Japan is warning that investments in the U.K. could be at risk with Brexit, if the negotiations drag on and are kept under wraps. And that includes pharma companies exiting the country.
One remedy? Keeping the European Medicines Agency headquartered in London--a surprising suggestion, given assumptions that it must move.
According to Japan's Ministry of Foreign Affairs, Japanese corporations could quit the country if Brexit creates a situation in which the U.K. loses many of its single-market privileges. [D]rastic changes in the business environment" will be exacerbated if the exit is not handled with an "an uninterrupted and transparent process," the ministry said Tuesday.
The ministry's 15-page statement also provides a comprehensive wish list--compiled by domestic companies--that spells out the potential perils of the split.
An EMA relocation poses some of those risks, the statement says. From the Brexit announcement, it has been assumed that the agency's headquarters would shift to an EU member state. That's not a given, however; the agency's jurisdiction covers not only EU nations, but countries in the European Economic Area (EEA). That raises the slim chance that the U.K. could remain its host, provided Britain takes EEA member status.
Japanese drugmakers have opted to base their European operations in London for proximity to the EMA, according to the Ministry, and also because the U.K. capital serves as the largest clearing center for euro transactions in Europe.
Shifting the EMA would mean the "appeal of London as an environment for the development of pharmaceuticals would be lost, which could possibly lead to a shift in the flow of R&D funds and personnel to Continental Europe."
Japan's other priority requests include maintaining the current system of trade tariffs and customs procedures, keeping equivalency in regulations and standards between the U.K. and EU and preserving the freedom of cross-border investment.
The Japanese also want free access to workers who are nationals of the U.K. as well as the EU, which could be a thorny issue, given that immigration and the free movement of people across the EU was a pillar of the Leave campaign.
Japan's comments come as the G20 summit got underway in China this week and add to pressure on new U.K. Prime Minister Theresa May to set out a clear plan for invoking Article 50 of the European Lisbon Treaty, which will kick off a two-year period of separation negotiations.
The Ministry of Foreign Affairs points out that a considerable number of Japanese businesses operating in Europe are concentrated in the U.K., which received more than half the direct investment made in the EU by Japanese companies in 2015. Collectively, Japanese firms employ 440,000 people across the EU.
Many of those companies that chose to invest in the U.K. did so on the back of government invitation--and on assurances that the country served as a gateway to Europe, says Japan.
"It is in the interests of the world, including Asia, that an open Europe be upheld," says the statement. "Japan will continue to share with the UK and the EU the responsibility to lead the free trade system."
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