Japan issues demands to UK and EU over Brexit

Japan has sent warning about Brexit in a 15-page message to the United Kingdom and the European Union. The Asian nation is worried that the UK’s exit from the EU would negatively impact the Japanese businesses operating in Europe, and has therefore warned that some companies might have to transfer headquarters from the UK.

The Ministry of Foreign Affairs of Japan has fired off a 15-page warning to the UK and EU, declaring the country’s wish list for the British exit and reminding the UK government that it had lured Japanese companies to Britain by promising it was a “gateway to Europe.” But with the UK leaving the European Union, it would no longer serve as the opportunity it claimed it would be.

“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,” Japan has demanded.

The country has detailed its demands to both the UK and EU, asking them to clarify the process of Britain’s exit and the consequences of it. The lengthy document contains specific requests set by Japanese businesses in Europe, particularly to soften the blow of Brexit to the trading relations between Japan and the UK.

The companies are concerned about the new tariff rates and customs clearance procedures that could be set for foreign businesses.

As the BBC explains, tariff-free access to a single market is not a “nice to have,” but it’s a “must have” for businesses, more specifically for car manufacturers. Should the UK revert to the rules imposed by the World Trade Organisation, it could mean up to 10 percent tariff on imports and exports, and this would have a tremendous effect on Japanese businesses.

Japan is also asking, among many other things, the maintenance of trade goods without the burden of customs duties and procedures, access to workers who are nationals of the UK or the EU and with have the necessary skills, and harmonised regulations and standards between the UK and EU.

Should the UK prove not to be an attractive business destination for businesses anymore after the Brexit, Japanese companies have threatened to relocate their headquarters to outside the UK.

“The Japanese business community hopes to see the UK implement measures to promote investment including the easing of regulations to make the UK a more attractive investment destination. 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,” the ministry said.

“Japan is willing to cooperate so that the process of negotiations for the UK’s withdrawal would move forward smoothly without causing major disturbance to the world economy.”