Japan manufacturers meet UK Prime Minister to issue Brexit warning

12 February 2018

Japan manufacturers meet UK Prime Minister to issue Brexit warning

12 February 2018

Japanese car manufacturers have warned UK Prime Minister Theresa May that they may have to leave Britain if trade barriers with Europe after Brexit make them unprofitable.

The automotive industry has been concerned about the impact that any ‘hard Brexit’ deal would have on their businesses. Should no free trade deal between the UK and Europe materialise, import tariffs would be set at World Trade Organisation (WTO) rates of around 10%. This would be paid each time a product is imported and exported to the country’s many vehicle plants.

Nissan Europe Chairman Paul Willcox, Honda Europe boss Ian Howells and Toyota Europe CEO Johan van Zyl were among executives from 19 Japanese businesses who met May and several of her top ministers last week in Downing Street to voice their concerns over the process and their prospects in the country following Brexit.

Japan's ambassador to Britain issued an unusually blunt warning on the risks of trade barriers. ‘If there is no profitability of continuing operations in the UK - not Japanese only - then no private company can continue operations,’ Koji Tsuruoka told reporters when asked how real the threat was to Japanese companies of Britain not securing frictionless EU trade.

‘So it is as simple as that,’ he said. ‘This is all high stakes that all of us, I think, need to keep in mind.’

Japan, the world's third-largest economy, has expressed unusually strong public concerns about the impact of Brexit on the UK, the second-most important destination for Japanese investment after the United States.

Major corporations within and outside the automotive industry have sought a two-year transition period, which they hope will ease Britain into its new relationship with the bloc.

Both London and Brussels hope to agree a transition deal lasting until the end of 2020, in which Britain would remain in the single market and be bound by all EU laws, by a summit towards the end of March.

A spokesman at May's office said she had agreed on the need to move on quickly in the Brexit talks to secure a trading relationship with the EU that is as tariff-free and frictionless as possible after the transition period.

Brexit minister David Davis said there was still progress to be made in the committee after disagreements between ministers erupted into the public domain.

The industry has often called for clarity over the Brexit situation. Despite its plant investment plans announced earlier in 2017, Toyota asked the government to ‘lift the fog’ surrounding negotiations, while Honda became the first manufacturer to reveal that it could not absorb the potential 10% tariffs placed on imports and exports, meaning vehicle prices would need to rise, or it would have to look at manufacturing in mainland Europe.

Ford also warned that a ‘hard’ Brexit could lead to a withdrawal of investment in UK facilities and manufacturing in another stark warning about the impact of the situation on the automotive industry. The company said that it would be difficult to ‘unwind’ its supply chain after 40 years of establishing it.