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Japan's Prime Minister Shinzo Abe arrives at the Hangzhou Exhibition Center in China to participate in the G20 Summit, on September 4, 2016


Japan warns over Brexit during G20 talks

Japan's Prime Minister Shinzo Abe arrives at the Hangzhou Exhibition Center in China to participate in the G20 Summit, on September 4, 2016

Japan’s Prime Minister Shinzo Abe arrives at the Hangzhou Exhibition Center in China to participate in the G20 Summit, on September 4, 2016

HANGZHOU, China – Tokyo has issued its boldest warning yet over the potential fallout from Brexit, saying Japanese firms may shift key operations from Britain to Europe if they lose free access to the single market.

With a G20 summit under way in China, a Japanese government taskforce told Britain and the EU to minimise the “harmful effects” of Brexit on firms that treat the UK as a gateway to Europe.

Some of Japan’s best-known companies, including Toyota, Hitachi and investment bank Nomura, are re-assessing their UK investments after Britain voted in June to quit the 28-member EU, according to a report issued by Tokyo.

“Japanese businesses with their European headquarters in the UK may decide to transfer their head-office function to Continental Europe if EU laws cease to be applicable in the UK after its withdrawal,” said the 15-page document, published late Friday.

The topic is almost certain to come up if Japanese Prime Minister Shinzo Abe and British leader Theresa May hold a meeting on the sidelines of the G20 talks in Hangzhou.

US President Barack Obama said at a joint briefing Sunday with May that they had discussed trade and both countries aim to “ensure that we don’t see adverse effects” in their commercial ties.

Japan has warned that some of its firms were lured to Britain by its sales pitch as a launching pad for tapping the much-larger European market — adding that London has a duty to hammer out a Post-Brexit deal that protects Japanese companies.

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“We strongly request that the UK will consider this fact seriously and respond in a responsible manner to minimise any harmful effects on these businesses,” the report said.

More than 1,000 Japanese companies do business in Britain, employing some 140,000 local people, and Japan’s direct investment in the country has topped 10 trillion yen ($96 billion) to date.

The report also urged Britain and the EU to make the Brexit negotiation process transparent to avoid “unpleasant surprises”.

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“Uncertainty is a major concern for an economy,” it said.

“What Japanese businesses in Europe most wish to avoid is the situation in which that they are unable to discern clearly the way the Brexit negotiations are going, only grasping the whole picture at the last minute.”

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