The UK and Japan Free Trade Agreement- A Benefit to the UK Video Games Industry?
After the recent announcement of a new free trade deal between The UK and Japan- post-Brexit, it raises the question of the impact the free trading arrangement will have on the UK’s economy and its businesses. More specifically, considering Japanese prowess in technology, what impact the deal will have on UK technology and software companies such as its video game developers and the UK video game market in general.
What is a Free Trade Deal?
Before this blog delves into this question, it is worth pointing out a free trade deal. A free trade agreement is a trading agreement between states whereby tariffs on all goods are removed, meaning nation-states can trade freely without extra goods. Free trade benefits all parties, and trade in general benefits everyone involved in it. It allows nation-states to get more goods that they want for less of a cost. With a free trade agreement, the cost of trade is absent. In effect, it allows states to trade and specialise in what they are good at producing in return for something they are poor at in terms of production without any extra cost, benefiting all states involved and their economies.
The UK Video Game Industry will Benefit Significantly from a Deal
When nation-states specialise in one particular area of production, they have a comparative advantage in this area. Meaning they can produce more of a product than another state at a lower cost. Thus, states trade areas of comparative advantage for mutual benefit. Much like the UK and Japan, Japan seemingly has a comparative advantage in technology compared to the UK and will and will trade these goods with an area the UK has an advantage in, for example, knitwear production, and this is where it gets interesting. With Japan having an advantage in technology production, the UK will benefit through more trade because of no tariffs. With an increase in the exchange of new technology, the UK video game industry will benefit enormously from this trade deal. Because Japan is a world leader in technology products and video game development (Think about Nintendo), video game developers in the UK will benefit from this new technology in software development. It will enhance their ability to make video games, helping to grow the UK’s video game industry. Thus, this free trade deal between the UK and Japan will significantly benefit the video game developers in the UK and the video game industry.
Final Thoughts
Conclusively, this free trade agreement will help the UK video game industry to grow. In general, this trade deal will be of significant benefit to the UK economy. But it is worth remembering that trade benefits all parties involved. There are arguments to be made by advocates of protectionist trade policies that trade can destroy an economy’s sectors due to being outcompeted by another state. But with effective government policies such as subsidies, Governments can mitigate these negative implications. With effective governmental policies, trade is a positive thing. The UK video game industry will see this in the years to come through growth.
Originally published at https://www.pixelpolitics.co.uk on September 13, 2021.