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UK-Japan: Prime Minister May Tries to Allay Brexit Fears with State Visit

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UK-Japan: Prime Minister May Tries to Allay Brexit Fears with State Visit

Was May’s visit sufficient to alleviate Japanese concerns about Brexit?

UK-Japan: Prime Minister May Tries to Allay Brexit Fears with State Visit
Credit: Official Website of the Prime Minister of Japan and His Cabinet

​British Prime Minister Theresa May went on a three-day visit to Japan on August 30 – September 1 to reassure her country’s top Asian partner that the UK remains committed to their bilateral relations following last year’s decision to leave the European Union. The UK has been the European destination of choice for Japanese investors, but many are revisiting their options in light of the uncertainty surrounding the Brexit negotiations. May’s visit brought some clarity on the immediate post-Brexit bilateral trade relationship, including announcements of deeper security cooperation between the two sides and promises of an even stronger future relationship. The trip coincided with the third round of Brexit negotiations in Brussels, and took place against the backdrop of North Korea’s decision to fire a missile over Japan a day prior to her arrival. While the Japanese side welcomed the visit, a feeling of unease about the status of Brexit negotiations with Brussels remains.

Bilateral trade relations heavily dependent on post-Brexit arrangement

There has been much speculation about the specific post-Brexit trade arrangement between the UK and Japan since the UK cannot legally negotiate a free trade agreement until after it exits the EU. Prime Minister May’s visit brought an unexpected answer: after leaving the EU, the UK will apply the same trade regime towards Japan as the EU itself; the two sides will adopt a separately negotiated agreement as soon as possible after Brexit. In that sense, both the British and Japanese stressed their “immediate priority” was the early signature and entry into force of the EU-Japan Economic Partnership Agreement (EPA) currently under discussion, a deal Japanese Prime Minister Shinzo Abe has called a “model for the 21st century.”  After the visit, the British Trade Secretary Liam Fox suggested the decision was driven by limited resources to negotiate both a post-Brexit agreement with the EU and separate free trade agreements with third countries. However, this position drew sharp criticism from the leader of Liberal Democrats, and some commentators expressed doubts the final terms of the EPA would favor the UK post-Brexit.

Accompanied by the British Trade Secretary and a delegation of 15 business leaders, Prime Minister May took part in the Japan-UK Business Council meeting, where she praised Japan’s important role for the British economy.  She later had separate meetings with representatives of Nissan, Toyota and Hitachi, some of the largest Japanese investors in the UK. The content of the discussions remains secret, but there has been widespread speculation about financial incentives to ensure business presence in the UK after Brexit.  Aston Martin separately announced a £500 million investment in boosting production to meet increased demand in Japan, the world’s second-largest luxury car market, to result largely from a £400 million boost of car exports from the company’s factories in the UK.

A new step forward in defense cooperation

In addition to trade, the visit also had a major defense component. On the second day of her trip May visited the largest Japanese warship at the Yokosuka naval base, and attended a special session of Japan’s National Security Council on Thursday, the first European leader to do so. During the joint press conference with Abe, the British leader stressed three times that the two countries are “natural partners,” and “each other’s closest security partners in Asia and Europe.”

The two sides also released a five-page Joint Declaration on Security Cooperation. The document promises to enhance cooperation in many areas, ranging from joint military exercises and exchanges of strategic assessment and relevant information to humanitarian assistance, disaster relief and cooperation on space and cyber-security. The two sides committed to developing an action plan with specific measures for implementation, and to increase the frequency of their security dialogues. However, some European diplomats in Tokyo privately question whether this declaration would significantly alter existing forms of cooperation anytime soon.

North Korea steals the show

Prime Minister May’s visit was overshadowed by the actions of the North Korean regime. Pyongyang flew a missile over Japan the day before her arrival, and it tested a hydrogen bomb more powerful than the one dropped over Hiroshima in 1945 two days after her departure. The Japanese hosts were clearly preoccupied with these developments, as illustrated by the fact that the special NSC session May attended was dedicated to North Korea. “Japan can count on the UK as a dependable and like-minded partner,” May said during her visit, and released a joint statement with Abe condemning the actions of the North Korean leader.

May also showed support for the Japanese position that China is an indispensable element to a solution, saying “we should be encouraging China to exercise that leverage.”  In a reaction indicative of the UK’s own limited leverage over Beijing, the Chinese Foreign Ministry promptly brushed off the remarks. “People say all kinds of things whenever the situation on the Korean peninsula becomes tense,” said spokeswoman Hua Chunying. Two days later Xinhua ran an interview with a Chatham House Fellow calling May’s visit to Japan “premature” because of ongoing ambiguity over Brexit negotiations.

Japan’s Brexit negotiations wish list: “transparency and predictability”

News reports prior to the visit indicated that a high level Japanese official had called on May to end the “sense of crisis” surrounding Brexit negotiations. The level of cooperation and coordination on Brexit between the Japanese government and business community has been very strong. Representatives from many big Japanese companies visit both London and Brussels periodically to stay informed about the latest developments. Japanese businesses would like a post-Brexit arrangement that is as close to the current status quo as possible, but some are starting to see Brexit as an opportunity to engage other European markets more directly.

Abe took on these business concerns and reiterated calls for “transparency and predictability” in Brexit negotiations at every turn. In his remarks, he also said that the fact that new Japanese investments in the UK show their “profound trust” in the British economy, a comment warmly welcomed by the British Prime Minister.

London ready for “Global Britain,” Tokyo prefers to focus on Brussels first

May’s ambitious visit conveyed a sense that Tokyo is more on London’s mind than Brussels lately. Her very busy schedule stood in contrast with the underwhelming Brexit negotiations taking place in Brussels at the same time for less than the duration of her trip. The Prime Minister did not visit any other country during this trip, underscoring the important role Japan plays for Britain, and chose to wear an outfit in the colors of the Japanese flag – a fact which did not pass unnoticed by her hosts. An official press statement also noted the UK government’s “intense engagement” with Japan in recent months, and a Joint Declaration on Prosperity Cooperation even included references to a Japan-UK Season of Culture in 2019-2020, and the donation of cherry blossom trees to the UK to rival the Tidal Basin display in Washington, D.C. Other European diplomats in Tokyo frequently express a sense of admiration — even envy — for the British diplomats’ ability to successfully engage the Japanese government, and this visit reinforced their views.

The Japanese side rolled out the red carpet in its turn, complementing a busy set of substantive discussions with a meeting with the Emperor and a lot of “face time” between the Japanese and British prime ministers. It was evident that both sides contributed to the careful planning of the visit from its diverse and groundbreaking agenda.

However, while the visit was a step in the right direction, it was insufficient to alleviate Japanese concerns about Brexit. The Japanese government and industry still need certainty on the future UK-EU trade relationship, something May cannot deliver at this stage in the Brexit negotiations. The big winner of the visit may ironically be the EU as a result of the boost in British and Japanese political commitment to the EPA’s completion.

Irina Angelescu is a Council on Foreign Relations (CFR) Hitachi Fellow at the Japan Institute of International Affairs (JIIA) in Tokyo. The views expressed in this piece are her own.