II.III. CHALLENGES AHEAD FOR THE UK-JAPAN BILATERAL TRADING RELATIONSHIP

‘Beyond the Galapagos Syndrome ’ : Mapping the Future of UK-Japan Economic Cooperation

Luke Cavanaugh (ed.), Olivia Bisbee, Owain Cooke, Kezzie Florin-Seon, Elizabeth Steel

to the Japanese market, Japanese businesses have long been involved in Britain. Japan has focused on investment and business in the UK as a hub for its European trade since the 1980s, and around 40% of its total foreign direct investment (FDI) in Europe is concentrated in the UK. Over 800 Japanese businesses operate in the UK, ranging from large manufacturing firms such as Fujitsu to smaller SMEs. 41 Japanese firms are considered reliable partners for Britain, especially as other economic powers such as China have more complicated political relationships with the UK. This was highlighted in mid-2021, when the British government banned Chinese telecommunications giant Huawei from supplying the equipment for British 5G wireless networks, and instead approached Japanese technology companies NEC and Fujitsu as potential suppliers, along with reaching out to companies in Europe.

42 Potentially indicating future cooperation, NEC has begun establishing an Open RAN (technology which facilitates the adoption of 5G for mobile providers) promotion centre in the UK, a development facilitated by CEPA provisions on free data flows that will be discussed further in this paper.

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The UK and Japan have been, and look likely to continue to be, strong trading partners who share values of free, open and rules-based trade. Liz Truss, former British International Trade Secretary (current Foreign Secretary), stated at the UK-Japan Free Trade Summit in January 2020 that ‘Japan and the UK are natural partners… As island nations, we both have to trade in order to improve the prosperity of our people and to secure the goods that we need… As fellow democracies, we have a strong shared interest in ensuring trade does not

41 ‘Brexit: Japan ‘would welcome’ UK to TPP says Abe’ (BBC News, 8 October 2018) https://www.bbc.com/news/uk-politics-45780889 accessed 17 October 2021 42 ANI, ‘UK seeks Japan’s help to develop its 5G wireless networks’ (Economic Times Telecom, 21 July 2021) https://telecom.economictimes.indiatimes.com/news/uk-seeks-japans-help-to-develop-its-5g-wireless-networ ks/77081468 accessed 17 October 2021

43 ‘UK-Japan digital cooperation: 5G and beyond’ (Chatham House, 9 March 2021) https://www.chathamhouse.org/events/all/research-event/uk-japan-digital-cooperation-5g-and-beyond accessed 17 October 2021

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