British Prime Minister Theresa May is doing her best to patch up the relationship with Japan, following the shock caused by Brexit.
Her recent landmark trip to the country was part of a campaign to maintain trade and encourage Japanese companies to keep investing in Britain despite economic and political uncertainties. Prime Minister May also described Japan as Britain’s “closest security partner in Asia,” and pledged to support its defense objectives.
Her friendly intentions were signalled when she stepped off her plane in Osaka wearing a red and white outfit which matched the colors of Japan’s rising sun flag.
First on her agenda was business. She told Japanese corporations that Britain wants them to stay in the United Kingdom and will, in the future, seek a free trade deal with Japan.
Most Japanese business leaders were dismayed when they learned that Britain voted to leave the European Union. More than a thousand Japanese companies have offices registered in Britain, employing around 150,000 people. They assumed that, by having a base in Britain, they would gain access to the whole European market.
So the Brexit has left Japanese companies “bewildered and anxious,” according to Professor Seijiro Takeshita of Shizuoka University.
Initially it seemed Britain would leave both the single market and the customs union within a couple of years of the Brexit vote. That is now unlikely due to political changes in Britain.
Professor Takeshita says that Japanese companies are frustrated by the slow progress in the Brexit negotiations and the lack of clarity about their outcome. “The longer those talks take, the more the Japanese companies in the UK will look to relocate parts of their business to the continent.”
Another concern is the possible departure of banks and financial institutions from London to continental Europe. Hideki Kishida, a senior economist at Nomura Securities, observes that “some financial institutions have already announced that they are prepared to move a certain number of jobs from London to the European continent to retain the single passport system which enables them to operate within the EU. That is not good for the UK.”
May’s long-term goal is to secure a free trade agreement with Japan, like the one Japan recently agreed in principle with the EU. Yet Britain is constrained from entering such negotiations until the Brexit process is completed. Likewise, Japan wishes to settle its arrangements with the Europeans before it starts talks with the British.
Japan is the largest Asian investor in the UK, but the rapid growth of China and its vast overseas investment program has brought large sums of Chinese money to Britain. However, the diplomatic relationship between China and the UK has recently “hit rock bottom,” according to the British tabloid newspaper The Sun.
Prime Minister May visited Japan just weeks after she postponed a trade trip to China. She has been condemned in the Chinese media for comments on security in the Asian region. Her negative image in China contrasts with that of her predecessor, David Cameron, who welcomed a “golden era” in Sino-British relations, spearheaded by the former British finance minister, George Osborne.
“The May government has shifted its approach toward China slightly from the Cameron government primarily because of the loss of George Osborne,” said John Hemmings, director of the Asian Studies Centre at the Henry Jackson Society. “Osborne was determined to get Chinese investment into the north of England, often at the expense of other considerations. May—as fitting for a former Home Secretary—has been more cautious. She welcomes Chinese investment, but is determined to screen it for security risks.”
Alongside the Brexit, security was another crucial issue on the agenda during May’s trip to Japan. She declared the UK’s backing for Japan’s bid for a permanent position in the United Nations Security Council. The tense situation in East Asia was emphasised when North Korea fired another missile over Hokkaido just before May arrived in Osaka. She condemned the action, but the UK has little ability to influence affairs on the Korean peninsula.
John Hemmings from the Asia Studies Centre said: “When it comes to North Korea, the UK government has deliberately avoided playing a frontline role, preferring instead to play an auxiliary diplomatic role in the UN. It has on occasion sought to help directly with projects that bring North Koreans to the UK for exposure to the outside world, but generally London has deferred to the direct interests of its friends and allies in Washington, Seoul, and Tokyo.”
May said that Britain aims to help protect Japan from North Korean aggression in cyberspace by offering assistance with internet security and counter-terrorism. She also announced the deployment of the British battleship HMS Argyll to the region in December and the joint training exercises between UK and Japanese troops.
Duncan Bartlett is a former BBC Business Reporter and founder of Japan Story.