Japan’s prime minister, Shinzō Abe, has said Britain would be welcomed into the Pacific free trade pact “with open arms” after it leaves the European Union. His comments followed warnings from Japanese carmakers that a no-deal Brexit could hit production and force them to rethink their investments.
In an interview with the Financial Times in Tokyo, Abe said Britain would lose its role as a gateway to Europe after Brexit, but would still be “equipped with global strength” – remarks that will encourage staunch leavers who argue that Brexit will allow Britain to strike free trade deals with countries outside the EU.
Abe, a key architect of the Trans-Pacific Partnership (TPP), is attempting to bolster the 11-nation agreement after Donald Trump took the US out of the deal on his first day in office, calling it “a potential disaster for our country”.
But British membership of the TPP would be dependent on its withdrawal from the EU customs union, which would allow it to set its own tariffs.
Japan, Singapore and Mexico have ratified the agreement, while Australia, Brunei, Canada, Chile, Malaysia, New Zealand, Peru, and Vietnam have all signed it.
The UK would be the first member of the agreement that does not have borders on the Pacific Ocean or the South China Sea, although the bloc does not include China or South Korea.
Abe encouraged London and Brussels to avoid a “disorderly” deal that would affect Japanese businesses with investments in the UK.
“I hope that both sides can contribute their wisdom and at least avoid a so-called disorderly Brexit,” Abe said, adding that Japanese businesses would need time to adjust after Britain leaves the EU on 29 March next year.
He added: “I truly hope that the negative impact of Brexit to the global economy, including Japanese businesses, will be minimised.”
Britain would have much to lose from even a partial withdrawal by Japanese businesses that felt the terms of the Brexit deal were detrimental to their long-term interests.
Companies such as Nissan and Hitachi have invested more than £40bn in the UK since the 1980s. More than 1,000 Japanese firms together employ about 140,000 people in Britain in manufacturing, pharmaceuticals and financial services.
In its most candid comments on Brexit to date, Nissan last week said there would be “serious implications” for Britain’s manufacturing industry if it left the EU without a deal.
“Today we are among those companies with major investments in the UK who are still waiting for clarity on what the future trading relationship between the UK and the EU will look like,” Nissan said.
The firm, which employs 7,000 at its plant in Sunderland, added: “We urge UK and EU negotiators to work collaboratively towards an orderly balanced Brexit that will continue to encourage mutually beneficial trade.”
Earlier, Toyota warned that a no-deal Brexit would temporarily halt output at its plant in Burnaston, Derbyshire, which employs 2,500 people and produced almost 150,000 cars last year, 90% of them for export to the EU.
“My view is that if Britain crashes out of the EU at the end of March we will see production stops in our factory,” Marvin Cooke, managing director at the Burnaston plant, told the BBC.
Despite announcing a £240m investment in Burnaston last year, Toyota said a no-deal Brexit would adversely affect the plant’s future.
“The UK market in itself is not big enough to justify a plant that size,” said Johan van Zyl, president and chief executive of Toyota Motor Europe. “If we cannot sell into the European market, it will have an impact on the future of our plant.”
Major Japanese banks have already announced plans to scale down their presence in London. They are worried about the potential loss of the “EU passport”, which enables banks based in London to operate freely across the continent’s financial markets.
Abe and Japan’s biggest business lobby, Keidanren, have voiced fears that a hard Brexit could be a “huge negative” for Japanese companies in the UK.
In an unusually frank statement issued at the 2016 G20 summit in Beijing, Japan set out a list of Brexit demands that included Theresa May negotiating a deal that kept Britain in the EU customs union and single market, and guaranteed the free flow of workers between the UK and the rest of the continent.
Japan’s ambassador to Britain, Koji Tsuruoka, also painted a grim picture of Japanese involvement in the British economy if the Brexit deal put profits at risk.
“If there is no profitability of continuing operation in the UK – not Japanese only – no private company can continue operation … it’s as simple as that,” he told British ministers this year.
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