Japan's Official Development Assistance White Paper 2007
Next PageMain Text > Part II ODA RECORD FOR FY2006 > Chapter 2 Details about Japan's Official Development Assistance > Section 2. Measures for Each of the Priority Issues > 1. Sustainable Growth > (5) Facilitating Trade and Investment
(5) Facilitating Trade and Investment
<Current Status>
Because one key to sustainable economic growth is the private sector taking on a leading role, it is important to promote and stimulate the activities of the private sector, including trade and investment. However, there are a vast number of policy measures that the governments of developing countries must carry out in order to develop an investment climate to attract the private sector. For many poor countries it is difficult to resolve this issue by themselves. Therefore, assistance from donor countries or based on various international frameworks is necessary.
<Japan's Efforts>
From this perspective, Japan has been providing assistance in areas such as infrastructure development, institution building, and human resource development though such means as official development assistance, and Other Official Flows (OOF).
In FY2006 Japan approved the provision of loan aid for Tanzania to support the plan to improve an international trunk road.10 This project is expected to develop a foundation for sustainable economic growth, and vitalize the regional economy by means of improving the international trunk road connecting Tanzania and Kenya. Moreover, it is also anticipated to promote economic integration and economic vitalization within the East African Community (EAC) region over the medium to long-term. This project is co-financed with the African Development Bank (AfDB). Japan supports the Tanzanian side of the road, while AfDB is providing assistance to the Kenyan side and a part of the Tanzanian side.
International highway planned for improvements running between Tanzania and Kenya (Photo: JBIC)
<Developments in the WTO Doha Round>
Along with direct investment from overseas, trade has great importance to the development of developing countries. In the World Trade Organization (WTO), an international organization that works to maintain and strengthen the multilateral trading system, developing countries' presence has gained in importance. In fact, roughly three quarters of the 151 WTO members (as of October 2007) are developing countries, and 32 of them are Least Developed Countries (LDCs). For this reason, the economic growth and poverty reduction of developing countries through trade has come to be a core theme at the Doha Round negotiations which are currently underway.
As economic conditions vary greatly among WTO members in terms of trade volume and gross national income (GNI), various adjustments need to be made in order to conduct trade under a common set of rules: the WTO agreements. To this end, the WTO has formulated technical assistance plans to enhance the capacity of developing countries to implement the WTO agreements and to participate in negotiations, and has been holding seminars and dispatching experts. To assist these efforts, Japan has extended approximately ¥480 million to the Doha Development Agenda (DDA) Global Trust Fund, which was set up to help implement the technical assistance plan since starting the Doha Round negotiations in 2001. In addition, as for bilateral assistance, Japan implemented approximately 1,600 Trade Related Technical Assistance/Capacity Building (TRTA/CB) projects in FY2006, including these related to WTO agreements. As support for the Integrated Framework (IF), which is a framework for trade-related technical assistance for LDCs led by six international organizations including the WTO, Japan donated ¥20 million to the IF Trust Fund (IFTF) in 2006. Furthermore, in the interest of supporting LDCs mainly in Africa, Japan donated approximately ¥8 million to the trust fund of the International Trade Centre (ITC) in 2007.
As for the Doha Round negotiations, major countries failed to reach a consensus over points for agriculture and non-agricultural market access (NAMA). As such, the negotiations were suspended temporarily at the end of July 2006. Japan has traditionally touted the importance of providing support for the development of developing countries through the promotion of trade. In light of this, the suspension of the negotiations was not desirable for LDCs and other developing countries, as well as for Japan, which has regarded the multilateral free trading system as the foundation of its trade policy, and which has also been actively contributing to an early conclusion of the current Round in order to further develop and strengthen the multilateral trading system. For this reason, Japan made a number of appeals for the early resumption of the negotiations. With efforts such as those by Japan, full-fledged negotiations were resumed in January 2007, with various consultations vigorously carried out towards the early and successful conclusion of the negotiations.
<Development Initiatives for Trade>
Currently, discussion over Aid for Trade (AFT) is being actively carried out through various international forums such as the WTO, World Bank, and OECD. Japan announced the "Development Initiative for Trade" prior to the "WTO Hong Kong Ministerial Conference" in December 2005 as a comprehensive initiative for AFT. The "Development Initiative for Trade" is a comprehensive package of assistance and measures designed to promote trade and thus contribute to the development of developing countries. The package covers the assistance in each stage of trade - "Produce," "Sell," and "Buy." The package thereby provides comprehensive and tailored assistance by combining various programs through development assistance and other relevant measures such as the provision of Duty-Free and Quota-Free market access to the LDCs (see also Box I-1 (page 24) of Japan's Official Development Assistance White Paper 2006 for details on the "Development Initiative for Trade"). Japan intends to steadily advance this "Development Initiative for Trade", regardless of the progress of the Round negotiations of the WTO.
See Part I Chapter 1 Section 2 also for details
In order for developing countries to improve their market access, the importance of improving their export capacity and competitiveness has been stressed on an international basis, especially through the Generalized System of Preferences (GSP) which adopts lower tariff rates than general rates for their exports. Improving market access for LDCs through DFQF treatment in particular has been an agenda not only in the trade negotiations in the WTO, but also in the arena of the UN, such as in the MDGs and the Programme of Action for the Least Developed Countries for the Decade 2001-2010.
In April 2007 Japan expanded the coverage of the goods subject to DFQF to LDCs from 7,758 to 8,859 tariff lines. As a result, the coverage has increased to about 98% defined at tariff line level, thus achieving the 97% agreed in the Hong Kong Ministerial Declaration in December 2005 as the goal for the immediate future. In terms of the import value the coverage is well over 99%. For its part, Japan will continue to ensure the market access for LDC countries through such measures.
See Part I Chapter 1 Section 2 for details
"One Village One Product" Movement
The "One Village One Product" movement began in 1979 in Oita Prefecture. It aims to revitalize the regions by promoting products unique to the region. The "One Village One Product" movement in Asian and African countries adopts an idea from this movement in Japan. It is one method developed to achieve endogenous economic growth in developing countries through trade. The Government of Japan actively supports the "One Village One Product" movement in developing countries. For example, as part of the Development Initiative for Trade, the Ministry of Economy, Trade and Industry and the Japan External Trade Organization (JETRO) are taking the lead in deploying the "One Village One Product" campaign. Specifically, it has held "One Village One Product Markets," which are airport displays at major domestic airports, an African Fair, and other events.
The airport displays ("One Village One Product" Markets) were held from March 2006 to March 2007 11 at airports in Narita, Kansai, Chubu, Kobe (run by the Manufactured Imports and Investment Promotion Organization, (MIPRO)), Haneda, Itami, and Fukuoka. The markets displayed and sold handicrafts, textiles, processed foods, accessories, and related products from developing countries. The markets ran a booming trade, with more than 360,000 people having visited them. Furthermore, they served as an excellent opportunity to introduce the efforts of the Japanese Government when leaders and cabinet ministers from African and Asian countries and heads of international organizations visited Japan.
In addition, the African Fair was held from September 2-4, 2006. Through product displays, sales, and events for 39 African countries the fair increased the visibility of Africa while also providing support for the expansion of exports of African products to Japan. The fair was a success, as evidenced by the 16,000 people that attended and the 500 or so business discussions which took place. The African Fair is planned to be held in 2008 in conjunction with TICAD IV so as to assist development in Africa through trade promotion. What is more, in addition to these events, from August to September 2006 the Association for Overseas Technical Scholarship (AOTS) conducted "One Village One Product" training, in which about 80 trainees from 45 developing countries took part.
On top of this, the Japanese Government is also working on the "One Village One Product" movement via support through international organizations. Japan conducted a variety of activities as part of support for the Mekong region, which includes Thailand and Cambodia, through the Asian Productivity Organization (APO) in 2006. These activities included the establishment of the "One Village One Product" Teleconference,12 training in Oita and Thailand,13 and the National Conference on "One Village One Product" movement14 in Cambodia. Through these it has contributed to the diffusion of the "One Village One Product" project.
One Village One Product market at Narita Airport (Photo: JETRO)
The "One Village One Product" movement began in 1979 in Oita Prefecture. It aims to revitalize the regions by promoting products unique to the region. The "One Village One Product" movement in Asian and African countries adopts an idea from this movement in Japan. It is one method developed to achieve endogenous economic growth in developing countries through trade. The Government of Japan actively supports the "One Village One Product" movement in developing countries. For example, as part of the Development Initiative for Trade, the Ministry of Economy, Trade and Industry and the Japan External Trade Organization (JETRO) are taking the lead in deploying the "One Village One Product" campaign. Specifically, it has held "One Village One Product Markets," which are airport displays at major domestic airports, an African Fair, and other events.
The airport displays ("One Village One Product" Markets) were held from March 2006 to March 2007 11 at airports in Narita, Kansai, Chubu, Kobe (run by the Manufactured Imports and Investment Promotion Organization, (MIPRO)), Haneda, Itami, and Fukuoka. The markets displayed and sold handicrafts, textiles, processed foods, accessories, and related products from developing countries. The markets ran a booming trade, with more than 360,000 people having visited them. Furthermore, they served as an excellent opportunity to introduce the efforts of the Japanese Government when leaders and cabinet ministers from African and Asian countries and heads of international organizations visited Japan.
In addition, the African Fair was held from September 2-4, 2006. Through product displays, sales, and events for 39 African countries the fair increased the visibility of Africa while also providing support for the expansion of exports of African products to Japan. The fair was a success, as evidenced by the 16,000 people that attended and the 500 or so business discussions which took place. The African Fair is planned to be held in 2008 in conjunction with TICAD IV so as to assist development in Africa through trade promotion. What is more, in addition to these events, from August to September 2006 the Association for Overseas Technical Scholarship (AOTS) conducted "One Village One Product" training, in which about 80 trainees from 45 developing countries took part.
On top of this, the Japanese Government is also working on the "One Village One Product" movement via support through international organizations. Japan conducted a variety of activities as part of support for the Mekong region, which includes Thailand and Cambodia, through the Asian Productivity Organization (APO) in 2006. These activities included the establishment of the "One Village One Product" Teleconference,12 training in Oita and Thailand,13 and the National Conference on "One Village One Product" movement14 in Cambodia. Through these it has contributed to the diffusion of the "One Village One Product" project.
One Village One Product market at Narita Airport (Photo: JETRO)
<Promotion of Economic Partnerships>
In recent years, Japan has been actively promoting economic partnerships through the Economic Partnership Agreements (EPAs). In addition to traditional trade in goods, these also cover investment rules, the liberalization of trade in services, the movement of natural persons, government procurement, the protection of intellectual property rights, competition policies, improvement of business environments, and more. These not only advance economic partnerships between Japan and the partner countries, but also have significant implications in terms of contributing to the economic growth of the countries concerned. The Medium-Term ODA Policy states Japan's intention to strategically provide development assistance in order to make more impact of EPAs even larger by supporting the improvement of trade and investment environments and the economic infrastructure of developing countries and regions, including the Asian region with which Japan has been promoting EPAs.
Specifically, Japan has been providing assistance in institution building related to trade and investment, support for human resources development, assistance in establishing domestic legal systems related to areas such as the protection of intellectual properties and competition policies, assistance in improving enforcement and enhancing capacities in the area of customs and immigration control, and assistance in areas such as ICT, science and technology, SMEs, energy, agriculture, tourism, and the environment. As part of the cooperation related to the EPA with Thailand which entered into force on November 1, 2007, progress is being made on developing a structure for conducting research by the Japanese and Thai public and private sectors. This is being done to enable Thailand to develop human resources by themselves in supporting industries for the automobile and parts industry, which is its priority. Through the cooperation of JICA, JETRO, and others, operational management of the overall project will be provided, equipment will be contributed, and experts will be dispatched to advise the government. In addition, the fostering of Thai leaders and the development of a system for measuring proficiency will be carried out through the leadership of Japanese companies which have local offices in Thailand. Furthermore, cooperation between agricultural cooperatives in both countries is advancing, and Japan is supporting training to improve the quality of Thailand's agricultural products, as well as the fostering of leaders in agricultural villages.
In addition, see Part I, Chapter 1, Section 2 for details on the EPA with Malaysia, and Part II, Chapter 2, Section 3 for details on the EPA with Mexico.
Japan will ensure consistency with both development and trade policies through bilateral support and cooperation with international organizations. It will also proactively cooperate for the reduction of poverty and sustainable growth by designing multifaceted free trade structures for developing countries from a comprehensive trade and development perspective, as well as by strengthening economic partnerships.
Column 6 A Cup of Coffee from Mexico to the World
— Coffee-related technical assistance for the Cooperative Producers Union Maya Vinic —