Is the EU looking east as a result of Brexit?
Brexit has been a long and bumpy road so far, and it’s a smart bet there are still twists and turns ahead before the UK and the EU can reach a satisfactory deal.
But the EU may already be considering its options further afield if relations with the UK remain rocky. In July, a landmark trade deal between the EU and Japan took another step forward. The agreement, which the two parties signed in Tokyo, covers one-third of global GDP and approximately 600 million people.
Does the trade partnership signal a new direction for the EU? Can we expect the region to explore stronger relationships with Asian economies? Will these changes affect corporate governance professionals? Let’s examine some of these questions.
Japan deal arrives at a fortuitous time
Negotiations for the EU-Japan Economic Partnership Agreement (JEEPA) began in 2013, so they are not a direct result of the EU Referendum. Nevertheless, the deal comes at an interesting time in the political landscape.
The EU is facing trading uncertainty due to both Brexit and US president Donald Trump’s increasingly protectionist policies. So what does JEEPA mean for import and export operations across Europe and Japan?
Nearly all tariffs on EU goods exported to Japan will eventually be eliminated under the agreement, saving European businesses more than €1 billion in customs duties each year. The changes are expected to simplify trade across many lucrative EU-Japan sectors, including:
- Agriculture and food products.
Wine and other alcohol.
Leather and shoes.
Meanwhile, Japan has adopted various international standards in recent years, which will prevent European goods needing modification or reassessments to pass Japanese regulations. This should make trade easier for exporters of motor vehicles, textiles, medical devices and other products.
The current state of Brexit
Some of the political posturing that has been the hallmark of Brexit negotiations seems to have died down recently. The increased possibility of a hard Brexit following the fallout from the Chequers proposals in July has perhaps softened relationships between the UK and the EU.
A hard Brexit could hamper the UK economy, and a recent Bank of England survey cited political problems as the biggest systemic risk to the country’s financial system. Eight out of 10 respondents who mentioned political tensions as a major concern specifically mentioned Brexit.
That said, EU chief negotiator Michael Barnier indicated on Monday (September 10th) that a Brexit agreement could be reached within six to eight weeks if both sides were “realistic” in their ambitions.
Europe may be tossing UK prime minister Theresa May a lifeline after it emerged that as many as 80 Conservative Party politicians aim to torpedo the Chequers plan if it goes to a House of Commons vote later this year.
Will trade deal change recruitment landscape?
The EU-Japan deal is expected to come into force in early 2019, just as the UK is scheduled to leave the union.
Our 2018 European Governance Market Report highlighted the impact that Brexit is already having on recruitment throughout multiple sectors across the continent. Fears of an acrimonious split remain at the forefront of most people’s minds, given how this could negatively affect business performance.
Stronger partnerships with Asian economies could alleviate some concerns (and considerable costs) for European businesses, although these markets have risks and challenges of their own.
Foreign language skills are already sought-after among employers, and corporate governance professionals who have experience in Asian markets could soon find themselves in high demand.
Japanese and Mandarin are currently the highest-paying language skills in the UK, according to Adzuna research. However, whether or not British organisations will be able to piggyback off the Japan deal is likely to depend on the status of Brexit negotiations when JEEPA is finally ratified.
As with many of the issues surrounding Brexit, only time will tell how the recruitment landscape reacts to a European shift towards Asian trade.
Our Market Reports combine a review of the prevailing conditions in the European corporate governance recruitment market with key insights from Barclay Simpson’s expert consultants.
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