Japanese businesses are hoping the United Kingdom and the European Union will swiftly forge a free trade agreement following the country’s exit from the bloc Friday, as a failure to do so would have a major impact on their operations in Europe.
They are concurrently asking the Japanese government to strike a free trade deal with the United Kingdom as the Japan-EU trade pact is no longer applicable to trade relations between Tokyo and London.
“The government is set to discuss with the United Kingdom a new trade deal but talks depend on how negotiations with the European Union are settled,” said Hiroaki Nakanishi, chairman of the Japan Business Federation, also known as Keidanren.
“Japan needs to conduct various talks with both the United Kingdom and the European Union in a public-private effort,” Nakanishi said at a recent news conference.
The government intends to proceed with trade negotiations with the United Kingdom based on the Japan-EU deal that came into effect last year.
The agreement gives consumers access to cheaper imported food items and eliminates tariffs on industrial products to the benefit of exporters.
“I will swiftly tackle building an ambitious economic partnership with the United Kingdom,” Economy, Trade and Industry Minister Hiroshi Kajiyama told a news conference Friday.
Akio Mimura, chairman of the Japan Chamber of Commerce and Industry, depicted a bleak outlook for the weeks and months ahead.
“Essentially the United Kingdom’s departure is nothing positive for the Japanese companies doing business there so the focus going forward is how much the negative impact is alleviated,” he said.
The United Kingdom is a major trade partner for Japan, with total exports to in 2018 totaling ¥1.53 trillion ($14 billion), the second-largest in the EU bloc after Germany.
As for imports, the United Kingdom was Japan’s fourth-largest trade partner among EU members at around ¥909.4 billion.
The United Kingdom is home to offices of nearly 1,000 Japanese companies, according to the Japan External Trade Organization.
Nevertheless, the Japanese government is seeking to use Brexit as an opportunity to strengthen economic and security ties between Tokyo and London.
The two are in talks for a potential visit to Japan by British Foreign Secretary Dominic Raab this month. Raab and Foreign Minister Toshimitsu Motegi are expected to meet and discuss mainly how to proceed with negotiations on a bilateral trade deal.
At a news conference Friday, Motegi expressed Tokyo’s willingness to negotiate a trade agreement with Britain, saying, “We will quickly work to build a new economic partnership with Britain.”
Tokyo is also expected to support Britain’s participation in the Trans-Pacific Partnership, on which London is showing interest. Japan led efforts to put the multilateral trade deal into effect in late 2018.
Japan believes that enhancing ties with Britain is important amid China’s growing maritime assertiveness. Britain maintains influence in many parts of Asia, and shares with Japan basic values such as freedom and democracy.
“Post-Brexit Britain will likely seek to strengthen relations with the United States and Japan to maintain its international influence,” a senior Japanese Foreign Ministry official said.
“Britain’s eyes are on Asia,” a high-ranking Defense Ministry official said.