Japanese companies in UK ‘already receiving offers from EU’

Haruki Hayashi, president of Japanese chambers of commerce in UK, said his businesses need more than ‘general reassurances’. Japanese companies based in Britain have already started to receive offers from other European countries and could postpone investment decisions if the government fails to negotiate a close economic relationship with the EU.

That was the stark warning of Haruki Hayashi, president of the Japanese chambers of commerce in Britain and the European CEO of Mitsubishi, who said businesses needed more than “general reassurances” if his country’s investment presence in Britain was to be maintained.

Speaking to MPs in parliament, including the Brexit secretary, David Davis, Hayashi said that in a complex and interdependent world, the decision to leave the EU would have a serious impact on individuals and businesses.

Speaking after it emerged that the government had written to Nissan to promise it would remain competitive following the Brexit process, Hayashi emphasised the importance of factors such as membership of the single market and customs union. “Some examples of areas of concern of Japanese companies include validity of the single passport system, the free movement of skilled workers between the UK and different parts of Europe and whether the continuation of the current environment of uncertainty will lead the Japanese companies to postpone further investment decisions,” he told a reception organised by the Japanese embassy in London at which dozens of companies were represented.

It could also mean companies would seriously consider relocating to other countries, he added, urging the government to speak to Japanese business figures throughout the renegotiation process. “Some Japanese companies have already started receiving offers from alternative European host countries,” said Hayashi. “I cannot speak on behalf of each individual member of the chamber but the message coming through loud and clear is that more than general reassurances are called for at this stage to ensure that the Japanese investment presence in the UK is not diminished for lack of consultation and information sharing.”

His comments came alongside a warning from Koji Tsuruoka, the Japanese ambassador to the UK, that his government could not instruct companies over their decisions, as they were private entities. But he said the Japanese were willing to engage in “periodic meetings with the UK” through the Brexit process, stressing that the embassy was informing the Japanese government in Tokyo about what was happening in Britain on a daily basis. “Of course Japan will not sit at the negotiating table,” he said, but warned that it was a “very major stakeholder”.

Davis also addressed the room saying that Brexit should be seen as a a huge opportunity for Britain. “I want to reassure you about the type of country that the UK will be – a beacon of free trade,” he said, arguing that Nissan had grown hugely in the UK. He reassured companies that a careful negotiation would result in a “comprehensive trading” arrangement with Europe.

The strong interventions from the Japanese came as the business secretary, Greg Clark, claimed the government’s letter to Nissan cannot be published because of commercial sensitivity. He was pressed three times by Labour’s shadow business secretary, Clive Lewis, to “show us the letter” that persuaded the company to boost its production in Sunderland, amid speculation it could have financial implications for the taxpayer.
Clark said he had already set out the broad principles of the correspondence, including the aim of negotiating an EU deal for cars that is free of tariffs and bureaucratic impediments. He insisted it was no sweetheart deal and only contained three commitments to continue fundings as well as the promise that carmakers would still be competitive when the UK leaves the EU.

“My responsibility, on behalf of the government, is to encourage and to attract investment in this country. And it’s important that when companies of all types and in all sectors share with me their investment plans – that are of information to their prospective competitors – that they can be assured that they are not going to be disclosed to their competitors to their disadvantage,” he said.

However, Lewis said it was not good enough for the cabinet minister to “ask people to believe that Nissan is risking millions of pounds of investment and the success of its newest models on the basis of the government’s good intentions alone”.
“If you didn’t offer Nissan a sweetener, then what have you got to hide? Show us the letter,” he said.

The issue has caused controversy over fears that other companies and industries will now be lining up for similar reassurances from government.

Hayashi pointed out that a survey of the Japanese chamber of commerce members in October, before the referendum, found that 96% backed Britain remaining in the EU, while 4% expressed no view.

He said that despite the clear view, which was still held, there was a desire to respect the democratic vote and “face the reality and get on with our lives – together with our trusted partners in the UK”.

But he said that the Japanese government had taken the exceptional decision to voice the concerns of businesses in the UK. He said the message was a friendly one to a strong Japanese partner but added: “I am confident that this statement helped convey the seriousness of the Japanese business community.

“Why are we so serious? Well because of the exceptional bilateral relationship we built over 400 years nurturing trust and common understanding towards the people, lives, culture, sustainable business practice here that requires.”

Clark faced questions from a string of MPs including Hilary Benn, the new chair of the Brexit committee, Ed Miliband, the former Labour leader, and Andrew Tyrie, the Tory chair of the Treasury committee, who all pressed him for more details.

In his answer to Tyrie, Clark gave his strongest hint yet that the government will be seeking to stay in the customs union for the automotive sector at least. Asked whether his reassurances amounted to staying in the customs union, he answered: “This goes beyond any discussions I’ve had with any company. But it seems to me why would you not aim as a matter of negotiations to avoid bureaucratic impediments. That seems to me common sense.”

When Benn pressed him on whether the UK will offer tariff-free access to all other parts of industry, Clark admitted it was only an ambition rather than a certainty that this will be achieved for carmakers in talks with the EU. “It is not in my gift to offer tariff-free access to the single market. What I was describing was what would be a positive outcome from the negotiations and therefore the demeanour we should take,” he said.

In another answer, Clark appeared to signal the government wants different deals for different sectors of the economy.