Japanese companies want UK visa carve-out

Tokyo will push for tougher trade deal with UK than with EU

Japan has said terms of EU deal will apply to UK during transition

Japanese companies are pushing for their employees to be exempt from strict visa quotas in any future trade deal with Britain after Brexit.

“Even now the situation is becoming more difficult for us getting Japanese staff into the UK and our fear is that it will not become easier during the transition period,” said a senior executive at one of Japan’s largest trading houses.

“The Japanese companies in the UK are experiencing a huge issue around people. Japanese expats are not getting in and the companies are tearing their hair out,” said Pernille Rudlin, the head of Japan Intercultural Consulting, a training and consulting firm based in the UK.

“Japanese companies want to bring in highly skilled people — design engineers and other positions that they not only need in the UK but need to have moving around the EU,” she added, referring to recent figures that showed Britain turned down more than 6,000 so-called tier 2 skilled workers visa applications between December 2017 and March 2018 — a key period of the year for Japanese companies bringing specialists into the UK.

Automotive tariffs are another focus

Other items on the wish list for Japanese negotiators, as they begin to plan for future trade talks, include a faster phase-out of UK tariffs on automobiles.

While the UK is hoping to duplicate the wide-ranging access embodied in the Japan-EU trade pact, Japanese officials are hardening against offering an identical deal to a much smaller economy. For example, they are considering offering less access to Japan’s luxury goods market than Tokyo granted to the EU in its prospective deal.

“The UK’s position is that it wants a copy and paste [of the Japan-EU deal], but that is not where we are. We want something better,” said one Japanese official involved in preparations.

“There is a feeling within the ministries that although the [Japan-EU] Economic Partnership Agreement as a whole is good, there are areas where Japan could have done much better in its negotiations, and these will probably be areas where we press harder with the UK.”

Japan would prefer UK to stay in customs union

Officials in Tokyo emphasised that all of their planning is hypothetical since it is not clear whether the UK will pursue an independent trade policy or stay in a customs union with the EU. Japan, a big investor in the UK, would strongly prefer a customs union.

“There is still no clarity from the UK. Japanese industry is becoming increasingly frustrated and concerned,” said a second official from a different ministry.

The framework for a future deal with the UK is another open question. One constituency within the Japanese government is keen for the UK to join the Trans-Pacific Partnership, arguing it would increase pressure on Washington to return to the eleven-member trade deal. Donald Trump quit the TPP in one of his first acts as US president.

Important agricultural constituencies in Japan, such as the dairy sector, think Tokyo gave too much away to the EU. Industrial players such as the automotive industry will use trade talks to seek deeper market access in the UK.

Tokyo will not seek concessions during transition

The UK is likely to have its own requests, potentially seeking greater access for financial services exports to Japan.

Japanese and UK officials outlined areas where they might go beyond the EPA at the second meeting of a trade and investment working group, held in London in early May. Participants say the UK gave a debriefing on exit talks with the EU and the two sides discussed how to proceed with trade talks once Brexit is complete. There were no negotiations since that is not possible while the UK remains a member of the EU.

Japan’s top priority is to implement its recent EU free trade deal, regarded as an important policy victory for prime minister Shinzo Abe, with both sides aiming for ratification by the summer.

In one significant positive for the UK, Tokyo signalled it is willing to apply the terms of the EU deal to the UK until the end of 2020, and will not seek concessions during the transition period after Brexit. Both sides are still considering how to give that legal effect. Japan may attach an explanatory note to ratification legislation for the EPA signalling its intention.

Japanese industry is postponing decisions about UK investment until there is more clarity about the future relationship with the EU. Yaskawa Electric, one of Japan’s top industrial robotics companies, last week decided to build a new components factory in Slovenia instead of expanding an existing site in Scotland.

Hiroshi Ogasawara, the company’s chief executive, told the Nikkei newspaper: “For risk management we need a supply system inside the EU.” However, the company denied claims it plans to cut off investment or close the plant in Glasgow, which exports industrial servo motors to Europe.

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