TOKYO -- Japanese businesses took little solace Thursday in reassurances by British Prime Minister Theresa May of a smooth U.K. withdrawal from the European Union, given uncertainty over London's access to the unified market after the divorce.
"Without seeing how the separation will actually proceed, its effects are difficult to predict," one Japanese economic official said.
At a joint news conference, Japanese Prime Minister Shinzo Abe stressed to May the importance of transparency and predictability in the British exit from the EU. May promised to deliver a "smooth and orderly" process and to build a new relationship with Japan.
In a joint statement, May and Abe agreed to establish a new ministerial-level framework for deepening relations and reaffirmed that both countries hope to see the U.K. forestall any business turbulence arising from Brexit and form a new relationship with Brussels.
Yet the visit did not erase the fears of business leaders. Enterprises may hesitate to embark on new investments in the U.K.
"Considerable burden and confusion appear inevitable," said one senior official at a Japanese automaker, bluntly expressing concerns to U.K. trade secretary Liam Fox during a consultation Thursday. The U.K.'s departure from the EU customs union, which will close Britain off from tariff-free trade with the continent, is at the root of worries at corporate Japan.
"The impact of the separation must be minimized," an electronics maker executive urged.
But Fox replied by blaming Brussels for stalled talks, saying the shape of Britain's future relationship with the EU cannot be known until the latter responds to full-scale negotiations. That answer failed to reassure the gathered corporate chiefs. "The meeting failed to assuage the sense of uncertainty about the future," said one participant.
When Britain leaves the EU, changes to tariffs with countries in the bloc will likely follow. If imports from the continent -- such as manufacturing components -- are hit with high duties, companies with production hubs in the U.K. will have to rethink their arragements. London hopes to sign a pact with Brussels to continue receiving the same benefits, but the EU might not accommodate.
Hot and cold
May made full-throated calls for bilateral cooperation Thursday. She urged Japanese and U.K. business officials to consider that Brexit offered an opportunity to take commercial relations between Tokyo and London to the next level.
Establishing a bilateral free trade agreement ranks as a priority for May. She hopes to score improved trade deals and tout them to U.K. citizens as benefits of Brexit. Japan has shown understanding for that goal, including by stating the establishment of a new trade and investment working group in a joint statement on economic affairs. That move laid the groundwork for FTA negotiations.
But Tokyo is less enthusiastic than London. The Asian country prioritizes its economic partnership agreement with Brussels, broadly agreed upon in July, and will focus on implementing that pact, which means leaving London for later. Full-scale negotiations appear unlikely to start until the U.K.'s divorce talks with the EU are settled.