Presentation by Mr. Akira Miwa (Japan's SOM)

We highly appreciate a marvelous job done by the review team. Since it is the first strengthened peer review, the work must have been challenging and intellectually stimulating. Our special thanks go to Mr. Yueu Pau Woo who came to Tokyo and went through an extensive interview with the representative of various government agencies. His report is a fair assessment of Japan's efforts. We also value the active participation by many economies. We hope that this review serve to clarify the Japanese IAP, and also clarify, to some extent, the influence, value added of APEC in domestic policy formulation.

The expert introduced very interesting analytical tools, which are "weak test" and "strong test". We understand both tests are equally valid. APEC has the Bogor goal, that is, free and open trade by 2010 for developed economies and by 2020 for developing economies. To attain the goal, there exist various avenues available for each economy to follow. As the expert correctly points out, in case of Japan and, I presume, also in other economies, these are WTO, FTA, domestic economic structural reform and, of course, our APEC initiatives. So long as progress towards the goal is continued to be made, the choice of avenue is of second importance. In this sense, "weak test" is a valid analytical tool. On the other hand, "strong test" is a valid tool to assess the progress made on a voluntary basis. Since voluntarism is the inherent approach of APEC, "strong test" serves us well to identify areas where we can expect concrete achievements based on APEC initiatives. Here we have to be reminded that for APEC to remain relevant, APEC needs to continue to produce to concrete achievements. The expert tentatively suggests that trade facilitation is one of prominent areas for APEC. I share this view. In short, "soft test" is valid to measure progress towards the goal, whereas "strong test" is valid to identify APEC role on the way to the goal.

Having said this, I would like to reiterate that Japanese import-weighted applied tariff rate has fallen from 5,0% in 1996 to 2,5% in 2001, very low among economies in the region. The question of the remaining items with higher tariff rates should be addressed in the WTO. On the trade facilitation, I would like to refer to one concrete measure we took based on APEC initiative, in the area of mobility of business people. Japan has extended validity up to 5 years of 90 days multiple-entry visa for business people from the APEC region. We are now in the midst of the efforts to participate in the ABTC in the near future.

Now, I would like to come back to the questions of avenues, or driving forces which would lead member economies to the Bogor goal, i.e., WTO, FTA, structural reform and APEC initiatives. In our joint efforts towards its goal, we must strive to exploit every avenue available. And from time to time, we have to examine whether APEC is really doing so.

Firstly, as for WTO, APEC has been rather successful in our supportive role. WTO related capacity building activities, the concrete outcome of last MRT, are valuable contribution of APEC, which are well recognized and appreciated outside of APEC.

Secondly, as for FTA, there has not been a major work done in APEC. However, if we can regard FTA as one of major driving forces for the Bogor goal, then APEC should encourage FTA in the region. I know that there are still divergent views as to merit and demerit of FTA. But the fact is that FTA is becoming more and more one of the main features in the region today. It is not the correct attitude for APEC to shy away from the reality. APEC has to address its reality.

Thirdly, as the report correctly points out, the economic structural reform is an important driving force in Japan. This is the most important political agenda Koizumi administration faces today in order to reinvigorate the economy. Our colleague Dr. Shiozawa from the Cabinet office will make a presentation on this question. As I understand that leaders in other economies are also pursuing their own structural reform, I think it only natural that the leaders compare notes on their efforts during free discussion of the Leaders meeting.

Lastly, but not the least, concerning the APEC initiatives. This is the real test for APEC. In the area I so far mentioned, what is expected from APEC is a supportive role. However, since it was APEC who set the Bogor goal, APEC should play its own unique, major and credible role in the pursuit of this goal, where achievements are very much visible and appreciated by the community. During the peer review process up to 2005, we can learn the actual working of APEC in domestic policy formulation and, based on the knowledge, I hope we will be able to define and give prominence of such a unique, major and credible role for APEC.