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Japan’s Brexit challenge

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Special To The Japan Times

Let’s give two hearty cheers for the government of Japan, for coming into the open to present an important international policy question, and for the content of its message to the Brexit-challenged United Kingdom and European Union. The 15-page “Message” was published by the Foreign Ministry, but its main thrust is addressed to Theresa May’s new government in London, which has pledged to follow through on the June referendum in which the people of the U.K. voted by 51.9 to 48.1 percent to leave the EU.

Prime Minister Shinzo Abe took up the question in his meeting with May on the sidelines of the summit of Group of 20 leaders in Hangzhou, China. He asked for May’s help to keep Nissan and other major Japanese companies in the U.K. after Brexit finally happens. Japan’s Foreign Ministry was on its best diplomatic behavior in summarizing the meeting of the prime ministers: “Prime Minister Abe requested her (May’s) cooperation to enhance predictability and to continue to secure Japanese companies’ businesses and value chains.”

But the same Foreign Ministry officials broke normal mealy-mouthed bureaucratic cover in their message. British commentators described the document as “unprecedented.” The message warns: “Japanese businesses with their European headquarters in the U.K. may decide to transfer their head-office function to continental Europe if EU laws cease to be applicable in the U.K. after its withdrawal.” It noted that Japanese businesses in Europe have created 440,000 jobs, with the U.K. benefitting greatly. Last year nearly half of Japanese direct investment in the EU went to the U.K.

More than 1,000 Japanese companies have offices in the U.K., and for many of them the U.K. is their home in Europe. Banks and financial companies use the City of London as their base for dealings in Europe and the rest of the world. But it is also true for industrial companies. Nissan, for example, makes 480,000 vehicles a year in its plant at Sunderland, and 80 percent of these are exported, most to the rest of the EU. Hitachi set up a plant in Newton Aycliffe to build trains, but it also has eyes on competing with Siemens of Germany for contracts on the European continent. If Brexit shuts the U.K. out of the EU single market, Japanese pan-European hopes will be damaged.

Two months after the referendum, May is known for her mantra, “Brexit means Brexit.” But that reminds me of the student who got a first class degree in philosophy at Oxford University by answering the question, “Is this a question” by writing, “If that is a question, then this is an answer.”

What does “Brexit means Brexit” mean? There is no clear answer. A cartoon showed the three ministers charged with responsibility for the Brexit negotiations perched together on a unicycle and trying to pedal furiously in different directions. It is impossible to avoid the conclusion that the Brexit-dedicated government — like the electorate that wanted to be free of the burdens of EU membership — would prefer to keep the benefits of EU membership without the costs.

But that’s not on: Brussels and the most powerful EU member states have made it clear that, for example, continuing access to the single market will depend on acceptance of the four freedoms, including free movement of labor, which Britain, demanding control of immigration, is adamantly against.

Such is the potential hardball game that the latest headline is that Brexit Britons may have to apply and pay fees merely to visit the EU. Cynics say that if the U.K. wants any deal with the EU, it will have to accept rules and pay to the EU budget, without having a seat at the table where the Europeans set the rules.

May’s trade and industry secretary, Liam Fox, recently attacked British business as “fat and lazy” and not ready to face the cold winds of competition outside the EU, surely raising the question why Fox is one of the leading supporters of Brexit.

Many promises of Brexit, notably that leaving the EU would free £350 million a week to be spent on the country’s cherished but ailing national health service, have been dropped as false. But May sticks to her Brexit mantra and won’t contemplate a parliamentary vote on when to trigger Brexit or a new referendum for the British people to decide which of the bad options of leaving the EU they prefer. British democracy has certainly been found wanting.

This means that Japan’s wish for continuity is a cry in the wilderness. The Guardian’s economics correspondent was being optimistic for Japan when he described the Japanese demands in this way: “Some look possible, others almost fanciful.” It is tempting to point to the irony of Japan pleading for continuing open access to a single EU-U.K. market of 510 million people when Japan doesn’t allow the same freedoms to access its own market. Free movement of labor — what’s that?

There are other reasons why there should be only two cheers for Japan. To be fair to Abe, he said unequivocally weeks before the referendum that Japan would prefer the U.K. to stay in the EU.

But this was too late and lacked facts and figures to help shape the EU debate. It is refreshing that the Foreign Ministry bureaucrats spoke up, but they should have done so earlier and with more details of the potential implications of Brexit on Japanese companies and hence on the U.K. and EU.

There are wider points. Do giant Japanese multinational companies, like Mizuho Bank, Mitsubishi, Nissan and Hitachi really need the government of Japan to do their whining about potentially unfair changes in the international trading system? Surely they are big enough and savvy enough to stand on their own feet, with the government coming in as a backup if corporate Japan’s voice proves to be not strong enough.

Where are the Japanese think tanks and others, like Brookings, the Council on Foreign Relations, the Woodrow Wilson Center, the Royal Institute for International Affairs, the Lowy Institute, the great schools of Oxford, Cambridge, Harvard and Yale universities, which could, should and would have helped shaped the debate with analyses, views and surveys? I can hardly see any new thoughts coming from the University of Tokyo or Kyoto University or Osaka University or any of Japan’s research institutes on the great topical issues of the day.

These are turbulent and troublesome times, not only in Europe, but also closer to home on the Korean Peninsula, in the South and East China seas, in the Middle East, in the kaleidoscopic shake-up in superpower relationships and, perhaps most worryingly, in a potentially difficult change of regime in the U.S.

Japan cannot and should not rely on Abe alone. There are many issues on which he too needs to be challenged to think through and beyond the obvious. On top of which, by the time that Abe seizes an issue, as seen with Brexit, it is often too late.

Kevin Rafferty, a British and Irish journalist, has been an editor of daily newspapers in more than 30 major cities on five continents.