POLITICS

UK Should Apologise To Japan For 'Breaking Promises' With Brexit, Says Asian Business Expert

'We’ve broken the trust and the promise that we’ve made.'

31/08/2017 07:00 | Updated 31 August 2017

Japanese businesses are owed an apology from the UK for breaking the promise of making Britain the “gateway” to the Single Market, according to a leading advisor to Asian companies.

Pernille Rudlin, who has consulted leading Japanese firms including Hitachi, Mitsibushi and Nikon, says she feels “embarrassed” that after so much investment, the Brexit vote could damage access to the European market for those companies with UK bases.

Her comments come as Prime Minister Theresa May visits Japan in attempt to lay the groundwork for a future trade deal.

Japanese companies employ about 140,000 workers in the UK, and earlier this week an official at Japan’s London embassy said it was “no secret” the country’s government and many of its businesses were not in favour of  Brexit.

Speaking on the BBC World Service, Rudlin was clear about the level of frustration felt in the Japanese business community.

She said: “The Japanese will be far too polite to say so directly but I feel myself quite embarrassed and that they’re owed an apology really because nearly half of the investment into the EU has been into the UK over the years from Japan on the promise since Mrs Thatcher’s time that we were the best gateway into the Single Market.

“We’ve broken the trust and the promise that we’ve made.”

Rudlin pointed to a memo from the Japanese government published in September 2016, which stated: “In light of the fact that a number of Japanese businesses, invited by the Government in some cases, have invested actively to the UK, which was seen to be a gateway to Europe, and have established value-chains across Europe, we strongly request that the UK will consider this fact seriously and respond in a responsible manner to minimise any harmful effects on these businesses.”

May’s three-day trip to Japan comes two months after Tokyo and Brussels shook hands on a trade deal of their own.

While the details are set to be ironed out, the agreement would make it easier for EU farmers to sell dairy products into Japan, while Japanese car manufacturers will pay zero tariffs on cars sold into the EU after a seven year transition.

The noises coming from Tokyo are that Japanese officials see finalising that deal as far more important than securing an agreement with the UK.

FRANCOIS WALSCHAERTS via Getty Images
European Council President Donald Tusk (L), Japanese Prime Minister Shinzo Abe (C) and President of Commission Jean-Claude Juncker at the European Council on July 6, 2017 after agreeing the broad outline of a landmark trade deal.

Ken Endo, a professor at the Department of Politics at Hokkaido University, said Japanese politicians were determined to get the EU deal done after a trade agreement involving multi-national trade deal involving Australia, Canada and the US derailed.

Donald Trump pulled the US out of the Trans-Pacific Partnership as soon as he took office in January, leaving the remaining 11 countries having to reopen negotiations on the deal.

Professor Endo told HuffPost UK: “The focus [on the EU deal] is justifiable, which does not mean the UK has ‘missed out’ though.

He added: “The EU economies are as socially matured as Japan. With the Trans-Pacific Partnership derailed, it is natural for Japan to look to the socio-economically most approximate entity in the world.

“The UK has yet to clarify its position as regards its trade, but not only trade, relations with the world.”

UK imports from Japan - 2015

One area of the UK which will be hoping a free trade deal is signed will please the Japanese is the North East.

It relies heavily on investment from foreign companies, and more than 50 businesses in the region have Japanese owners or parent companies based in the Asian country.

A month after the Japanese government’s memo, Nissan – which employs 7,000 workers in Sunderland – announced it would be producing two new cars at its North East plant, allaying fears of a Brexit exodus.

The Government denied the company had been given a sweetheart deal to keep it in the UK, but the very fact Theresa May hosted Nissan chief executive Carlos Ghosn in Downing Street underlines the importance of keeping the business in the UK.

Jonathan Walker, head of policy at the North East Chamber of Commerce, tried to play down fears the Japanese were about to pull money out of the area because of Brexit.

“There’s a lot of scaremongering going on,” he told HuffPost UK.

Walker said the business community was looking for “a Brexit deal that allows them to access the European markets in a relatively unbureaucratic and frictionless way”, but even if some barriers were thrown up, the UK still had much to offer the Japanese.

He said: “The costs of doing business in the UK is favourable for them.

“We have here a very highly quality local workforce.”

Yet despite his optimism, Walker was alert to the fact that when it comes to business decisions there is little room for sentiment.

“There’s a significant amount of contingency planning taking place, no doubt,” he said.

UK exports to Japan - 2015

It is not just manufacturing plants which represent Japanese business interests in the UK.

According to Rudlin’s blog, 20 of the top 30 Japanese companies in the UK are regional headquarters.

That means that non-tariff barriers affecting the UK’s service sectors could also have an impact on future business activities.

She writes: “If a hard Brexit means that the centre of the action – in terms of regulatory influence, access to a diverse and talented workforce and selling into a large and growing market – shifts to the continent, then those regional headquarters will shift too, and with them will go the purchasing power for all of those services which the UK has become so good at providing – not just financial but legal, consulting, IT, R&D and creative.”

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