NTT, Fujitsu welcome UK-Japan trade deal

14 September 2020 | Melanie Mingas

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NTT and Fujitsu have welcomed a free trade agreement between Japan and the UK, which promises to boost digital trade between the two economies.

The UK-Japan Economic Partnership Agreement was signed in principle on Friday and promised to “drive innovation” in tech, boosting the UK’s £14.8 billion in annual exports to the major Asian economy.

The agreement marked the UK’s first international trade deal ahead of Brexit, the transition period for which ends on 31 December. 

For the tech industries of the two countries the deal includes a digital chapter that will see the free flow of data, a commitment to uphold the principles of net neutrality and a ban on data localisation that will prevent extra costs for British businesses setting up servers in Japan. The UK government said such “cutting-edge digital and data provisions” will help UK firms operating in Japan to innovate and grow.

TechUK welcomed the development as a “significant upgrade for the UK tech sector”, noting that cryptography, open government data, electronic authentication, consumer protection and cooperation on emerging technology will also be enhanced.

CEO Julian David, said: “TechUK welcomes the conclusion of the UK-Japan Economic Partnership Agreement with its comprehensive digital trade chapter. [The] agreement improves an already flourishing relationship between the UK and Japan tech sectors and creates significant opportunities for trade and investment for both our countries.

“Since 2018, in partnership with JEITA, we have run a successful UK-Japan Tech Forum to enable our members to develop a closer relationship with Japan and we look forward to working with the Government and our partners in Japan to assist the tech sector in taking full opportunity of this agreement,” he added.

The deal also paves the way for improved market access for UK financial services, which will see “greater transparency” and streamlined application processes for UK firms seeking licences to operate in Japan. The deal creates an annual dialogue between Her Majesty’s Treasury, UK financial regulators, and the Japanese FSA that will explore ways to further reduce regulatory friction – a development described as “impossible” without Brexit.

Japan’s economy is bigger than that of the UK and Germany combined. The country is home to 62 Fortune 500 companies and the highest number of millionaires in Asia. Around 450 British companies currently operate in Japan, from major FTSE 100 companies to small businesses, including retailers and major financial institutions.

A government statement said that while the deal will be tailored to the UK economy, it will also secure additional benefits, giving UK companies exporting to Japan “a competitive advantage in a number of areas”. It also promised to create jobs and drive economic growth throughout the UK.

Specifically, UK businesses will benefit from tariff-free trade on 99% of exports to Japan, with a focus on tech as well as other sectors. Government analysis shows that a deal with Japan will deliver a £1.5 billion boost to the UK economy and increase UK workers’ wages by £800 million in the long run.

Other industries expected to benefit include manufacturing and food and drink.

Advanced data protection

NTT Group, which operates across the two markets was one of the first to welcome the deal.

The agreement is structured to enhance existing arrangements between the UK and Japan, giving such international businesses the security of “some of the most advanced data protection and sovereignty rules in the world”, according to Simon Williams, CEO of NTT DATA in the UK.

He explained: “The signing of the Brexit withdrawal agreement in January was a positive first step in removing Brexit-sourced uncertainty for business. However, it is even more important to secure a progressive reciprocal free trade agreement as these give a solid foundation on which to grow a business. As a Japanese-headquartered company, this is an important free trade agreement for us and its focus on the service sector and digital economy is particularly welcome.

“We’re delighted that this agreement not only replicates the existing EU-Japanese digital trade rules but goes a step further to enhance them. This gives UK businesses complete trust in dealing with Japanese businesses by including some of the most advanced data protection and sovereignty rules in the world. This demonstrates the high priority given to the digital economy by both countries - a blueprint for the digital era that others will surely replicate”

The firm is investing over £500 million in new UK data centres, including the Dagenham-based London 1, scheduled to open this Autumn.

Paolo Masselli, CEO of NTT Ltd. in the UK, said: “At NTT Ltd. we view the UK as a strategic location and key to our global success. We are proud of the breadth of technology services that we can deliver to our multi-national and global UK headquartered clients to help them digitally transform.

“NTT Ltd. is investing over £500m in new UK data centres as a critical enabler of global businesses.  This includes the opening of its London 1 Data Center, in Dagenham, east London in Autumn 2020, which is being built to the very latest standards and powered with 100% renewable energy sources.”

For companies looking to transfer staff between the two markets, new visa requirements will see skilled roles in areas such as IT and computer services benefit from five-year family visas processed in 90 days.

Paul Patterson, SVP and head of Fujitsu UK, and chair of the UK-Japan Tech Forum, added: “I am delighted to see a further strengthening of the relationship between the UK and Japan with the completion of the UK-Japan Economic Partnership Agreement. 

"Tech companies in both the UK and Japan have been vocal in their support for this agreement and will welcome the robust chapter on digital trade.  This agreement will support the flow of technology between our two countries.  It will increase trade, create new opportunities for investment and drive collaboration on emerging technologies. Both Fujitsu and the UK Japan Tech Forum are looking forward to making this agreement a success.”