Chapter I.   Japanese Foreign Policy in the Changing International Environment


Section 1. The Changing International Environment


1. International Developments


The international community is undergoing a major transition. The international order which has formed the postwar world is being forced to accommodate to these radically altered circumstances, and various trials and efforts are on the way.

Dialogue is now firmly a part of East-West relations centering on relations between the United States and the Soviet Union and the confrontational structure that has characterized the postwar world appears to be showing signs of change. Dialogue has become the norm in U.S.-Soviet relations since General Secretary Gorbachev came to power in March 1985 and the first U.S.-Soviet summit meeting in six years was held in November of the same year. Hoping not to reiterate the failure of the previous detente experienced in the 1970s, the United States is trying to integrate all aspects of its relationship with the Soviet Union and has defined the progress in the four areas of the bilateral relationship, arms control and disarmament, human rights, and regional problems as the criteria for progress in the overall relationship. The INF treaty to completely eliminate intermediate-range nuclear forces was signed in December 1987 and the Soviet Union completed its military withdrawal from Afghanistan in February 1989. At present, the United States and the Soviet Union are negotiating in the Strategic Arms Reduction Talks (START). In Europe, the Conference on Security and Cooperation in Europe (CSCE) process is being accelerated and visible steps are being taken to improve the human rights situation in the Soviet Union and Eastern Europe. Progress is also being made in the negotiations on Conventional Armed Forces in Europe (CFE) and the Confidence and Security Building Measures (CSBM) talks. With the more active exchanges of high-level visits between Eastern and Western Europe, there are heightened expectations that it might be possible to overcome the East-West division that has defined the international order in postwar Europe.


Map of GNP Shares in the World (1987)


Sino-Soviet relations are another element having a major impact upon the international order. Here too, the era of confrontation is over as General Secretary Gorbachev visited China in May 1989 and held a summit meeting with Deng Xiaoping, Chairman of the Central Military Commission - the first Sino-Soviet summit meeting in 30 years - in an effort to normalize relations between their two countries and parties.

With the continued lethargy in the socialist economies, the Soviet Union, China, and a number of East European countries have moved forcefully to implement economic reform. However, such events as the ethnic movements in the Soviet Union and the Chinese suppression of students and other citizens seeking democratization have proved that there is no easy and assured path to economic reform and its accompanying political reforms, and forces have appeared in some East European countries spurning reform. It is important to see what impact these developments will have on the shaping of the new international order.

Turning to regional issues, there are movements toward resolutions. While each regional conflict has its own inherent causes, the improvements in East-West relations and the Soviet military withdrawal from Afghanistan are bound to have an effect, directly and indirectly, on these conflicts. Agreement was, for example, reached on the Angola-Namibia problem in December 1988. Even on the Cambodian problem, efforts are being made to achieve peace and the International Conference on Cambodia was held in Paris in late July 1989.

The 1988 Seoul Olympics saw the participation of the majority of nations and regions of the world, and this was the first Olympic Games in 12 years that had the participation from both the Eastern and Western camps and other areas. In 1988 and 1989, South Korea's relations with a number of socialist countries were improved, including agreements to, for example, open reciprocal trade offices and establish diplomatic relations.

There is also movements toward shaping a new order in the world economy. Overall, healthy growth of the world economy has continued which indicates that the free-trade system at the heart of the international economy and the General Agreement on Tariffs and Trade (GATT) and the International Monetary Fund (IMF) which support this system have basically functioned effectively. However, there is still a need for the maintenance and strengthening of international policy coordination among the industrialized democracies in light of the heightened concern about inflation, huge external imbalances that are coming down too slowly, and increased pressures for protectionism. The vast expansion in world trade has made it imperative that we revise and strengthen the GATT regime established on the assumption that trade meant trade in goods, and the Uruguay Round has been convened to draft rules in such new areas as services, investment, and intellectual property rights. The emergence of the Asian newly industrializing economies (NIEs) has shown that discussions on managing the world economy can no longer be restricted to the industrialized countries alone, and the Organization for Economic Cooperation and Development (OECD) has begun a dialogue with the NIEs. At the same time, the situation remains grim for the developing countries, and conditions are deteriorating in the African and other Least Developed Countries (LLDCs). The debt problem in Latin American and some other middle-income countries has gotten worse to the point that it is now a critical issue affecting the sound development of the world economic and financial system and has even sparked social and political problems in some countries. Various efforts are taken to respond, positively through both bilateral and multilateral channels, to the debt problem and other problems in the developing countries. The ratification of the U.S.-Canada Free Trade Agreement, progress in EC market unification, and other moves for greater regional cooperation also bear watching as important developments affecting the shape of the future world economy.

There has recently been increased concern expressed over such global environmental problems as the decline in forest resources, destruction of the ozone layer, and global warming trend. These are issues that must be addressed by the international community as a whole, and active efforts are now in evidence toward resolution of these problems.


2. The Setting for the Changes in the International Community


There are a number of factors accounting for these changes in the international community - factors that interact closely in a complex relationship and manifest their impact in various forms across the entire spectrum of the international community including the political, military, and economic realms.


(1) While those countries that adopt market-oriented economic policies continue to enjoy sustained economic growth and rising standards of living for their people, the socialist countries and those developing countries that operate according to socialist principles are beset with economic stagnation and bottlenecks. Thus the socialist countries have begun putting relatively less emphasis on ideology, and this has in turn had a certain impact on the international community. Most socialist countries have been forced by their economic stalemates to look for new policies, and the citizens in many of these countries are now demanding an improved standard of living. Some East European countries, China and the Soviet Union have made economic development the central policy theme and embarked upon determined efforts for economic reform. The problem is that economic reform cannot succeed without concomitant political reform. As seen in the recent events in China, the socialist countries are now facing the very difficult problem of how to balance economic and political reform and how to achieve coherence with their ideological tenets.

The developing countries that attempted to build their economies based on socialist policies are now reevaluating their external relationships and appear more inclined to promote domestic reform.

Such trends reinforce the momentum for a peaceful international environment and foster both East-West dialogue and solutions to regional disputes.


(2) At the same time, the U.S. and Soviet superpowers are becoming relatively less important presences in the international community.

Although the United States was said to account for about half of world GNP immediately after World War II, this share was down to about 28% by 1988. In contrast, Japan and the countries of Western Europe have become more important presences in the international community, with the EC accounting for about 21% of world GNP and Japan about 12%. The EC countries are making steady progress toward market unification in 1992, have eradicated Euro-pessimism, and have a newfound confidence in the "European renaissance." Although the United States has experienced a relative decline in its presence, it remains the number one economic power in the world. In light of its vast and growing accumulation of scientific and technological capabilities, its all-round strength, its massive military might, and the great vitality inherent in the American society, it is clear that America will continue to be the leading industrialized democracy - as well it should.

The Soviet Union is a superpower by virtue of its military might, and it is that military might that has assured it a voice on the world stage. Although it is unthinkable that the Soviet Union would cease being a military superpower, Soviet economic stagnation and the rapid technological advances in the world seen in recent years have cast doubt upon the Soviet Union's ability to maintain the economic strength - especially in the scientific and technological fields and in improvement of productivity - necessary to support and upgrade this military power. In a way, perestroika represents an attempt by the Soviet leadership for resolution of this problem.

The relative declines experienced by the United States and the Soviet Union are accompanied by the relative declines in their ability to influence international developments and the increased influence now wielded by other nations and groups of nations; this multipolarization has served to destabilize the international political order.


(3) In a world where the balance of military power is maintained and deterrence holds sway, economic strength has come to be an increasingly significant aspect of international influence. It is the country with the most production capability, the most capital, and the most information that sits atop the world economy and has the biggest voice in the international community. This has had the effect of making economics more important to every nation, regardless of its political system or level of development.


(4) Reflected in industrial development, advances in science and technology hold the key to economic growth, and scientific and technological prowess, especially its production-related manifestations, is becoming increasingly important in the international community. Realizing this, nations are devoting more and more of their resources to research and development. The Eastern countries now realize quite clearly that scientific and technological backwardness equates to economic and military inferiority. With the focus on R&D, increasing attention has also begun to be paid to the protection of intellectual property rights. There also have appeared the problems of charges that other countries are reaping the technological harvest without sowing the scientific seeds and of techno-nationalism and techno-protectionism. This also raises the issues of promoting international research cooperation and basic research. The rapid progress in civilian technological development and the sophisticated dual-use technology that results has given rise to the question of civilian technologies being diverted to military uses, and within the context of East-West relations complicates the Coordinating Committee for Multilateral Strategic Export Controls (COCOM) restrictions on the transfer of military technology to communist-bloc countries.

As science and technology becomes an increasingly integral part of international politics and economics, it is increasingly important to establish an overall foreign policy for science and technology.


(5) The advances in science and technology have also given international economic activities greater breadth and depth as information, people, goods, and capital now move faster, farther, and in greater volume than ever before. This phenomenon - the phenomenon of the borderless economy - is especially pronounced among the industrialized democracies and the market-oriented developing countries. As the world economy becomes more and more interdependent in all of its many aspects, it is becoming impossible for any nation to seek to promote affluence secluded from world events. A country wishing economic development must expand its economy by taking active part in the world market, competing according to market principles, and providing and procuring quality products and development capital worldwide.

At the same time, however, the borderless economy entails friction in a variety of domestic and international realms. One problem will be the struggle between globalism and nationalism - the desire to participate in global markets versus the desire for sovereignty. Even as nations become more aware that an increasingly integrated world market is essential to their own economic vitality and development, it should be remembered that this process of integration will not always go smoothly and that there is a residual possibility that the tide could shift against integration.


(6) One recent international trend worth noting is the increasing importance of the Asia-Pacific region. In 1985, total trans-Pacific trade exceeded total trans-Atlantic trade for the first time ever. (Note) Neighbors across the Pacific, the United States and Japan together account for almost 40% of world GNP. The Asian NIEs have achieved spectacular economic growth - over 10% per annum in 1987 in all of the NIEs except Singapore (which was 8.8%). The average rate of growth for the Asia-Pacific region as a whole was 6.3% in 1987.(Note)

There is increasing horizontal division of labor among the Asian countries, including the NIEs and the ASEAN countries. Economic development in the Asian NIEs and the ASEAN countries is an important source of development hope for the developing countries. Just as it is imperative that this region's major contribution to world economic vitality be duly recognized, so is it expected that sustained growth in Asia can contribute to strengthening the international economic framework and sustaining world economic vitality. At present, a variety of initiatives are being taken to consolidate Asia-Pacific cooperation and hence to promote regional development.


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Note: Trans-Pacific trade is defined as the total of all trade between the U.S., Canada, and Latin America on one side and Japan, Australia, New Zealand, the ASEAN countries, China, Korea, Hong Kong, and Taiwan on the other.


Note: This is the average of the growth rates recorded by the ASEAN countries minus Brunei and Singapore, the Asian NIEs, Japan, the U.S., Canada, Australia, and New Zealand.