Japan Next for Raab as U.K. Pushes Post-Brexit Trade Credentials

(Bloomberg) -- Foreign Secretary Dominic Raab faces a tough task when he arrives in Tokyo: persuading Japanese companies -- including those that invested in Britain as an entry point to the European Union -- to back Prime Minister Boris Johnson’s vision for the U.K. after Brexit.

“Now we’ve left the EU we can take full advantage of the opportunities open to us -- in trade, investment, technological innovation and security cooperation,” Raab said in an emailed statement ahead of a meeting with his Japanese counterpart Toshimitsu Motegi on Saturday. “Japan is a great friend and our closest security partner in Asia.”

While the Japanese government has expressed a willingness to negotiate a trade deal, it has also lobbied hard on behalf of companies for the U.K. to maintain close ties to the EU. Johnson’s speech this week expressing a willingness -- if necessary -- to trade with the bloc from next year without a formal agreement will have done little to assuage their concerns.

Japanese companies have used the U.K. as a center of car manufacturing over several decades, but Brexit has undermined a key rationale behind such investments by jeopardizing tariff-free access to the EU’s single market and the ability to ship components and completed cars around the bloc without customs checks.

Honda Motor Co. said it will close its Swindon plant by next year, and the European chairman of Nissan Motor Co. warned a no-deal Brexit would mean the company’s factory in northeast England “will not be sustainable.” That’s still a possibility if the U.K. and the EU fail to reach a trade agreement before the deadline at the end of the year.

The risks for Johnson’s government extend beyond the economy. Many Japanese companies have operations in areas won by the Conservatives from Labour in the December election, and any loss of jobs would probably result in fewer votes for the governing party.

Johnson has argued that the ability to strike trade deals around the world is one of the great prizes of Brexit, and his government is prioritizing the U.S., Japan, Australia and New Zealand this year. Raab’s Japan visit follows talks in Canberra with his counterpart Marise Payne. After Japan, he will travel on to Singapore and Malaysia.

To contact the reporter on this story: Olivia Konotey-Ahulu in London at okonoteyahul@bloomberg.net

To contact the editors responsible for this story: Tim Ross at tross54@bloomberg.net, Stuart Biggs, Thomas Penny

©2020 Bloomberg L.P.