Brexit’s Impact on Japan’s Trade with Europe

AuthorNoriko Suzuki
Publication Date01 Apr 2021
DOI10.1177/00208817211002374
SubjectArticles
https://doi.org/10.1177/00208817211002374
International Studies
58(2) 265 –281, 2021
© 2021 Jawaharlal Nehru University
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DOI: 10.1177/00208817211002374
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Article
Brexit’s Impact on
Japan’s Trade with
Europe
Noriko Suzuki1
Abstract
In the context of globalization, the Japanese government emphasizes the
importance of reinforcing the free trade system. Due to European Union’s (EU)
reluctance, the free trade agreement (FTA) negotiations between Japan and
the EU took 4 years to conclude. However, Brexit prompted the conclusion
of Economic Partnership Agreement (EPA) with the EU as to maintain the
economic interests of both sides after the British exit from the EU. The UK
wants to maintain economic relations with Japan and to become a ‘Global
Britain’ in the post-Brexit era. This article analyses both Japan–EU and Japan–UK
FTAs. The core of the article looks at the impact of Brexit on Japan’s access
to the European single market through a review of Japanese sectors and large
corporations, particularly the automobile industry.
Keywords
Brexit, European Union EU, free trade agreement (FTA), UK, Japan, Automobile
industry
Introduction
In the context of globalization, while the European Union (EU) and the USA build
regional economic and trade networks and negotiate with the WTO, the Japanese
government emphasizes the importance of maintaining and reinforcing the free
trade system. It believes that entering into free trade agreements (FTAs) enhances
cooperation in areas beyond the level achievable or not covered by the WTO,
while ensuring consistency with WTO agreements is significant in expanding
external economic relations. Japan’s FTA strategy has three main partners—East
Asia, North America and Europe—which account for 80% of Japan’s trade, with
1 Professor, Faculty of Social Sciences, Waseda University, Tokyo, Japan.
Corresponding author:
Noriko Suzuki, Faculty of Social Sciences, Waseda University, 1-6-1 Nishiwaseda, Shinjuku-ku,
Tokyo 169-8050, Japan.
E-mail: n-suzuki@waseda.jp
266 International Studies 58(2)
FTAs with East Asian countries being the highest priority. This is because East
Asia, the region with the highest trade volume, has the highest tariffs (China at
10%, Malaysia at 14.5%, South Korea at 16.1%, the Philippines at 25.6% and
Indonesia at 37.5%) compared to the USA at 3.6% and the EU at 4.1%. Therefore,
further liberalization could generate the largest additional benefits. As a result,
Japan is interested in entering into agreements with the ASEAN countries
interested in bilateral FTAs first to eventually reinforce its economic partnership
with the entire ASEAN region, then encompassing East Asia that would include
China and South Korea (Ministry of Foreign Affairs [MOFA], 2002).
The reason behind Japan’s strategy of prioritizing FTAs in the East Asian
region is partly because its FTAs with the EU and North America are facing
several difficult issues, such as the treatment of agricultural and marine products.
Nonetheless, while Japan’s Economic Partnership Agreement (EPA) with the EU
came into force in February 2019, we assume that Brexit may have affected the
negotiations. This article examines the positions of the FTA/EPA strategy of the
Japanese government and its EPA with the EU, as well as the impact of the UK’s
withdrawal from the EU, which occurred during the EPA negotiations between
the EU and Japan. It also discusses the issues that were at stake for the British and
Japanese governments during the bilateral negotiations for an EPA.
Japan’s Free Trade Agreement/Economic Partnership
Agreement Strategy
Established in 2007, the coalition government of the Liberal Democrats and the
Komeito headed by Shinzo Abe of the Liberal Democratic Party decided to
promote the liberalization of the Japanese economy at a cabinet meeting. Because
‘resource-poor Japan has no choice but to actively participate in the global market
and build an economic system capable of reaping the benefits of globalization’,
the country intends to ‘maintain and develop a free global trade system and
promote economic cooperation with Asia and other countries’ (Prime Minister ’s
Office of Japan, 2007, p. 2).
For this reason, the Japanese government has decided to further reinforce
economic relations by making complementary use of bilateral and regional trade
agreements, while promoting trade liberalization and maintaining and securing a
multilateral trade system with the WTO at its core. The three pillars of Post-war
Japan’s foreign policy have been the US–Japan alliance, international cooperation
and an emphasis on neighbouring Asian countries. The Abe administration added
the ‘Arc of Freedom and Prosperity’ to these three pillars to promote a free trade
regime centred on the Asia-Pacific region (House of Councillors, 2007, p. 89).
Moreover, EPAs concluded by Japan strengthen broader economic relations
than trade liberalization. They include investment, movement of people, protection
of intellectual property, rulemaking of competition policy and elements of
cooperation in various fields.
Japan’s first EPA with Singapore came into force in November 2002, and
negotiations with other countries have been based on this EPA, with the options to

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