In a strongly worded report sent to the UK government, the country has warned that “Japanese businesses with their European headquarters in the UK may decide to transfer their head-office function to continental Europe if EU laws cease to be applicable in the UK after its withdrawal.”
Japanese companies employ over 140,000 people in the UK and, according to the report, “nearly half of Japanese direct investment intended for the EU in 2015 flowed to the UK.” Prime Minister Theresa May, who is in China for the G20 Summit, has already been told by US President Barack Obama that the Asia-Pacific region and EU will take priority over the UK where trade deals are concerned.
The report sets out a list of priorities for the UK and EU to agree upon going forward. These include access to overseas workers; the maintenance of the current tariff rates and customs procedures; and the protection of intellectual property rights. “It is desirable that the current business environment in Europe be maintained as much as possible,” it said.
The EU and UK have both been warned that any uncertainty and lack of clarity will cause jitters amongst the world economy. “Uncertainty is a major concern for an economy,” the report says. “It is imperative for the UK and the EU to regain the confidence of the world and ensure their unwavering competitiveness by increasing the predictability of the Brexit process, ensuring the outcome is free of unpleasant surprises and reducing the risks emanating from uncertainty.”
Looking ahead, however, Japan is confident that the relationship will remain strong. “Japan expects to continue cooperating and collaborating closely with the UK and the EU for international peace, stability and prosperity,” the report said. “Convinced that the UK and the EU will continue to share with us the responsibility to lead the free trade system, Japan expects the EU and the UK to demonstrate to the world their equivocal commitment to this end.”
