The UK signed its first post-Brexit Comprehensive Economic Partnership Agreement with Japan in October after the two sides reached an agreement in September.
The deal will “ensure continuity in bilateral business operations beyond London's end of transition out of the European Union this month,” South Korea’s Yonhap News Agency reported.
Japan’s Foreign Minister Toshimitsu Motegi and British International Trade Secretary Liz Truss had signed the deal in Tokyo.
However, the UK has yet to ratify the deal.
According to the report, Japanese companies that operate in the UK and in Europe are “still wary about whether London will reach a free trade agreement with the bloc by the end of the transition period.”
“Without such an agreement, the European businesses of Japanese manufacturers, including Nissan Motor Co. and Toyota Motor Corp., which benefit from supply chains built across the continent and Britain, could be disrupted. The two automakers procure parts from continental Europe and assemble vehicles in Britain,” the report said.
Under the new deal, however, tariffs on Japanese cars will be zeroed out in stages through 2026, akin to the existing Japan-EU agreement. The UK is also expected to “immediately scrap tariffs on railway cars and auto parts.”
The UK government said the deal will boost trade with Japan by £15.2 billion ($20.4 billion) over the next 15 years, and over the same period boost the UK’s GDP by around 0.07%.
The deal will mean 99% of British exports to Japan will be tariff-free. The government also said the UK would get cheaper access to high-quality Japanese goods.