Comprehensive Economic Partnership (EUC Report)

Lord Howell of Guildford Excerpts

Thursday 26th November 2020 Grand Committee

[Lord Howell of Guildford (Con) [V]]

My Lords, I join in warmly congratulating the noble Lord, Lord Darroch, and welcome him and indeed his wisdom to our counsels. I declare interests in advising for many years two major Japanese companies and writing a regular column since the 1980s in their newspapers, and as UK chairman for 10 years of the UK-Japan 2000 Group, renamed the UK-Japan 21st Century group when we got to the millennium, which in those days included such legendary giants as “Sony” Morita and Shoichiro Toyoda. However, I want to concentrate here on the less business-related and more strategic significance of this agreement.

The agreement, which is thoroughly modern in focusing on digital trade and services, has had a rather grudging reception in some quarters, like the Financial Times, which has emphasised the undoubtedly small immediate trade aspects compared with large issues like the EU, or, as some have said, a new trade deal with the United States—although I have always been a bit sceptical about the wisdom of disturbing our present very strong trade with the USA by going for something bigger still: a slight case of the dog with a bone seeing the bigger bone in the pool.

This new agreement with Japan has also had a thorough and impressive going-over, as we have heard, from our EU International Agreements Sub-Committee, as well as from the independent Regulatory Policy Committee. It made the point, which I agree with, that we have no bilateral investment treaty with Japan, nor does this agreement create one, which is slightly odd when one considers that foreign direct investment is, has been and will often be the main trade driver.

However, the new agreement is significant for the UK—and maybe for Japan—for a number of reasons that go very much deeper than just trade. It marks a firm step towards the realisation in British policy circles that the future will be increasingly Asian. It could therefore herald a new era of increased collaboration with Japan, not just in trade relations but in much wider fields. For instance, extending the Five Eyes intelligence alliance would be an obvious next step on this front. Opening the gateway for us to join the Comprehensive and Progressive TPP is another, already featured. Aid co-operation could also increase, although it is worth noting in passing that Japan runs an excellent aid programme at only 0.29% of its GDP.

Another shift of huge significance could be about to occur on the UK home front as well. Ten years ago we were all talking about a golden era of UK-China relations, ushering in extensive Chinese involvement in many aspects of the British economy, from nuclear power to railways, ports, property, public utilities and even football clubs. However, in the decades since then, under the rule of Xi Jinping, China has forfeited much of the UK’s broad goodwill by its growingly assertive and prickly attitudes and disruptive policies, not least in Hong Kong. Maybe this will change under better leadership but, meanwhile, it could be that the golden era of UK relations with China is set to be replaced by a golden era of relations with Japan. The trade deal is a harbinger of just that. This would make a great deal of sense, since the two nations working in tandem could be a considerable force for good in a fragmented and frightened world and at a time when the voice and influence of a divided United States has regrettably become “an uncertain trumpet”—at least up until now.

Perhaps the new Prime Minister, Yoshihide Suga, could open his premiership not only by welcoming the new trade deal, as he has already done, but by recognising that this is one step along a road to very much closer co-operation in almost every field—security, defence, culture and intelligence included—and that Japan and the UK, working in harmony, constitute a formidable nexus around which the 21st-century connectivity between east and west can continue to be expanded.