Brexit: Japan Raises Concerns Over Impact On Its Cloud And Tech Businesses

Japanese tech companies may leave the UK if Brexit negotiations are not transparent, warns Japan’s foreign ministry

The UK’s decision to leave the European Union has prompted Japan’s foreign ministry to raise concerns about the Brexit’s potential affect on the operations of Japanese cloud and data companies in Britain and Europe.

In an open letter to the UK’s government, Japan’s foreign ministry asked for transparent negotiation on how the UK plans to leave the EU and provide advanced warnings on any changes that will affect companies operating in both the UK and EU member states.

Japan is particularly concerned over the affect the Brexit could have on data protection legislation, currently in the process of being defined by the General Data Protection Regulation (GDPR), which instructs how companies should protect, handle and transfer data originating from within the EU’s borders.

“Japanese businesses have concerns that the free transfer of information might be impaired once the UK releases itself from the EU’s data protection legislation and establishes its own legislation,” the letter said.

“Once the UK is no longer bound by the EU’s data protection legislation, the smooth cross-border transfer of personal data between the UK and the EU may become difficult.”

Making demands

cloud securityTo address this concern Japan is requesting that the UK maintains the current levels of information protection and the free transfer of data if it sets up its own take on the GDPR.

It also requested that the Brexit negotiations “establish close cooperation on the facilitation of data transfer among Japan, the UK and the EU”.

If such negotiations do not happen or leave Japanese businesses at a disadvantage, the letter warned there could be an exodus from companies like Hitachi and Toyota with facilities in the UK to the European mainland.

“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.”

With Japanese companies providing jobs to more than 100,000 workers in the UK, the impact of such a departure on employment and the economy could be severe indeed.

Cloud control

EU Brexit referedumIf Britain decides that it does not want to participate in the GDPR, it will need to come up with its own data protection legislation.

For companies running cloud-based services in the across the EU, this could mean the need to adjust their operations to fit both EU and UK rules on handling data.

Given the Safe Harbour ruling, which had allowed EU data to be stored in data centres beyond its borders, was scrapped earlier this year any further changes to data regulations could spell major headaches for cloud companies both operating in Europe and the UK.

As such, it is not overly surprising that Japan should voice its concerns, though it has been fairly public about them.

The impact of the Brexit has been much discussed, but it is still difficult to forecast its true impact until Article 50 is invoked and the nation officially begins the two-year process of annexing itself from the EU.

Alongside possible changes to data protection regulations, for the technology world there is a potential it could loose out on easy access to skilled workers from Europe’s mainland, be required to work within new trade agreements and tariffs, and face issues over research work that involves multiple EU nations.

The potential for such changes also prompted Japan’s foreign ministry to request that the UK’s Brexit negotiations aim to ensue its companies have access to the workers, funding, and trade agreements they currently enjoy.

Time will tell how the Brexit truly impacts the technology industry, both in the UK and further afield. But while the Brexit may have dented the confidence of the UK technology industry, it has not stopped Amazon from pressing on with building its UK data centres.

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