Japan warns on Brexit: we cannot continue in UK without profit

Britain’s Prime Minister Theresa May hosts a roundtable with Japanese investors in the UK at 10 Downing Street in central London. (AFP)
Updated 08 February 2018
0

Japan warns on Brexit: we cannot continue in UK without profit

LONDON: Japan warned Prime Minister Theresa May on Thursday that its companies would have to leave Britain if trade barriers after Brexit made them unprofitable.
Japanese firms have spent more than 40 billion pounds ($56 billion) in Britain, encouraged by successive governments since Margaret Thatcher promising them a business-friendly base from which to trade across the continent.
But after May and several of her top ministers met bosses from 19 Japanese businesses, including Nissan, SoftBank and bank Nomura, Japan's ambassador to Britain issued an unusually blunt warning on the risks of trade barriers.
"If there is no profitability of continuing operations in the UK - not Japanese only - then no private company can continue operations," Koji Tsuruoka told reporters on Downing Street when asked how real the threat was to Japanese companies of Britain not securing frictionless EU trade.
"So it is as simple as that," he said. "This is all high stakes that all of us, I think, need to keep in mind."
Japan, the world's third largest economy, has expressed unusually strong public concerns about the impact of Brexit on the United Kingdom, the second-most important destination for Japanese investment after the United States.
In a warning after the shock 2016 Brexit vote, Japan expressed fears about a cliff edge that could disrupt trade when Britain formally leaves the bloc in March 2019.
Major corporations have sought a two-year transition period, which they hope will ease Britain into its new relationship with the bloc.
Both London and Brussels hope to agree a transition deal lasting until the end of 2020, in which Britain would remain in the single market and be bound by all EU laws, by a March 22-23 summit.
May and her ministers assured Japanese businesses of the importance of maintaining free and frictionless trade after Brexit during the meeting but said nothing firm on the matter, a source familiar with the discussions told Reuters.
"The point about frictionless trade and tariff-free trade was made in the meeting and acknowledged by the government and all sides as being important but nothing firm," said the source, who spoke on condition of anonymity.
CUSTOMS UNION UNCERTAINTY
A spokesman at May's office said she had agreed with them on the need to move on quickly in the Brexit talks to secure a trading relationship with the EU that is as tariff-free and frictionless as possible after the transition period.
Thursday's meeting came after a Brexit sub-committee of ministers discussed their Brexit strategy including how closely Britain should remain aligned with the EU and its customs union, a divisive issue for the ruling Conservatives.
Brexit minister David Davis said there was still progress to be made in the committee, after disagreements between ministers erupted into the public domain.
Hitachi Europe's Deputy Chairman Stephen Gomersall, Mitsubishi CEO for Europe and Africa Haruki Hayashi, SoftBank Investment Advisers UK CEO Rajeev Misra and Nomura's Executive Chairman in Europe, the Middle East and Africa Yasuo Kashiwagi joined the meeting with Japanese investors.
Nissan's Europe Chairman Paul Willcox, Honda's Senior Vice President in Europe Ian Howells and Toyota's Europe President and Chief Executive Johan van Zyl were also present.
Collectively the three carmakers build nearly half of Britain's 1.67 million cars.


Saudi energy minister compares electric vehicle ‘hype’ to peak oil misconceptions

Updated 15 October 2018
0

Saudi energy minister compares electric vehicle ‘hype’ to peak oil misconceptions

  • Khalid Al-Falih on Monday questioned what he described as the “hype” of the electric vehicle market
  • Compared it to past misconceptions around the theory of peak oil

LONDON: Saudi Energy Minister Khalid Al-Falih on Monday questioned what he described as the “hype” of the electric vehicle market and compared it to past misconceptions around the theory of peak oil.
He told the CERAWeek energy gathering by IHS Markit in New Delhi that petrol and diesel engines would co-exist with emerging electric and hydrogen fuel cell technologies for much longer than widely expected.
Miscalculations around the pace of electrification could create “serious” risks around global energy security, he said.
“Conventional vehicles today, despite all the hype, represent 99.8 percent of the global vehicle fleet. That means electric vehicles with 0.2 percent of the fleet, only substitute about 30,000 barrels per day of oil equivalent of a total global oil demand of about 100 million barrels.
“Even if those numbers increase by a factor of 100 over the next couple of decades, they would still remain negligible in the global energy mix.”
He said: “History tells us that orderly energy transformations are a complex phenomenon involving generational time frames as opposed to quick switches that could lead to costly setbacks.”
In another broadside aimed at electric vehicles, the Saudi energy minister highlighted past misconceptions about global energy demand growth — and specifically the notion of “peak oil.”
“I remember thought leaders within the industry telling us that oil demand will peak at 95 million barrels per day. Had we listened to them and not invested . . . imagine the tight spot we would be in today.”
“Let’s also remember that in many parts of the world, roughly three fourths of the electricity, which would also power electric vehicles, is currently generated by coal, including here in India. So you could think of any electric vehicle running in the streets of Delhi as essentially being a coal-powered automobile.”
“When it comes to renewables, the fundamental challenge of battery storage remains unresolved — a factor that is essential to the intermittency issue impacting wind and solar power. Therefore the more realistic narrative and assessment is that electric vehicles and renewables will continue to make technological and economic progress and achieve greater market penetration — but at a relatively gradual rate and as a result, conventional energy will be with us for a long, long time to come.”