Trade in sectors with high R&D and skill content was restricted by nontariff barriers, preventing productivity spillovers.2 The Single Market offered a way to remove these barriers, reverse the decline in economic potential, and bring more people back into work. Yet the Single Market was never just about this.
The direct impact on Japan’s economy is likely to be minimal, as its lending to countries in the region is inconsiderable, while exports to Europe account for only about 10 percent of the total. However, for China and the United States – the major destinations of Japanese exports – Europe accounts for about 20 percent of exports and Japan could, therefore, be indirectly affected.