UKFT underlines importance of Japanese market
The UK Fashion & Textile Association (UFKT) has underlined the great significance of the Japanese market for the UK fashion and textile industry to the UK Government, in response to the Department for International Trade’s consultation on the terms of a future free trade agreement with Japan.
“Japan is the UK fashion and textile industry’s third largest export market after the EU and the USA,” said Paul Alger MBE, Director of International Business at UKFT. “Given the additional punitive duties that came into force from the USA last month, UKFT expects that Japan has the potential to overtake the USA in terms of exports as long as an FTA based on exporting finished goods from the UK (manufactured in the UK and the EU primarily) is agreed as a matter of the utmost urgency.”
Currently UK designers and manufacturers of fashion, textiles and footwear products can export to Japan on a duty-free basis under the terms of the EU-Japan Economic Partnership Agreement (EPA), which came into force on 1 February 2019, but this will change when the UK leaves the European Union. The UK and Japan have agreed to use this EPA as the basis for a future UK-Japan FTA, with enhancements in areas of mutual interest.
UKFT is urging the government to include not only goods that are made here UK in the future UK-Japan FTA but also those manufactured for UK companies in the rest of the EU, sometimes referred to as “triangulation”, as Japan already has an existing trade agreement with the EU.
“The UK is a global player and not all goods are manufactured here but there is a lot of concern that if this is not included, brands and companies might have to consider relocating in the EU 27 to take advantage of the EU/Japan EPA on EU manufactured goods,” said Alger. He underlined that many well-known fashion and textile brands and smaller UK SMEs are heavily dependent on exports to Japan.
“For many of them, especially those manufacturing in the UK, Japan is their number one export market and the first market to buy their products because the Japanese have a unique appreciation of products manufactured in Europe and particularly in the UK,” he said.
He explained that the industry is happy with the existing EPA: “It is relatively easy to register for REX although UKFT does have to accompany companies through the process the first time round,” he said. “Any simplification around rules or origin, labelling and common standards would be welcome but, under the existing agreements, any enhancements for the UK would also need to be offered to the EU27, so there is a limit to the competitive advantage we could gain from improving EPA.
“Very importantly, the UK Fashion & Textile Association believes that the UK/Japan FTA should be the UK’s second priority after the UK/EU FTA, partly because the government is confident that an agreement is reachable in the near future but also because of the competitive advantage EU 27 companies would have over the UK post-Brexit. Furthermore, the majority of the business UK companies place with Japan (and the USA) is secured at international trade shows and showrooms in the EU (usually Paris, Florence and Berlin). Enhancement of the UK’s Tradeshow Access Programme to offer additional support at EU shows to target Japanese and other Asian buyers would give the UK a competitive edge (our EU competitors are far more generous in this respect) and we have also called for additional support from our Embassy.”
UKFT argues that support from the British Embassy is vital to support fashion and textiles in any market where an agreement is signed, to give UK companies the possibility to develop their business there. Specifically for Japan, UKFT has requested the return of its programme of successful trade missions to Japan to help future trade.
“Previously, UKFT and the British Embassy used to run two highly successful trade missions to Japan every year to complement our companies’ business with Japan generated at international events. These missions have been watered down over recent years and we have not run one for almost five years but they are incredibly popular with large and small British companies and we would like to see them reprioritised,” he concluded.