Commentary / Japan

A new EU gateway for Japan

by Radu Magdin

Special To The Japan Times

During the past half a year, a non-European country has been very active in voicing its concerns over the decision of the British voters to abandon the European Union and, potentially, the access to its market. Surprisingly or not, this country has not been the United States, too focused on the November elections, but Japan, which is in full process of redefining not only its regional profile but also its global footprint.

In Europe, with its traditional partner caught between the Scottish referendum and the deep blue sea of Brexit, Tokyo has the chance to move strategically. Eastern Europe, and specifically Romania, can be the new gateway toward the heart of the old continent. Recent news also help: Confidence among Japan’s biggest manufacturers has risen for the second straight quarter, a key central bank survey showed this Monday, and this should signal even more important exports and investment ambitions.

After the 15-page memo on Brexit talks posted on the website of the Foreign Ministry, Japanese businesses are ready, according to Financial Times, to make another public move in urging the British politicians to center the EU-U.K. negotiations around pragmatic economic considerations.

More openly or behind the closed doors, the government and major Japanese multinational corporations are coordinating to make sure that they will not be one of the collateral victims of a process that will for sure not be easy. When European Council President Donald Tusk says that Europe already misses Britain, this is more of a sign that Britain will have to deal with a Europe it does not know too well — one very obviously pursuing its interests.

Of course, London cannot be replicated in continental Europe, but access to the EU market is key to Keidanren, and there are even more options than Frankfurt or Paris, the obvious alternatives to the U.K. capital. Bucharest and Warsaw deserve a closer look by Japanese business.

Beyond the natural concern as regards Brexit, Japan should refresh its European strategy. Playing yesterday’s game is never a solution to get ahead, and Tokyo is right to plan ahead for an increasingly competitive future. Naturally, the common history and the traditional link to the United Kingdom make it hard to diversify, and to search for other ways to approach economic and political relations with Europe and the EU. That Britain has been a gateway to Europe for the Japanese products is well established.

But it’s also key for Tokyo to pay sufficient attention to how continental acts in the context of Brexit: political and market opportunities could be lost if solid bridges to the remaining countries of the EU are not built. The reality that the U.K. cannot be anymore a single major gateway to Europe has to be acknowledged by Japanese officials and business leaders not only at the level of principle but also as a day-to-day strategy.

If successfully concluded by the end of the year, the EU-Japan Free Trade Agreement and the Strategic Partnership Agreement will signal a step in the right direction. But it may not be enough. As some say, history does not close one door without getting ready to open another with bigger and greater things.

And, I dare to argue, for Japan this means more substantive involvement in Central and Eastern Europe. It is perfectly normal for Japan to engage with its partners in the Group of Seven or the Group of 20, to use the links to boost its European business and play a balancing act between the EU and President Donald Trump’s America. But, especially in times of political electioneering or uncertainty in Germany, France and Italy, it is more clear than ever that Central and Eastern Europe matters.

To put it differently, if Japan has the ambition to become Asia’s next superpower, it needs at least to match China’s offensive in Eastern Europe. “A new European gateway” for Japan would be the perfect answer to the “new silk road.” Hence, the fundamental role a port like Constanta can play and, more generally, Romania. In a region that experiences its own reconfigurations, Romania has the advantage of being stable and predictable, with its next elections only in 2019 and a strong majority in Parliament. A staunch U.S. ally as well, Bucharest is complementary to Tokyo, in terms of mentality and skills. Romanians are tactical and used to crisis mode, so they could prove useful allies in shifting global sands.

Strong economic growth, political clarity, and hunger to thrive regionally and to capitalize on a decade of EU integration, are all contributing to a country profile that Japanese officials and business leaders should study more carefully.

Romania will have the EU presidency in 2019, and will become, post-Brexit, number six in terms of size of the vote and influence in Brussels. Romania needs and seeks investment, so a Japanese-promoted financial center in Bucharest, or a major charm offensive by the Keidanren across industries, can be a good opening in assessing the potential of this new EU gateway. For sure, if Japanese exports are to increase at the same pace, a growing region as Central and Eastern Europe cannot be ignored.

Radu Magdin, a former adviser to Romanian Prime Minister Victor Ponta, is vice president of Strategikon, a Bucharest-based think tank.