Japan Demand for Seamless Brexit is a Timely Warning Against Hubris
Comment of the Day

September 07 2016

Commentary by David Fuller

Japan Demand for Seamless Brexit is a Timely Warning Against Hubris

It [Japan] wants continuation of the ‘single passport’ system for financial services, and clearing of euro transactions in London. “If Japanese financial institutions are unable to maintain the single passport obtained in the UK … they might have to relocate their operations from the UK to existing establishments in the EU,” it said.

The task force insists on mutual recognition of ‘Authorized Economic Operators’, which could not occur if Britain fell back to the minimalist terms of the World Trade Organisation. If the UK fails to retain the European Medicines Agency, Japanese pharmaceutical companies might shift research and investment to mainland Europe.

It wants guaranteed “access” for EU and UK nationals to work in each other’s country, which is not the same thing as free movement of labour or benefit rights. While the paper stresses that Japan “respects the will of the British people”, it cleaves to the status quo. “The message is essentially that nothing should really change,” said Raoul Ruparel from Open Europe.

The wish-list could perhaps be achieved through a halfway house such as entry into the European Economic Area, the ‘Norwegian model’. It is totally incompatible with the hardline demands of the Brexit triumvirate.

The task force paper is probably music to the ears of 10 and 11 Downing Street, and its release during the G20 summit may have been co-ordinated. It strengthens Theresa May’s hand as she tries to steer through treacherous waters, and pushes within the cabinet for a compromise soft Brexit - or a “seamless Brexit” as Tokyo calls it.

Japan’s demarche should not be read as a threat to Britain. The document is equally addressed to the EU, making it clear that the EU’s own credibility is on the line and that any attempt to ‘punish’ Britain would be intolerable.

It urges the EU to recognize that Britain cannot on its own deliver these terms, and that EU officials must “heed the voices of Japanese businesses to the fullest extent and to do their utmost to cooperate in taking the necessary measures to advance the Brexit negotiations,” it said.

David Fuller's view

AEP’s article is more cautious than The Telegraph’s other article regarding Japan which I posted on Tuesday.  A lot is in play right now and the EU is likely to change radically over the lengthy medium term, as I have said before.  However, the more immediate question is - might it actually concede to the UK a separate deal in terms of autonomy and sovereign rights, including control over its own borders?  There is currently no precedent for this, although it would be in the sensible interests of European trade with the rest of the world.  Alternatively, the UK may have no other option but to go for full Brexit, in its best long-term interests.  In other words, leave the EU, lock, stock and barrel.    

Here is a PDF of AEP's article.

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