In a historic referendum, United Kingdom (UK) citizens voted to leave the European Union (EU), creating confusion in markets across the world. How should Japan respond to this unprecedented global shift?
Japanese businesses in the UK
According to the "Statistical Survey on the Japanese Nationals Overseas," over 1,000 Japanese companies do business within the UK, and many of these companies use the UK as their gateway for business within the EU. If the UK loses access to the EU’s single market and tariffs are imposed on EU transactions, those companies will have to shoulder additional costs.
Companies voice concerns
Top executives from Japanese companies with business in the UK gathered at the Ministry of Economy, Trade and Industry (METI) on June 27 to share their concerns about the uncertainty of mid- to long-term relationships between the UK and the EU.
The UK will likely spend two years negotiating terms for leaving the EU. To minimize any adverse effects of the Brexit on the Japanese economy, Japan should take the lead and proactively pursue more public-private cooperation.
Japan-EU Economic Partnership Agreement
At the G7 Ise-Shima Summit in May, Japan and the EU reaffirmed their commitment to conclude an EPA that will eliminate tariffs and develop investment rules as soon as possible. Regardless of the change in the setting for these negotiations due to the UK’s anticipated exit from the EU, Japan maintains its position to seek an agreement within the year.