Japan UK FTA-Symbolic Smoke and Mirrors
Updated: Feb 16
As a fitting tribute to the end to Shinzo Abe’s premiership, Japan has just signed a free trade agreement in principle with the UK. Given that the current Brexit negotiations are still threatening a no-deal Brexit and it looks like the British Government is about to go back on its word, the UK does not at first glance look like an attractive partner for Japan-a country that is very risk-averse in business and values long-term obligations, reliability and trust. One of the cornerstones of trust when doing business with the Japanese is ensuring that once agreements are made, they are not reneged on. Japan was the first country to openly lobby the British government post Brexit referendum to avoid a no-deal Brexit, not least because of the devastating impact that would have on the numerous Japanese UK-based companies relying on open borders with the EU. The Japanese also felt let down on the long-term obligations they felt had been set in motion by locating many of their European headquarters in the UK to get unlimited access to the EU. Even as recently as 2015, Hitachi Rail invested heavily in a manufacturing facility in County Durham where it was very clear at the opening ceremony that the Japanese relied on these long-term links and obligations much more than the British side did.
So why have they signed this deal given the precarity of our economic situation? Well, apart from honouring their long-term ties with the UK and trying to offset some of the losses for Japanese manufacturers in the UK, who will lose out in a no-deal Brexit, it is also very symbolic for Japan. The structural reforms of Abenomics were based around ‘opening up Japan’, which Abe certainly did enthusiastically by entering into and signing numerous ETA/FTAs agreements, even at the expense of alienating his core supporters-the agricultural lobby-within the Trans Pacific Partnership (TPP) negotiations. He even seemed to ‘take the lead’ on these negotiations after the US pulled out, symbolising the economic and diplomatic strength of Japan in a world of trade that was becoming increasingly dominated by China. The UK has even been given a potential route to join the newly formed CPTPP! Given the speed at which this UK Japan trade deal has been agreed, this was certainly set to be one of the final achievement of Abe's legacy.
This UK Japan trade deal encompasses many shades of the Japanese cultural concept of tatemae-putting on a certain face to represent a situation that means something quite different- which has always been understandable and to some extent acceptable to the Japanese. The British Government seem to have also adopted this strategy of ‘smoke and mirrors’, using this trade deal as a symbolic statement of a Brexit Bonus to show that we can still sign a deal with the third largest economy in the World. Given the realities of the potential economic devastation of a no-deal Brexit happening within the already catastrophic economic fall-out of Covid 19, the tag-line on the Department for International Trade’s website of ‘it goes even further than the EU EPA’ may be little comfort if you are a small British exporter about to lose access to one of your largest trade partners in the world or your company is facing bankruptcy and you are having to furlough workers but is a boost for passionate Brexiteers (and hopefully for those British companies who may benefit from this deal and have the resources and know-how to do business in Japan.)
Ultimately, this attempt at tatemae by the British Government is more likely to be seen in the West as deception or self-delusion as it becomes increasingly clear that this trade deal was mostly done for symbolic reasons to justify Brexit and that the Japanese Government has most probably lost trust in the UK as have major Japanese businesses such as Hitachi and Softbank, who have recently pulled out of any further investment in the UK or have sold their British assets-many other Japanese companies have been gradually moving their operations into Europe
Of course, this will be denied, as is the nature of tatemae and to admit it these things publicly would be unthinkable to the Japanese. It seems that the British Government has chosen to go the same way.