Japan has warned Britain that its exit from the EU could prompt Japanese financial institutions to relocate from London and listed a raft of concerns from Japanese companies about the transition away from the bloc.
In a 15-page report published on Friday last week, a Japanese government task force formed to respond to “Brexit” also warned of a possible outflow of drug research and development investment from Britain.
The report said it expected the British government to handle its exit from the bloc smoothly.
Economic data suggest the economic effects of Britain’s vote to leave the EU has not been as severe as some predicted, although British Prime Minister Theresa May yesterday said that its economy would suffer as a result of the decision.
The report, published on the Japanese Ministry of Foreign Affairs’ Web site, raised several concerns, including that Japanese financial institutions might have to apply for corporate status in the EU if Brexit means they lose the “single passport” — the right to operate across the bloc.
It also raised worries over ease of access to unskilled labor, tariff protection, and London’s status as a clearing center for euro transactions.
Formed in July shortly after Britain voted to leave the EU, the task force was headed by Japanese Deputy Chief Cabinet Secretary Koichi Hagiuda and comprises senior officials from the nation’s Prime Minister’s Office, the foreign, finance, trade and agriculture ministries and the Japanese Financial Services Agency.
“Since the inception of the task force, three meetings were held and we’ve compiled the message, taking into account concerns from the private sector,” a Foreign Ministry official told reporters.
“As a next step, we would like to relay this message to EU and UK leaders, taking advantage of diplomatic opportunities that are coming up, including a G20 and UN high-level week,” he said, declining to be identified.
London in the coming week is to set out how it plans to shape its relationship with the EU upon leaving the bloc, May said in an interview yesterday.
Many Japanese financial institutions and other companies, such as Nissan Motor Co, count Britain as their European headquarters.
Nearly half of Japan’s EU investment last year flowed to Britain, the report said.
These Japanese companies have counted on unfettered access to the giant EU market in their investment decisions that the report said have created 440,000 jobs in Europe.
A British official said that such reports were welcome.
“It’s not unhelpful to also have some of our trading partners setting out some of the issues they are looking at and the types of concerns or issues that they would want to be addressed,” the official said on condition of anonymity. “This is all more information that helps to inform our thinking on what is the right deal for Britain.”
As for pharmaceuticals, the task force said that if the European Medicines Agency were to move to the continent, “the appeal of London as an environment for the development of pharmaceuticals would be lost ... this could force Japanese companies to reconsider their business activities.”
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