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Brexit's Stakes for Japan

16 Jan 2020
By Sato Yoichiro

Brexit has had a significant impact in East Asia, with Japan seeking to realign its strategic and security interests so that it can reap the greatest possible benefit from new potential alliances.

Introduction

With the electoral victory of the ruling party under PM Boris Johnson, the UK’s exit from the European Union (EU) marked a significant step forward. The UK’s anticipated loss of some member privileges inevitably affected bilateral UK-Japan relations. The signs are already visible in the economic sphere, despite the continuing negotiation of the UK’s exit terms with other EU members. On the other hand, the UK has clearly indicated that it will remain in the security framework of the North Atlantic Treaty Organisation (NATO), which includes most EU members, the United States, and some additional European countries. However, the UK’s decision to remain in NATO does not assure stability in Europe at a time when NATO faces major challenges to its security. Japan and the UK view each other as an extra-regional yet significant security partners.

Economic Relations

i) EU Access

The UK’s free trade with EU members will continue through the transitional period until end 2020. A further extension of two years is technically possible through a negotiation with the EU before June 2020, but pro-Brexit Boris Johnson’s electoral victory in December 2019 has made an extension less likely.

In anticipation of the imposition of EU tariffs on UK exports, the UK faces two challenges. First, negotiating favorable trade terms with the EU, so that both British exporters and foreign investors in the UK, who chose Britain because of free trade access into the EU market, will remain inside the UK. Japan’s large manufacturers like Nissan Automobile are already considering relocating some of their UK productions. Secondly, the UK must negotiate free trade agreements with key trade partners, so that its exporters can better compete in alternative markets.

ii) Bilateral FTA

In the wake of US President Trump’s decision to withdraw from the TPP negotiation, Japan quickly signed an Economic Partnership Agreement (EPA) with EU. Following Brexit, the UK will need a separate bilateral free trade agreement with Japan in order to maintain competitive ground vis-à-vis EU exporters to Japan. This puts Japan in a strong negotiating position. Japan has already revealed its condition that the UK must completely eliminate automobile tariffs under a new agreement.

Security Relations

i) The NATO crisis

NATO’s internal crisis was not triggered by Brexit. The underlying tension between Turkey and the other members since Turkish President Erdogan’s authoritarian turn was exacerbated by the civil war in Syria. While Trump accommodates both Russian and Turkish interests in Syria, he demands greater contributions by European members of NATO for their collective defence. Diverging perceptions of Russia and China among Europeans, the US, and key European allies are also present. Trump sees China as the primary threat to US security and expects the Europeans to shoulder greater defence burdens for their own defence against Russia. European states are divided over their perceptions of Russia, with key members like Germany and France taking a more accommodating stance.

The uncertain future of NATO is urging European members to hedge against NATO’s weakening by enhancing bilateral cooperation with the US, seeking diversified security partnerships with non-NATO countries, and/or seeking European security cooperation. The UK pursues the first two options, while it remains sceptical of the latter. The UK sees Japan as its preferred partner for diversifying security partnerships. The “global” turn of the UK security orientation also sends a signal to its European NATO partners to stop underspending on defence.

Strengthening special relations with the US while remaining within NATO and enhancing an alignment with Japan are mutually reinforcing objectives. Proving its own utility to the US security strategy not only in the Atlantic, but also in the Indo-Pacific, the UK attempts to hedge against weakening of NATO.

ii) Bilateral Strategic Partnership

Japan and the UK signed a joint declaration on their strategic partnership in 2012. Since then, the two countries have upgraded their defence cooperation through joint exercises, signing of the Acquisition and Cross-Servicing Agreement (ACSA), joint development of military equipment, intelligence cooperation in the anti-piracy operation in the Sea of Aden, and a joint UN sanction monitoring against North Korean maritime smuggling. As both the UK and Japan see that US commitment to their security is critical, the two countries work closely to enmesh their cooperation in Asia in an increasingly “trilateralising” context inclusive of the US. Similar “trilateralising” trends among Japan, Canada, and US as well as Japan, Australia, and US are slowly merging into a broader Indo-Pacific alignment.

Conclusion

Brexit and US President Donald Trump’s “America First” policy have opened up several dormant issues in the global system. The post-Cold War tide of European integration under EU and the growing German-Franco leadership places the UK between a rock and a hard place—between a constraining EU dominated by Germany and France and a free-riding EU upsetting its prominent Atlantic defence allies. The UK’s return to its globalist identity meets a partner in Japan. The different US approaches to European defence (multilaterally in NATO) and Asian defense (bilaterally through the “hubs-and spokes” system) are being reorganised into a cross-regional system of alliances and alignments. Both the UK and Japan strive to elevate their status as the prime allies of the US by networking US allies to sustain the US’ strength and commitment.

Yoichiro Sato is Professor in the College of Asia Pacific Studies and the Dean of International Cooperation and Research at APU.

This article is published under a Creative Commons Licence and may be republished with attribution.