Japanese companies with their European headquarters located in the UK have warned that they will relocate to an EU member state if Britain does not sign a suitable Brexit deal – a free trade deal with the EU. If EU rules and regulations cease to be applicable to the UK, the strongly-worded report warned that Japanese enterprises would move their European head offices out of Britain, plus much of their production facilities.
The report, which Downing Street received from Japan’s Foreign Ministry earlier this week, urges Prime Minister Theresa May and her government to ‘act responsibly’.
Hundreds of thousands of Britons are employed in Japanese firms located in Britain. Many more jobs would probably go if all the Japanese businesses decided to move across the channel.
Japan has a huge commercial presence in the UK. If no suitable post-Brexit trade deal is agreed, many of the names on this list would move their operations across the channel. The number of job losses would be considerable. (Data Source: japansociety.org.uk)
Japanese companies might leave the UK
According to the strongly-worded letter:
“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 document did not list specific companies, but stated that the message was written in response to “a variety of requests from Japanese businesses operating in the UK and the EU.”
Mrs. May is currently trying to assure other nations that the UK is open for business during her visit to China for the G20 Summit. The world’s largest twenty economies will be eager to hear from her regarding how Britain plans to leave the EU.
Japanese companies invest more in the United Kingdom than anywhere else in Europe. Would this privileged status prevail if Britain lost free access to the EU’s market of more than 500 million consumers? Absolutely not! (Data Source: japanese-addresses-europa.eu)
Mrs. May aims to get as many trade deals signed as possible soon after Brexit – Britain Exiting the EU – occurs.
However, this will not help answer the list of questions that Japan’s Foreign Ministry has. No matter how many trade deals the UK has with other parts of the world, what interests them the most is the UK-EU trade deal.
Japanese companies – list of requirements
Japanese companies need to see the following agreements between the UK and EU signed:
– Free trade in goods: with no burdens of customs duties and procedures. There is pressure from companies on both sides of the channel to refrain from imposing tariffs on goods and for trucks to be able to move back and forth without hindrance.
The German and French governments are under intense pressure from several domestic industries to give the UK special privileges.
– Access to skilled workers: Mrs. May’s government will probably adopt a points-based immigration system that will favour skilled workers.
– Harmonised regulations and standards: exporters need harmonized regulations. Initially, nothing is expected to change. However, there will be demands for the UK to start developing its own rules, especially when signing trade deals with Australia, South Korea, and other non EU markets.
– Maintenance of the freedom to establish and provide financial services: including the ‘single passport’ system. Banks and insurance companies in the UK can currently process transactions with no barriers – this is because the country is an EU member state.
If Brexit meant losing passporting rights, it would be the kiss of death for London as Europe’s financial centre.
Nissan has a car manufacturing plant in Sunderland, Tyne and Wear, northern England. It employs more than 6,700 workers. If no free trade deal is signed with the EU post Brexit, all those jobs will probably move across the channel. Followed by many other Japanese companies that operate in the UK. It would be disastrous for the British economy.
Japanese companies warned this might happen
Britons had been warned by Japanese companies as well as Shinzo Abe, the Prime Minister, that investment could suffer if the UK voted to leave the EU.
Japan’s message, which was also sent to Brussels, made it clear that it wants certainty from the outset that every effort will be made to keep Britain’s borders open for people, goods and the complex financial transactions that modern global capitalism relies on.
In the letter, the Japanese government says it is representing the needs of businesses that have invested heavily in Britain with a view of trading with the rest of the EU. The Nissan car factory in Washington, County Durham, for example, exports over eighty percent of the cars that it produces.
The new Hitachi train plant in Newton Aycliffe is manufacturing trains for Britain, but plans to compete with Siemens of Germany for contracts across Europe.
While making it clear that it respects the will of the British electorate, the letter clearly states that for Japanese companies to be able to continue operating in the UK, arrangements will need to be made for free access to the EU market.
If trade barriers were re-introduced, it is likely that the exodus of jobs from the UK to mainland Europe would begin with Japanese companies, soon to be followed by multinational corporations from the United States, South Korea and other parts of the world too.
Put simply, it looks glaringly likely that unemployment would go through the roof if Britain were unable to sign a free trade deal with the EU after Brexit.
US quick trade deal unlikely
US President Barack Obama said this weekend that the United States and United Kingdom will need to do everything they can to make sure strong trade links do not begin ‘unravelling’ after Britain leaves the EU.
Mr. Obama stood by his pre-referendum comments that Britain was now at the ‘back of the queue’ for trade talks.
In a press conference at the G20 Summit in China, standing alongside Mrs. May, Mr. Obama said US trade negotiations with the EU was his administration’s priority.
Regarding Britain’s and America’s business relations, Mr. Obama said:
“We have a lot of investment, including British companies in the United States and US companies in the United Kingdon. That’s not going to stop. We’re going to do everything we can to make sure that the consequences of the [Brexit] decision don’t end up unravelling what is already a very strong and robust economic relationship.”
Mr. Obama said negotiations on the controversial Transatlantic Trade and Investment Partnership could not be set aside – they are ongoing.
Regarding Britain’s participation in the EU, Mr. Obama said:
“It is absolutely true that I believe pre-Brexit vote and post-Brexit vote that the world benefitted enormously from the United Kingdom’s participation in the EU.”
“But I also said at the time [of making the comment] that ultimately this was a decision for the British people.”
Mrs. May said:
“The UK has always been a strong partner for the US and that will remain to be the case. We have a thriving economic relationship.”
“British business export twice as much to the United States as they do to our next largest market and the United States is the largest inward investor in Britain with total investments providing more than one million jobs.”
President Barack Obama explains that for the United States, negotiating a free trade deal with the EU matters more than one with the UK at the moment.