might the UK’s data protection standards and provisions for protecting users from online harms be affected by any deal?

Agriculture and Food

22. Japan is an important market for the UK agriculture and food export industry. The Japanese agriculture industry has expressed concerns regarding granting additional access to its market if the provisions in the EU-Japan EPA on agriculture and food are rolled over in an FTA with the UK. If such provisions are not included in a UK-Japan trade deal, what consequences might there be for the UK agriculture and food industries?

Letter from Lord Grimstone of Boscobel to the Lord Goldsmith QC in response to the letter on the UK-Japan trade negotiations, dated 7 September 2020

Thank you for your letter dated 31 July concerning the trade agreement with Japan.

I am aware that you will be holding an evidence session on 14 September. As you will be aware, events are moving quickly, as such this letter will provide you with an update on the current state of negotiations.

We are in the final stages of negotiations and are optimistic about reaching an agreement. Both the UK and Japan are committed to a deal that will enter into force by the end of 2020.

We have reached broad agreement on the vast majority of the UK-Japan Comprehensive Economic Partnership Agreement (EPA) which goes even further than this agreement in key areas, including digital and financial services.

Negotiations always cover a range of exporting interests rather than any single good or product. Nothing is agreed until everything is agreed, so the deal never really just comes down to one particular export. Both sides have to make efforts to reach a balanced agreement respecting each other’s interests and sensitivities. We are confident we can resolve the very few outstanding matters in time for the end of the transition period.

We will publish a parliamentary report for the UK-Japan agreement prior to ratification, clearly highlighting any areas where there are specific material differences between the existing EPA and this deal. Both the International Trade Committee and the International Agreements Sub-Committee will have the opportunity to report on the final agreement. This will enable the public and parliamentarians to understand clearly how we have worked to secure a better deal for the UK.

I look forward to providing further detail when I can and to further discussions with the Committee on 30 September and 28 October.

Letter from the Secretary of State for International Trade to the Rt Hon Lord Goldsmith QC regarding confidential provision of the CEPA text, dated 12 October 2020

I am writing following the letter of 31 July that I received from the International Trade Committee (ITC) and subsequent discussions on the ITC’s proposal for an FTA scrutiny arrangement between the Government and your committee and the ITC.

I am particularly keen to work with your Committee and the ITC to support your important scrutiny role. I am therefore writing to further build on these initial proposals and to set out in Annex A how my Department has worked and will continue to work with the IAC and ITC in respect of our Comprehensive Economic Partnership Agreement (CEPA) with Japan. A copy of the Written Ministerial Statement is attached at Annex B.

On Japan, my officials are working to share the initialled treaty text and drafts of related documents with your Committee around 12 October on a confidential basis as set out in the ‘Statement of Confidentiality’ in Annex C. These related draft documents include the Explanatory Memorandum, Parliamentary Report highlighting differences with the previous EU agreement and impact assessment. I hope this will help your Committee produce your report on the CEPA, which in turn will assist Parliamentarians in further understanding the agreement and its potential impacts when the signed treaty is laid in Parliament under the CRaG procedure.

I note that Lord Grimstone and the Chief Negotiator are to appear before your committee for a private briefing on the CEPA on 12 October.

I look forward to continuing our positive engagement with your committee as we progress our trade agenda.

Annex A–Japan Agreement Transparency and Scrutiny Arrangements with ITC and IAC

Prior to Negotiations:

• Undertook a call for evidence from the public, stakeholders, and MPs and Peers on the approach to negotiations.

At the launch of Negotiations:

• Published an Outline Approach for the negotiation. This included the scope of the proposed trade agreement and negotiating objectives and was accompanied by a scoping assessment providing an economic analysis of the potential impacts of an agreement.

During Negotiations:

Engagement with Parliament:

• Participated in ITC and IAC inquiries as required.
• Provided briefings by Ministers and officials to MPs and Peers on the progress of negotiations as part of X-FTA discussions.

Engagement with Industry:

• Provided regular updates to the Trade Advisory Groups to obtain expert input and get industry support for our negotiating objectives.

Now agreement in principle has been reached:

Scrutiny by the ITC / IAC:

• The text of the initialled Comprehensive Economic Partnership Agreement (CEPA) with Japan and drafts of the Explanatory Memorandum, Parliamentary Report highlighting differences with the EU agreement and impact assessment will be shared on a confidential basis with the ITC and IAC, where circumstances allow, in advance of the CRaG process starting. These documents will be under a duty of confidentiality as well as other security requirements.
• The ITC and IAC may wish to review the Japan CEPA text and related documents and in private sessions call expert witnesses, but the text and documents covered by the confidentiality requirements cannot be shared. Sighting Chairs of other Select Committees on the Japan CEPA text and related documents must be approved by DIT which will share the documents directly with those other Committee Chairs, if approved (e.g. Environment, Food and Rural Affairs Committee).
• At the end of this period the ITC and IAC may wish to produce a report on the Japan CEPA.

Scrutiny by Parliament:

• The Department will lay the signed Japan CEPA before Parliament and lay and/or publish the Explanatory Memorandum, Parliamentary Report and the impact assessment, starting the 21 sitting day CRaG process.
• During the CRaG process, the Government will endeavour to provide time for the text of the Japan agreement to be debated in the Commons and the Lords, subject to Parliamentary time, should the Committees recommend one.
• Following CRaG, Parliament will scrutinise/pass any necessary implementing legislation for the Japan CEPA. The Government cannot provide the Committees with precise dates for actions due to the flexibility that the concluding arrangements for the Japan CEPA require but we will use all reasonable endeavours to keep the Committees informed in good time.

Annex B–Written Ministerial Statement

WRITTEN MINISTERIAL STATEMENT

Rt Hon LIZ TRUSS MP SECRETARY OF STATE FOR THE DEPARTMENT OF INTERNATIONAL TRADE

DATE 12 October

TITLE Transparency and scrutiny arrangements with International Trade Committee and International Agreements Sub-Committee for UK-Japan Comprehensive Economic Partnership Agreement

I am setting out transparency and scrutiny arrangements for international trade deals starting with the UK - Japan Comprehensive Economic Partnership Agreement (UK-Japan CEPA) which will be signed shortly. At the outset of negotiations, the government published its objectives for this agreement, along with a scoping assessment. During the consultation period we have discussed progress with trusted advisors across industry, including with stakeholders in farming. This sector has been involved throughout, to ensure that nothing we agree undermines our farmers’ ability to compete internationally whilst producing food at a high standard. The government has also established a Trade and Agriculture Commission to advise on future trade policy. This will look at policy for our trade agreements and our work to improve the world’s trade rules, making sure they work for British business and consumers. We will share future trade agreements with the International Trade Committee in the House of Commons and the International Agreements Sub-Committee in the House of Lords, in advance of being laid in Parliament through the process set out under the Constitutional Reform and Governance Act 2010 (CRaG). Today we are doing this for the UK-Japan CEPA.

We will always endeavour to make sure the committees have at least 10 sitting days to read through these on a confidential basis, as we are doing for this deal. We are also sharing a full impact assessment which covers the economic impacts along with the social, environmental, and animal welfare aspects of the deal. This impact assessment has been independently scrutinised by the Regulatory Policy Committee. At the end of negotiations, this government is committed to ensuring the final agreement text, alongside an explanatory memorandum, is laid in Parliament under the CRaG scrutiny procedure for 21 sitting days. This will ensure the House has sufficient time to scrutinise the detail of any deal. This overall approach goes well beyond many comparable Parliamentary democracies. Parliament has been provided with the information it needs to provide effective scrutiny at all stages of the negotiations. We are also working constructively with the Select Committees referred to above, who may choose to produce independent reports on the agreement.

Widespread prior consultation and the publication of detailed impact assessments and objectives upfront, allows informed debate at the start of the negotiations. Extensive stakeholder engagement on the detail of the negotiations as they proceed, and confidential briefing of relevant committees, means we have taken best practice at every stage from comparable democratic systems. Combined with the confidential sharing of text at the end of negotiations, this is a best in class approach to transparency and openness to scrutiny by Parliament and other stakeholders, compared with such countries.

For example, before any of our negotiations with the US, Japan, Australia and New Zealand commenced, this government led a comprehensive public consultation or call for input. Like Canadian, Australian and New Zealand systems, we have kept Parliament updated on negotiations as they progress, including close engagement with relevant Select Committees.

These arrangements are appropriate to the UK’s constitutional makeup and separation of powers. Ultimately if Parliament is not content with a trade deal, it can raise concerns by resolving against ratification and delay any implementing legislation indefinitely. This government is committed to ensuring that no trade deal undermines key industries or lowers standards for consumers. We are concluding free trade agreements that benefit all parts of the UK, by creating opportunities for our world-leading industries and maintaining high standards, while increasing choice for consumers.

Annex C–Statement of Confidentiality

Statement of Confidentiality between the Department for International Trade and the International Trade Committee and the International Agreements Sub-Committee on the sharing of treaty text and related documents for the Comprehensive Economic Partnership Agreement between the UK and Japan

The Department for International Trade “DIT” will share the pre-signature treaty text and drafts of the related Explanatory Memorandum, Parliamentary Report and Impact Assessment for the Comprehensive Economic Partnership Agreement (CEPA) between the UK and Japan with both the International Trade Committee (ITC) and the International Agreements Sub-Committee (IAC) “the Committees” to enable them to complete a report(s) on the agreement to aid transparency and parliamentary scrutiny of the agreement.

DIT will share the text and related documents of the CEPA based on the understanding of DIT and the Committees that the information contained in the text and related documents are governed by an obligation of confidence owed in good faith by the Committees to DIT and under the following conditions:

1.DIT retains discretion to share the CEPA text and related documents with the Committees at a time of its choosing, considering wider time constraints. DIT will endeavour to allow the Committees reasonable time to produce its report(s) ahead of the final treaty text and related documents being laid in Parliament and/or published.

2.The text of the CEPA or related documents, as a whole or in part must not be shared outside a named list of members of the Committees and/or Parliamentary officials which is to be provided to DIT in advance of text sharing and whom will have access to the text for the purpose of producing the Committees’ report only. The Committees may only share the text with the named individuals and take all reasonable steps to handle the text and related documents securely. The Committees can review the documents and in private sessions can call expert witnesses, but the text and documents covered by the confidentiality requirements cannot be shared. Sighting Chairs of other Select Committees on the text must be approved and conducted by DIT and if approved these will be shared directly by DIT.

3.The Committees must not publish their final or any prior draft report on the CEPA until at least the day the final CEPA treaty text has been laid in Parliament, thereby respecting the Parliamentary convention that Parliament is the first to see a treaty.

4.The Committees should contact DIT officials immediately if there is a breach inadvertently or otherwise of the contents of this arrangement.

Letter from Lord Grimstone of Boscobel to Lord Goldsmith QC with further responses following an oral evidence session, dated 10 November 2020

Thank you for hosting me at the EU International Agreements Sub-Committee oral evidence session hosted on the 4th November.

In response to the follow up questions that were sent regarding the UK-Japan Comprehensive Economic Partnership Agreement (CEPA), please find attached answers addressing your questions.

I hope that this, alongside the oral evidence I provided to the Committee on 4 November, will help to inform your report on the CEPA.

Additional questions on the UK-Japan Comprehensive Economic Partnership Agreement from the International Agreements Sub-Committee

Which products where the tariff reductions under CEPA would benefit the UK?

Commitments on tariffs for both the UK and Japan have largely been transitioned without changes. This deal sees tariffs for UK exports to Japan fall relative to trade on WTO terms on products including beef (MFN 38.5% reducing gradually to 9% by 2033), higher value pork (MFN 4.3% reducing gradually to 0% by 2027), cheddar cheese (MFN 29.8% reducing gradually to 0% by 2033) and salmon (MFN 3.5% continued reduction to 0% at entry into force).

The UK and Japan have gone further than the tariff elimination schedules in the EU deal. For example, the UK agreed to eliminate tariffs at entry into force for two tariff lines covering electrical control units often used in cars. By bringing in reductions on tariffs on car parts this means UK-based auto manufacturers (like Nissan and Toyota) will benefit from lower costs of production.

The UK-Japan CEPA not only provides continuity of tariff treatments and protects established supply chains, it also allows more UK goods to access preferential tariffs than the EU-Japan Agreement, thanks to new and more liberal rules of origin provisions around certain food and textile products. This will allow up to £88.2m more of UK exports to receive preferential tariffs in Japan.

Are you able to give any indication of the sorts of areas Article 1.9.5 was intended to cover?

As Article 1.3 of the Agreement and Article 4 of the Protocol on Ireland/Northern Ireland clearly state, Northern Ireland is included within the territorial scope of UK FTAs. At the time of negotiations, not all decisions regarding the implementation of the Protocol on Ireland/Northern Ireland had been made. We therefore included this clause, which makes clear that the UK-Japan CEPA is legally coherent with the Protocol and the UK’s commitments under the Protocol.

Would a similar article to 1.95, covering NI protocol potential issues, appear in other continuity agreements?

Northern Ireland is clearly included in the territorial scope of the UK’s continuity agreements. Therefore, the implementation of the agreements alongside the NI Protocol, and in a way that is fully consistent with parties’ obligations under the Protocol, is an interpretative and operational matter.

We are working with partners to reach a shared understanding of how our continuity agreements will be implemented in Northern Ireland alongside the Protocol, and do not consider that this requires in-treaty provisions. This is especially the case as the Protocol pertains mostly to trade in goods, and reference to specific arrangements are therefore unnecessary. But there are various approaches through which we can reach such a shared understanding with partner countries. A general provision, as agreed in the UK-Japan Comprehensive Economic Partnership Agreement, is one such approach.

Mr Zebedee seemed to suggest at one point that objections to GI applications in Japan could be made by CPTPP countries/companies in CPTPP countries. It was not quite clear precisely which he meant, so it might be useful to have clarity on that?

Japan’s domestic opposition process for the addition of GIs to the agreement for protection allows any person to submit a written opinion about that application, this includes both third countries and private companies. This is provided for in Japan’s domestic law regarding agricultural GIs at Article 23-25 of Japan’s Act on Protection of Names of Specific Agricultural, Forestry and Fishery Products and Foodstuffs. Additionally, Japan is a party to the CPTPP, and Article 18.36.1 requires a CPTPP party to take certain steps where it is looking to protect another country’s GI through an international agreement. This includes running an opposition process on any proposed GIs to be protected through the international agreement and permitting interested persons to oppose the proposed GI for protection. It also includes informing other CPTPP parties when these opposition processes are to begin.

Why negotiations with Japan were not started earlier?

When the UK left the EU, we followed a technical replication approach with all partners where there was an existing agreement.

In January 2019, the Prime Ministers of the UK and Japan agreed to negotiate a new bilateral agreement using the EPA as a basis, ensuring the new agreement is as ambitious, high standard and mutually beneficial as the EPA and enhanced in areas of mutual interest. The EU-Japan Economic Partnership Agreement (the EPA) entered into force on 1 February 2019.

The Department for International Trade (DIT) sought input from members of the public, businesses, and any other interested parties to inform DIT of specific areas where new and additional provisions could be pursued. DIT ran a call for input on 20th September 2019 which closed on 4 November 2019. DIT published its response to the call for input on gov.uk, including an outline approach and scoping assessment on 13 May 2020. Both sides committed to an ambitious timeline for negotiations to secure a deal to enter into force by the end of 2020. DIT launched formal negotiations with Japan on 8 June 2020. DIT secured Agreement in Principle with Japan on 11 September 2020, and signature on 23 October 2020.

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