Ensuring World Peace and Stability

The international situation is undergoing such drastic changes as the end of the Cold War and the collapse of the Soviet Union. There are also noteworthy moves toward the relaxation of tensions in the neighboring areas of Japan. On the other hand, the situation is still fluid, since there are still unresolved questions in this region, such as the issues of the Northern Territories and the Korean Peninsula, in addition to such unsettling factors as the Russian military forces in the Far East and the suspicion of nuclear development in North Korea.

The situation in the countries of the former Soviet Union, including Russia, is still fluid and yet to be settled. The situation concerning the Russian military forces is unclear. Military activities in the countries of the former Soviet Union, proliferation of weapons of mass destruction, including nuclear weapons, and their technologies, and movements toward increased arms exports by Russia are a cause of concern.

The Russian forces are faced with various problems such as the social security of servicemen, the declining manned rate caused by draft evasion, and the difficulty in securing a required level of performance of weapons due to cuts in military expenditure. It has already been decided that Russia will reduce its military personnel to less than 1.5 million in the future.

As for the developments of the Russian forces in the Asia-Pacific region, there is a diminishing trend of warship and warplane activities and large-scale military exercises. The number of their ground forces divisions will continue to be cut, and the withdrawal from Mongolia has been completed. Russia has reduced the number of its warships. The withdrawal from the military facilities at Cam Ranh Bay has progressed, though it announced that it had no intention of pulling out completely, and it would maintain some forces there. As for its air force, the number of combat aircraft has been reduced.

In spite of the trend toward quantitative reduction of its armed forces, Russia continues to deploy new-model armaments in the Asia-Pacific region. Moreover, some of the large amount of armaments, transferred to the East of the Ural Mountains in connection with the Conventional Forces in Europe (CFE) Treaty (Note), seem to have been deployed in the region, thereby contributing to the modernization of the military forces. Furthermore, an enormous stockpile of arms including nuclear weapons still remains in the Far East region. With the uncertainties surrounding its military, the Russian Far East forces constitute a destabilizing factor for the security of this region.

Against the backdrop of the changes in the security environment and its growing fiscal deficits, the United States is promoting consolidation, integration and rationalization of its military forces. Assuming that the security environment will improve, it plans to reduce its military forces by about 25 percent of the FY 1990 level by FY 1995. The gradual reduction for the U.S. forces in the Asia-Pacific region, excluding Guam, has started since 1990, in which 135,000 personnel were reduced. The first phase reduction was completed at the end of 1992. In November 1992, the U.S. forces completed their withdrawal from the Philippines following the Philippine Senate's vote against the new U.S.-Philippines Friendship Cooperation Security Treaty (which was to allow the U.S. Naval Base at Subic Bay to remain for the next 10 years) signed in August 1991. As a result, together with the first phase reduction, approximately 25,000 U.S. military personnel have been reduced from the Asia-Pacific region. However, the U.S. defense strategy in the Asia-Pacific region is based on bilateral relations with its allies and forward deployment of U.S. forces, and the U.S. commitment to engaging itself in peace and stability in this region remains unchanged.

Under the basic principle of "following the general trend of economic construction," China continues to promote modernization of its defense capabilities as one of its "four modernizations" policy. It has been trying to modernize various armaments in addition to carrying out institutional reforms such as reorganization of military forces resulting in a reduction of army personnel by 1 million after 1985. Communist Party General Secretary Jiang Zemin stressed in his report to the 14th National Party Congress in October 1992, the need to strengthen capabilities in modern warfare. The recent China's purchase of Russian Su-27 fighter planes is seen as a part of this modernization. Some Southeast Asian countries see with concern China's enhanced military capability in connection with moves regarding the territorial rights to the Spratly Islands. Thus, there is a need to pay careful attention to future developments.

In the Korean Peninsula, moves toward the relaxation of tensions have been seen in developments such as the simultaneous admission of the two Koreas to the United Nations in September 1991, and the "agreement concerning the reconciliation, non-aggression, exchanges and cooperation between the South and North" effective in February 1992. However, since the end of 1992, bilateral dialogue has reached an impasse and more than 1.4 million ground forces still confront each other along the demilitarized zone.

In addition, the suspicion over the reported North Korea's development of nuclear weapons is a matter of grave concern for the security of the Asia-Pacific region. North Korea ratified the Safe-guards Agreement with the International Atomic Energy Agency (IAEA), and based on this, the IAEA has made five ad hoc inspections. The North also concluded with the South the Declaration on Denuclearization. However these measures have not removed the suspicion of North Korea's nuclear weapons development, and it is important to continue to call for North Korea's responsible actions in cooperation with the countries concerned. Another worry concerns reported North Korean development of new types of missiles with a 1,000 kilometer range.

As for Cambodia, the "Agreements on a Comprehensive Political Settlement of the Cambodia Conflict (Paris Peace Agreements)" were signed in October 1991. Under the supervision of the United Nations Transitional Authority for Cambodia (UNTAC), the peace process has begun toward general elections scheduled for May 1993. As of December 1992, the Pol Pot faction had not entered into the second phase (a process of disarming and demobilizing), and the situation remains fluid as the election approaches.

In the South China Sea, China, Taiwan, Vietnam, Malaysia, the Philippines and Brunei continue to be involved in dispute over territorial claims on the Paracel and Spratly Islands. Since 1990, three informal workshops have been held by the Indonesian Government concerning this issue. In July 1992 the 25th Association of Southeast Asian Nations (ASEAN) Ministerial Meeting also took up the issue, and a "Declaration Concerning the South China Sea" was issued calling for a peaceful solution to the issue and restraint by the countries concerned. China partially supported this Declaration, and Vietnam announced its full support.

Furthermore, the activities of the Indian Navy have drawn the attention of neighboring countries, and there is a need to continue to pay close attention to the strategic environment of the Indian Ocean.

Japan's security policy consists of three pillars: maintaining the Japan-U.S. Security Arrangements; securing its own defense capability; and making diplomatic efforts to secure stability in international politics.

Although the East-West Cold War has ended with the collapse of the Soviet Union, the importance for Japan of the Japan-U.S. Security Arrangements remains unchanged in spite of the changing international situation.

First, the international environment is still abundant with uncertainties. In order for Japan, with a minimum self-defense capability based on its three non-nuclear principles, to enjoy peace and prosperity, the U.S. deterrence based on the Japan-U.S. Security Arrangements is essential.

Second, the Japan-U.S. Security Arrangements constitute the core of the Japan-U.S. alliance. This alliance lays the political basis for cooperation between the two countries in assuming their roles and responsibilities. The extensive U.S.-Japan cooperative relations anchored by the Japan-U.S. Security Arrangements are also instrumental in securing world peace and stability.

Third, the U.S. presence in the Asia-Pacific region serves as a stabilizing factor for the region. The Japan-U.S. Security Arrangements ensure this U.S. presence and are an indispensable foundation to promote peace and prosperity for the whole Asia-Pacific region.

Fourth, the Japan-U.S. Security Arrangements also serve to give international credibility to Japan's basic policy of not becoming a military power capable of threatening other countries. They thus constitute an essential basis for developing relations between Japan and the neighboring countries of the Asia-Pacific region.

In order to maintain the peace and security of Japan, it is imperative for Japan to improve its self-defense capability as well as to ensure effective and smooth management of the Japan-U.S. Security Arrangements.

Japan, under its Peace Constitution, has been developing a moderate yet effective defense capability based on the basic principle of maintaining an exclusively defense-oriented policy and of not becoming a military power capable of threatening other nations. Currently, in accordance with the "mid-term Defense Program" (from FY 1991 to FY 1995), efforts are underway to set up a moderate yet effective defense capability. In December 1992, the Government of Japan, in light of the changing international situation, revised the program earlier than "after its third year" as stipulated in the program. This revised program reduced the total defense budget by \580 billion to about \22.17 trillion in FY 1990 prices.

Admittedly, some Asian countries are concerned that Japan might become a military power. Thus, it is important for Japan to continue explaining its defense policy, including its exclusively defense-oriented policy, at every opportunity.

As the international community today is seeking to build a new international order, diplomatic efforts to ensure international stability are becoming increasingly important.

In light of ensuring its own security, it is crucial for Japan to play the following role in an effort to secure the long-term stability of the Asia-Pacific region: making further diplomatic efforts to solve outstanding issues such as the Northern Territories and the Korean Peninsula problems, conducting region-wide political dialogue to enhance the sense of reassurance in this region and promoting economic development of the countries in the region through its multi-faceted diplomatic efforts.

Japan is extending cooperation to various international efforts to maintain peace and security, such as sending personnel to the Peace-keeping Operations in Cambodia and trying to persuade the Pol Pot faction to cooperate with UNTAC. Japan is also taking an active part in the international efforts for arms control and disarmament as well as non-proliferation. It took the initiative in establishing the U.N. Register of Conventional Armaments, made a positive contribution to the early establishment of the Chemical Weapons Ban Treaty, and is working with the U.S., the EC and Russia to establish the International Science and Technology Center to prevent an outflow of scientists of the former Soviet Union involved with weapons of mass destruction. The continuation of these efforts will contribute to improving the environment surrounding Japan's security directly and indirectly. They are important agenda items of Japan's foreign policy from the viewpoint of assuring Japan's national security, as well as fulfilling its responsibilities in the international community.

As the general situation in the Asia-Pacific region is described in Chapter 3, Section 1, there are four particularly important elements for the peace and prosperity of this region: first, maintenance of the presence and engagement of the United States; second, diplomatic efforts for the solution of conflicts and confrontation; third, promotion of region-wide political and security dialogues; and fourth, promotion of economic development in the region.

In the Asia-Pacific region, the presence of the U.S. forces and its engagement are widely recognized as a stabilizing factor not only in military but also political terms. It is strongly urged that the United States maintain its forward deployment strategy. The provision of facilities and areas by the Japanese Government based on the Japan-U.S. Security Arrangements, and its payment of expenses of the U.S. Forces in Japan (USFJ) form an indispensable basis for this forward deployment. The United States has expressed its intention to maintain its commitment for the peace and stability of the Asia-Pacific region. Japan, on its part, intends to make further efforts to ensure the smooth management and increased credibility of the Japan-U.S. Security Arrangements, including the continued enhancement of the cost-sharing scheme of expenses incurred by the U.S. Forces in Japan. (See Chapter 2, Section 1, 1 concerning the Japan-U.S. Security Arrangements.)

In the Asia-Pacific region, problems still remain, such as the confrontational situation with military tension in the Korean Peninsula and the South China Sea problem, which might lead to a regional conflict. In making diplomatic efforts to solve these problems, it is necessary to carefully consider the most appropriate approach for each individual situation. This may require the countries concerned to work together at a sub-regional level. For example, with regard to the problem of the Korean Peninsula, the cooperation among Japan, the United States, China and Russia in assisting the North-South dialogue for conciliation is important. Cooperative efforts by Japan, the United States and the Republic of Korea toward North Korea would be effective in resolving issues surrounding its suspected development of nuclear weapons.

At the same time, in this post-Cold War international environment, it is equally important to promote region-wide political and security dialogues to enhance the sense of mutual reassurance in the Asia-Pacific region on issues of common concern, such as the degree to which the United States will maintain its presence and involvement in the region, including its military activity, and the future political role that Japan will play. For the time being, the ASEAN Post-Ministerial Conference (PMC), in which the foreign ministers of the Association of Southeast Asian Nations (ASEAN), Japan, the United States, Canada, the Republic of Korea, Australia, New Zealand and the European Community (EC) participate would be considered as the most effective forum for such dialogues. Recognizing this, Japan's then Foreign Minister Taro Nakayama proposed at the ASEAN-PMC in July 1991 to conduct a political dialogue to enhance the sense of mutual reassurance by utilizing that conference. It was subsequently stated in the Singapore Declaration issued after the ASEAN Summit Conference in January 1992 that ASEAN's dialogue with extra-regional countries on political and security issues should be intensified through the ASEAN-PMC. As a result, active discussions took place at the PMC held in Manila in July 1992, on such issues as the Cambodian situation and the South China Sea. This should be considered as the first major step of region-wide political dialogue, a development which Japan values highly. (See Chapter 2, Section 1, 4 concerning ASEAN)

In July 1992, Prime Minister Kiichi Miyazawa explained in detail Japan's stance on a "two-track approach," which consists of promoting sub-regional cooperation to resolve conflicts and con-ducting region-wide political and security dialogue in order to increase the sense of mutual reassurance in his speech at the National Press Club in Washington D.C. In the future, there will be a need to consider how to involve China and Russia as constructive partners in the process of such dialogues and cooperation.

The Asia-Pacific economies are closely intertwined through flows of trade, investment, personnel and information. These economies, especially of the Newly Industrializing Economies (NIEs) and ASEAN countries have attained remarkable growth, based on their diversity and mutual interdependence as the sources of vitality. Their growth has helped enhance social stability as well as political stability in each country in the region. Recognizing this, Japan has actively cooperated in the nation-building efforts of these countries. In recent years, between 50-60 percent of Japan's bilateral Official Development Assistance (ODA) has been devoted to the developing countries in the Asia-Pacific region. (See Chapter 2, Section 1, 3 for Japan's ODA)

Together with the ODA, the Asia Pacific Economic Cooperation (APEC) is important in promoting the economic prosperity of the region. Launched in 1989, APEC aims at open regional cooperation by contributing to the development not only of this region but also of the world economy as a whole. Recognizing the importance of APEC's role in the Asia-Pacific region, Japan has been an active participant since its inception.

At the 3rd APEC Ministerial Meeting in Seoul, Korea, in November 1991, China, Hong Kong and Taiwan (called "Chinese Taipei") joined the initial members (Japan, the United States, Canada, Republic of Korea, six ASEAN countries, Australia and New Zealand) as new members. The APEC Declaration, which expounds APEC's basic ideals and objectives, was adopted. Three new areas of cooperation, fishery, transport and tourism, were added, making the total number 10 areas. Overall, it was a remarkable achievement. In the meantime, several senior-official-level meetings and meetings by officials, technical staff and experts, were held on the consolidation of statistics related to trade and investment, trade promotion, expansion of investment and technology transfer, human resource training, energy, preservation of marine resources and telecommunications, with tasks and responsibilities under the cooperation of each participating country and area.

In the specific content of the work of the major areas, with regard to human resource development, for example, its networking systems in the fields of economic development, business management and industrial technology have been implemented respectively. Work is continuing on the consolidation of statistics with regard to each participating country and area, on trade and investment, inventory of trade and direct investment. In regard to trade promotion, seminars are being held to discuss trade issues common to the Asia-Pacific region. It is important for Japan to contribute actively to this work and help promote cooperation.

At the 4th APEC Ministerial Meeting in Bangkok in September 1992, agreement was reached on establishing a secretariat, which will serve as the basis for promoting and strengthening APEC, and a budgetary system. This was a major progress in APEC's institutionalization. A small and efficient secretariat will thus be set up in Singapore. As for the budgetary system, the APEC Fund is to be created through contributions by each member country and area in order to finance various activities of the secretariat and APEC itself. Japan's assessed share of contributions to the APEC Fund is 18.0 percent, which is the highest among the participating countries and areas along with the United States.

Moreover, at the 4th APEC Ministerial Meeting, it was decided to hold the 7th Ministerial Meeting scheduled in 1995 in Japan (Note). Japan intends to make further contributions to APEC so that this region can fully make use of its economic potential in accordance with the basic principle of cooperation open to the world.

3. Contribution to Stability and Prosperity through Official Development Assistance (ODA)

Recent rapid changes in the international environment have a significant impact on Japan's economic cooperation policy.

First, the end of the Cold War triggered waves of liberalization and democratization on a global scale. Thus, the former socialist countries which embarked on various reforms have become potential aid recipients. At the same time, development assistance previously provided on the basis of strategic considerations within the framework of East-West relations has lost significance. Along with this, considerations of the North-South relations have come to the fore and there has emerged a growing necessity to provide assistance to eradicate poverty and promote social and economic development in developing countries.

A large number of developing countries are faced with a whole range of economic and social difficulties, such as sluggish economic growth, accumulated external debt and a growing number of people below the poverty line. Their serious economic plight further increases their dependence on development assistance.

Meanwhile, there have emerged new problems which require solutions on a global scale. These include the global environment, population growth, refugees, large-scale disasters, drugs and AIDS.

Thus, the need for assistance facing the world today is now new in nature and larger in volume compared with a few years ago. On the part of the aid donor countries, however, their economies are deteriorating and most of them are in fiscal difficulties. Therefore, it is increasingly difficult for the aid donor countries to boost their development assistance under these circumstances, and expectations in the international community for Japan's role in development assistance have never been higher, since Japan is now the world's second largest economy and the biggest aid donor. Japan needs to respond to such expectations positively.

To respond positively to such expectations from the international community, it is indispensable for Japan to clearly set forth both its philosophy and principles on development assistance and to carry out development assistance more effectively and efficiently. This will increase domestic and international understanding of Japan's aid policy, thereby securing a broad base of support. In this context, the Cabinet approved in June 1992 the Official Development Assistance (ODA) Charter, which outlines the long-term philosophy and basic thinking behind Japan's ODA policy in a comprehensive manner.

The basis of Japan's aid is described in this ODA Charter as being "support for the self-help efforts of developing countries toward economic take-off," based on the philosophies as follows: "humanitarian considerations," recognition of "interdependence in the international community" and "environmental conservation." "Humanitarian considerations" refers to the fact that it is impossible to ignore the reality that many people are still suffering from famine and poverty in the developing countries. The "interdependence in the international community" means that the stability and further development of the developing countries are essential to the peace and prosperity of the world. "Environmental conservation" is also a task for all humankind, which all countries, developed and developing alike, must tackle together.

The rapid changes in Central and Eastern Europe, the collapse of the Soviet Union, and the Gulf Crisis have also called attention to democratization in developing countries, and particularly on the relationship between assistance, on the one hand, and policies on human rights and military expenditures in recipient countries, on the other. In this respect, Japan's aid policy captured increasing attention. Against this background, in April 1991, the then Prime Minister Toshiki Kaifu announced the "Military and Other Expenditures of the Developing Countries and Japan's Official Development Assistance" regarding these points. These were defined in the Government's ODA Charter as the "principles." In other words, taking into account comprehensively each recipient country's requests, its socioeconomic conditions, and Japan's bilateral relations with the recipient country, Japan's ODA will be provided in accordance with the following principles: (a) Full attention should be paid to trends in recipient countries' military expenditures, their development and production of mass destruction weapons and missiles, their exports and imports of arms, etc.; (b) Full attention should be paid to efforts for promoting democratization and the introduction of a market-oriented economy, and the situation regarding the securing of basic human rights and freedoms in the recipient country. These principles aim to maintain and promote international peace and stability. They are also based on the view that developing countries should place appropriate priorities in the allocation of their resources on their own economic and social development. (the so-called Four Guidelines on ODA) in order to clarify the Government policy

As regards environment conservation, it was set forth as one of the basic philosophies behind Japan's ODA in the ODA Charter. It also made simultaneous protection of the environment and development one of its principles. Stress on the environment is clearly indicated.

As for regional priorities, the ODA Charter stated that the regional priorities of economic assistance will continue to be placed on Asia, with which Japan has had close relationships in historical, geographical, political and economic terms. At the same time, the ODA Charter made it clear that Japan will extend cooperation, befitting its position in the world, to other regions.

(3) Support toward Efforts for Democratization and Introduction of Market-oriented Economies.

Based on the principles of the Charter mentioned above, Japan has made efforts to support positive moves in light of such principles. Following the First Mongolia Assistance Group Meeting in September 1991, Japan took the initiative in holding the second meeting in May 1992 to demonstrate international support for Mongolia's efforts to promote democratization and moves toward a market-oriented economy despite its economic difficulties.

In Latin America, Japan extended cooperation to support reconstruction both in Nicaragua, which saw a peaceful transition of power in April 1990, and in El Salvador, which succeeded in concluding a peace accord to end the civil war that had lasted for more than 10 years.

In Africa, the movement toward democracy, multi-party politics and the introduction of market principles have increased. In particular, Japan provided aid to help Zambia promote democracy and a market-oriented economy. Zambia completed both presidential and congressional elections in October 1991 with the participation of multiple parties. It was the first time in 27 years since independence that Zambia went through the change of government peacefully and smoothly.

In its efforts to contribute to peace, Japan hosted the Ministerial Conference on Rehabilitation and Reconstruction of Cambodia in Tokyo in June 1992 to establish the framework for international cooperation to help the country promote rehabilitation and reconstruction. The rehabilitation and reconstruction are important challenges for the new administration, which will be set up after the general election, in running a stable government. Japan also announced its willingness to make active contributions.

On the other hand, undesirable developments are seen in developing countries, such as reversals of democratization process and human rights violations. When it has been judged that there are clear problems in reversals of democratization, violations of human rights, and other undesirable developments from the perspective of the Japanese people and the international community, Japan has reevaluated its aid policy to these recipient countries. One example is Haiti, where a coup d'etat took place at the end of September 1991. In response to the coup, Japan decided to postpone its aid under its basic policy that Japan cannot condone a move which was a tremendous setback against democracy. As for Myanmar, Japan in principle suspended its assistance due to the turmoil caused by the democratization movement of 1988 and the subsequent military coup d'etat. Japan also takes the stance that it will consider on a case-by-case basis the aid projects started before the coup and those of an emergency and humanitarian nature.

With respect to Kenya and Malawi, the donor countries, including Japan, expressed their concerns in aid group meetings over human rights in Kenya and Malawi, as well as corruption and the delay in economic reforms in Kenya. Japan refrained from announcing a specific amount of aid to Kenya and from pledging new assistance for Malawi's international balance of payments.

In the case of Zaire, economic difficulties and delays in its efforts toward democracy intensified public dissatisfaction, triggering a riot and deteriorating public order. As a result, the Japanese Embassy was evacuated. As it became difficult to implement programs in Zaire, Japan was forced to suspend its aid. The internal situation in Zaire continues to be fluid, and Japan will consider resuming assistance after taking full account of the four principles of the ODA Charter, as well as the public safety situation in the country. In addition, vis-a-vis Sudan, Japan intends to limit its assistance to that of an emergency and humanitarian nature in light of the deterioration of human rights protection in that country. In considering other forms of assistance, Japan will see how the Sudanese government handles the questions of human rights in considering it.

Japan has explained its thinking on the four aid guidelines of the ODA Charter to recipient countries through various bilateral aid meetings and on occasions of VIP visits. As a result, some aid recipient countries have already approached Japan to explain and seek understanding of their efforts to reduce their military expenditures or to improve their records on human rights issues.

Protecting the global environment, together with the problems of overpopulation and illegal drugs, is a task for all mankind which the industrialized and developing countries alike must tackle together. There is a need for the industrialized countries to support developing countries through aid programs designed to protect the environment.

In the ODA Charter, Japan has newly added environmental conservation as its basic philosophy of aid policy. At the same time, it has emphasized the importance it places on the environment by referring to it in principle, priority issues and measures for the effective implementation of ODA. Based on this policy, at the United Nations Conference on Environment and Development (UNCED) in Rio de Janeiro in June 1992, Japan announced that it would expand and strengthen its ODA in the field of the environment to around \900 billion to \1 trillion during the five years starting in FY 1992. Moreover, Japan has been successful in meeting the targets for its environmental aid: at the Arche summit it announced that in three years (FY 1989 to 1991) it would commit environment-related assistance of around \300 billion. In fact, more than \400 billion was provided during the period.

In implementing environment-related assistance, it is important to take full account of the position of developing countries. In this respect, there is a need to strike a balance between the environment and development, by attaining sustainable growth and preserving the environment at the same time.

Since the nature of environmental problems differs depending on the stage of development of developing countries, there is a need for fine-tuned consideration in dealing with these problems. For example, in the case of low-income countries, the impoverished living environment and deforestation caused by poverty are the major challenges. Under such circumstances, it is necessary to eradicate poverty and improve social infrastucture, particularly in urban areas. On the other hand, countries with higher incomes suffer from, among others, acute air and water pollution problems and from deterioration in the natural environment as a result of development. Here, it is vital to help such countries to improve their capacity to cope with these problems through financial and technical aid.

In addressing the environment and development in the context of development assistance, it is important to implement aid projects that seek to preserve the environment, as well as to make efforts to minimize the possible adverse effects of projects on the environment. Making use of its own experience, its own technology and expertise, Japan sees these issues as a priority task.

Japan's ODA record in 1991 (on a net disbursement basis) was $11.034 billion (\1.484 trillion), ranking Japan, as in 1989, as the world's largest aid donor country. The GNP ratio of ODA was 0.32 percent, an increase, albeit small, from 0.31 percent achieved in 1990. This ratio still remains below the OECD's Development Assistance Committee (DAC) members' average, which in 1991 was 0.33 percent. Japan has been endeavoring to improve its ODA in both quantity and quality through its Fourth Medium-Term Target, whereby it would provide more than $50 billion in ODA in the five years from 1988, thus improving the ODA ratio to GNP in the meantime.

By region, Asia receives the largest amount of assistance. Yet, as international expectations for Japan have grown, the number of aid recipients has expanded worldwide, and Asia's regional share in total bilateral assistance is decreasing. [Compared with 59.3 percent in 1990, the 1991 figure decreased sharply to 51.0 percent, although this drop is largely attributed to the temporary increase in the share of Middle Eastern countries due to loans to support the frontline countries during the Gulf Crisis (with its share in total bilateral assistance rising from 10.2 percent to 20.4 percent)].

The ODA budget for FY 1992, the final year of the Fourth Medium-Term Target, aims to steadily enhance ODA in an attempt to achieve its target. The general account has allocated \952.2 billion, up 7.8 percent from the previous year. The total amount of ODA budget, which consists of the ODA budget in the general account, plus loans from the Government Fiscal Loans and Investment Program and contributions to international organizations, etc., showed an 11.1 percent increase from the previous fiscal year to reach \1,699 billion.

The improvement of aid quality continues to remain an important task. The grant element and the grant share of Japan's aid remain low compared with those of other donor countries, and the Government is striving to increase grant aid and technical assistance.

Thanks to various efforts to date, the ratio of untied aid (the procurement ratio of goods and services not restricted to those from the donor countries), was 79.7 percent (the general untying ratio for 1991) in total bilateral ODA, and was one of the highest levels in the world. This indicates that criticism that Japan's aid is motivated by commercial profit is entirely misplaced.

(8) Discussions at the Development Assistance Committee (DAC) of the Organization for Economic Cooperation and Development (OECD)

Japan has actively participated in the discussions at the DAC of the OECD. For example, Japan made its contribution to the discussions at the DAC concerning "Good Governance." "Good Governance" which includes promoting democratization, respect for human rights and establishing the rule of law in developing countries has captured attention at the DAC in recent years. Japan, for its part, has taken the initiative. For instance, Japan worked on the DAC to place priority on issues of military expenditure and aid in the context of "Good Governance" and to hold an expert group meeting on this subject with the participation of the other DAC members. Japan was also instrumental in leading DAC member countries to add the five former Soviet republics in Central Asia to the list of the developing countries eligible for ODA. The decision was made at the end of November 1992, and they were officially listed on January 1, 1993.

There is a need to cooperate with and support non-governmental organizations (NGOs), which are capable of extending assistance directly at grassroot level and responding to urgent needs swiftly and flexibly. It is also important to promote assistance with due consideration for the benefit and the participation of women, which is expressed in the idea of "Women in Development" (WID) In order to respond specifically to wide-ranging needs and different situations in developing countries, Japan intends to make use of its know-how and expertise.

In order to improve ODA, it is important not only to increase the amount of aid, but also to make the implementation of aid as effective and efficient as possible. This involves an improved implementation system or an increase in the personnel engaged in ODA activities along with the quantitative expansion of aid.

Although Japan is one of the world's largest aid donors today, its implementation system, particularly the number of personnel involved, such as the staffs of the Japan International Cooperation Agency (JICA) and the Overseas Economic Cooperation Fund (OECF) and the ministries concerned, including the Ministry of Foreign Affairs, is far from sufficient compared with those of other major industrialized countries. In particular, it is hoped that the number of personnel actually stationed in developing countries will be enhanced.

In recent years, problems concerning aid have become more complex and diversified. In fact, in addition to the sharp increases in the volumes of aid, global problems, such as the environment, population and drugs have emerged as new challenges. There is also a need to implement aid programs by carefully taking note of such considerations in recipient countries as military expenditures, human rights, democratization and Women in Development. In order to cope with these situations, a large number of staff involved with aid programs and experts with extensive knowledge are needed.

In order to further expand and enhance ODA, it is critical to raise public awareness of developing countries and enhance public understanding and support for ODA. The Government of Japan is endeavoring to promote public understanding of ODA through dissemination of information on ODA and distribution of various public relations materials.

In addition, it is important to foster a social infrastucture so as to further encourage people to participate directly in development assistance activities. From this point of view, the Government intends to strengthen development education and to increase its support for privately promoted assistance by NGOs and others.

One aspect of technical cooperation is the training of human resources who will assume the nation-building role in developing countries. Another aspect is that of deepening mutual understanding and goodwill between Japan and recipient countries through person-to-person contacts. Technical cooperation is an area in which further improvement is anticipated in the future, as a means of cooperation based on Japan's abundant technologies.

Official technical cooperation is implemented mainly through the Japan International Cooperation Agency (JICA) in various forms to meet the various needs of the developing countries. These include the acceptance of trainees, the dispatch of experts, the provision of equipment, development studies (Note 1), project-type technical cooperation (Note 2), development cooperation (Note 3),the dispatch of Japan Overseas Cooperation Volunteers, the Youth Invitation Program (Friendship Plan for the 21st Century), and dispatch of Japan Disaster Relief Teams in international emergency cases. Japan's technical cooperation in 1991 amounted to $1,870 million. International comparison of Japan's technical cooperation by the documents of the DAC shows that it ranked fourth after France, the United States, and the then West Germany among the 18 member countries, with its amount of $1,334 million in 1990 on a disbursement basis (\193.2 billion excluding administrative expenses). The share of technical cooperation in total ODA in 1990 was 14.7 percent against the DAC average of 23.1 percent.

In order to improve the content of its overall ODA, Japan needs to expand the volume of technical cooperation. Toward that goal, it must strengthen the implementation system that can respond to the increase in the amount of technical aid. In addition, there is a need to enhance the training of personnel engaged in development assistance.

Grant aid provides funds to developing countries without imposing repayment obligations. It therefore is a form of assistance that can respond to a variety of needs in developing countries, centering on basic human needs and human resources development. Grant aid includes grants for general projects, fishery projects, emergency disaster relief, cultural projects, food (Note 1) and increased food production (Note 2).

The total of Japan's grant aid has expanded, reflecting the rising expectations of developing countries and of other major donors. The initial budget for grant aid in FY 1992 was \227.8 billion, approximately 1.6 times higher than the amount provided a decade ago.

Achieving not only an expansion in quantity, but also an improvement in quality of ODA has become a major task for Japan. Grant aid plays an important role in this context.

In March and May 1992, Japan provided a total of \14.8 billion (\2.5 billion as food aid; \3.8 billion for food production increase; and \8.5 billion in grant aid for non-project finance) to nine southern African countries (Angola, Zambia, Zimbabwe, Swaziland, Tanzania, Namibia, Malawi, Mozambique and Lesotho) to relieve the drought damage which was said to be one of the worst in 50 years. In June, Japan also provided about \1 billion assistance in food aid through international organizations for refugees and drought victims of these countries.

Japan is extending non-project grant aid to support economic structural adjustment efforts in developing countries. Japan provided \61.7 billion (about $500 million) to African countries during the three-year period from FY 1987 to 1989. From FY 1990, Japan decided to provide about $600 million over the ensuing three years for the second grant aid program in support of economic structural adjustment efforts. In FY 1991, the number of recipient countries was enlarged to include countries other than Africa, such as Indonesia, Mongolia and Peru, and Japan provided a total of \29.2 billion. In view of the demand for capital by developing countries, its achievements to date in this field, as well as the high marks given by other major donor and recipient countries, Japan decided to implement the third economic structural adjustment grant aid, in an amount between $650 million and $700 million during the three years beginning in FY 1993, which was announced at the Munich Summit of July 1992.

The small-scale grant assistance system was introduced in FY 1989 to finance relatively small-scale projects that were not suitable for assistance under the existing system of general grant aid in an expeditious and appropriate manner. In FY 1990, 92 grants totaling approximately \296 million were provided to 44 countries, and in FY 1991, 156 grants totaling approximately \499 million were given to 48 countries. Japan is given high regards for this flexible and finely-tuned aid that reaches the grassroots level. Thus, in FY 1992, the budget for this aid program was increased to \700 million to further enhance this system.

In order to implement grant aid more efficiently and effectively, the following measures have been taken: 1) the enhancement of preliminary studies; 2) the strengthening of coordination with technical assistance; 3) the strengthening of coordination with other donor countries, international organizations and non-governmental organizations; 4) improvement of follow-ups (including implementation of follow-up cooperation which provide additional, spare parts of equipment and machines already furnished, and rehabilitation assistance which improves and reinforces the existing projects).

Direct government loans (ODA loans) provide funds to developing countries at low interest rates and over long repayment periods. The average interest rate in FY 1991 was 2.4 percent with a repayment term of 25-30 years including a grace period of 7-10 years. While offering such generous conditions, they nonetheless impose a debt burden on the recipient countries. ODA loans not only promote self-help efforts of recipient countries but meet demands for large-scale development funds and, accordingly, are provided to improve the social and economic infrastructure which can directly contribute to the social and economic development of developing countries. Thus, ODA loans with such roles have played an important part in contributing to the economic growth of countries with relatively high demands for development funds, such as the Association of South-east Asian Nations (ASEAN) member countries.

Furthermore, Japan has prepared to extend non-project-type loans to those countries which are faced with immediate difficulties in their international balance of payments.

The extension of ODA loans in FY 1991, including rescheduling, totaled \979.4 billion based on the Exchange of Notes, down 8.5 percent from the previous year. Rescheduling of debts through the Paris Club a forum to discuss the debt issue, totaled \31.75 billion.

As regards the procurement conditions of ODA loans, Japan has promoted a general untying of loans, in view of the needs of developing countries and more efficient management of development funds. On the basis of the Exchange of Notes, the untied ratio for FY 1991 was 89.8 percent, an increase of 5.4 points from the previous fiscal year. In terms of the procurement record, the share of contracts won by Japanese corporations under ODA loans has been on a decreasing trend in the medium- and long-term. It was 31 percent in FY 1991, 44 points lower compared with FY 1984. The share of other industrialized countries (OECD member countries other than Japan) and of developing countries to the total procurement were 21 percent and 48 percent, respectively. The rise in the share of developing countries was particularly notable.

The most notable recent trend in ODA loans was the extension of commodity loans with a higher grant element than average in FY 1991 to the Middle East countries (Egypt, Jordan and Turkey) to support them in overcoming economic difficulties resulting from the Gulf Crisis.

At the time of the Rio UNCED meeting in June 1992, Japan promised to strengthen its assistance to environment-related fields. As part of this, it announced its intention to provide environment-related ODA loans to Brazil and Mexico.

Japan, in addition to bilateral aid, provides assistance through international organizations. The total multilateral aid provided through international organizations in 1991 was $2,163 million (down 5.2 percent from the previous year). This accounted for 19.6 percent of Japan's total ODA (as compared with 24.7 percent in 1990).

The advantages of multilateral aid include: 1) access to the sophisticated and specialized knowledge and experience of various international organizations; 2) the ability to secure political neutrality in furnishing aid and; 3) access to global aid networks. On the other hand, bilateral aid can be extended flexibly and carefully, inline with Japan's foreign policy and help promote its friendly relations with recipient countries. The scope of aid can be expanded by the interactive linkage (multi-bi cooperation) of multilateral and bilateral aid.

As for international development financial institutions, Japan has cooperated with the World Bank Group [which comprises the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA)] and with regional development financial institutions such as the Asian Development Bank (ADB), the Inter-American Development Bank (IDB) and the African Development Bank (AfDB). Japan also actively cooperates with the European Bank for Reconstruction and Development (EBRD) which was established in April 1991 with the aim of supporting political and economic reforms in the Central and Eastern European countries and the former Soviet Union. Japan also makes contributions to the International Fund for Agricultural Development (IFAD), whose objective is promoting agricultural development.

Furthermore, Japan has positively cooperated with the activities of the U.N. aid agencies, such as the United Nations Development Programme (UNDP), which is the mainstay of technical assistance in the U.N. system, the U.N. High Commissioner for Refugees (UNHCR), the World Food Program (WFP), the United Nations International Children's Emergency Fund (UNICEF), and the U.N. Relief and Works Agency for Palestine Refugees in the Near East (UNRWA). Japan's contribution to these U.N. aid agencies totaled approximately $700 million in 1991.

The Government of Japan has actively supported the activities of the NGOs, in an attempt to strengthen the national foundation for economic cooperation as well as to implement development aid more effectively and efficiently.

The Government established the Subsidy System for NGO Projects in FY 1989. This system attempts to provide aid to small-scale humanitarian development projects, which are not suitable for assistance under the ODA system. Its scale is increasing year by year. In FY 1991, a total of \236 million was provided to 24 organizations and 47 projects.

The United Nations was founded with a grand ideal of ensuring permanent peace. However under the U.S.-Soviet Cold War structure, the collective security system with the Security Council as its core, did not fully function as originally intended. U.N. Forces under Chapter 7 of the U.N. Charter have never been established.

New developments in the international relations characterized by the U.S.-Soviet cooperation have changed the situation substantially. The dramatic change in East-West relations seems irreversible, albeit with certain twists and turns. The environment surrounding the United Nations has improved substantially, and the Security Council has gradually begun to function as originally envisaged, paving the way for a revitalized United Nations.

It was the Gulf Crisis triggered by the sudden invasion of Iraqi forces into Kuwait in August 1990, which strongly demonstrated these developments to the entire world.

The Gulf Crisis could not be solved within the East-West framework which might have depended upon either the United States or the Soviet Union to deter the aggression of Iraq. Instead, the United Nations, in particular the Security Council, assumed the major responsibility. How the United Nations would react to this Crisis was regarded as a crucial test as to whether the United Nations could play a key role in the new international relations in the post-Cold War period.

With worldwide support, the Security Council imposed economic sanctions on Iraq and demanded that it abide by Council resolutions. However, Iraq continued to refuse cooperation, and the Council responded to it by adopting Resolution 678, authorizing Member States to assist the Government of Kuwait by dispatching military forces as the so-called coalition forces to the region to take all necessary means.

The international unity under the United Nations in handling the Gulf Crisis has produced new expectations that international peace and stability can be maintained by establishing a collective security system centered around the United Nations through further promoting such cooperation.

The U.N. Peace-keeping Operations (PKOs) were not a task of the United Nations stipulated in the U.N. Charter. Rather, having been invented as practical and concrete means for helping solve disputes, U.N. Peace-keeping Operations have proved successful in many cases. Peace-keeping Operations differ from enforcement actions stipulated in Chapter 7 of the U.N. Charter. They are deployed on a Security Council or the General Assembly Resolution with the consent of countries concerned after a cease-fire has been agreed by the conflicting parties and the political will to end the conflict has been ensured. The U.N. Peace-keeping Operations discharge their mandate through the authority of the United Nations and through the power of persuasion. The United Nations does not impose any specific solution.

Since the establishment of the U.N. Truce Supervision Organization (UNTSO) in 1948, concrete modalities of activities, conditions necessary for the conduct of Peace-keeping Operations have been gradually established on the basis of experiences of their missions through monitoring cease-fires and other activities.

More than 520,000 personnel from more than 80 countries have participated in the U.N. Peace-keeping Operations. In 1988 the Nobel Peace Prize was awarded for their efforts.

It is worth noting that out of a total of 28 Peace-keeping Operations established in the past, 15 were set up after 1988. This indicates the rising demand for Peace-keeping Operations in the post-Cold War world.

While the tasks of the U.N. Peace-keeping Operations were initially limited to maintaining a cease-fire and preventing the recurrence of conflicts, they are recently performing a wide range of tasks. For example, some operations of new type are emerging, with complex activities for assisting in the post-conflict nation building, including conducting of elections and the monitoring of administrations during a transitional period. Along with the diversification of tasks, the scale of Peace-keeping Operations has grown.

Thus, the U.N. Peace-keeping Operations have recently developed both quantitatively and qualitatively and have come to play a central role in the efforts of the United Nations for international peace and security.

The dynamic developments of the U.N. Peace-keeping Operations have revealed difficulties never experienced in the past. One of the difficulties lies in the increasing demand for finances [See (5) below]. Another is securing personnel. Even some traditional troop-contributing countries are beginning to find it difficult to make further contributions for national defense reasons. In Secretary-General Boutros Boutros-Ghali's "An Agenda for Peace," the lack of logistic personnel is pointed out.

The Gulf Crisis which broke out in August 1990 provided the Japanese with an opportunity to reconsider the issue of how to maintain international peace and security. It also triggered a discussion on how Japan should make contributions in such a crisis. Japan contributed $13 billion to restore peace and stability of the Gulf region, which was financed by increasing the tax rates. Further, Japan sent medical teams and it also examined to dispatch Self-Defense Forces planes for displaced persons transportation, and issued a government ordinance for that purpose. However, as there proved to be of no practical necessity, the dispatch did not take place, and a government ordinance was issued to abolish the previous ordinance.

In fall 1990, amid the Gulf Crisis, the Government submitted a bill concerning cooperation to the U.N. peace efforts, which was abandoned before completing its deliberations. However, through nationwide debate including the Diet session, a perception is believed to have grown among the public that it is indispensable for Japan to make sufficient contributions to international peace and security.

With mounting debates about Japan's international contributions thereafter, the Government submitted a new bill to the Diet in September 1991 concerning cooperation to U.N. Peace-keeping Operations and other operations with a view to establishing a domestic framework to participate in U.N. Peace-keeping Operations and humanitarian international relief activities on a full-fledged scale.

Diet discussions focused on the conformity of the bill with the Constitution, necessity of Diet approval, the meaning of U.N. command, the basic principles on participation in the U.N. Peace-keeping Operations (the so-called "five principles,") (Note), in particular the suspension or completion of peace cooperation activities and the freezing of the main part of Peace-keeping Forces. The Diet debate was an exceptionally long one just to pass one bill, stretching over three Diet sessions.

As regards the constitutionality, participation in U.N. Peace-keeping Operations is in conformity with the principle of the Constitution which calls for permanent peace and international cooperation: It does not, in any sense, run counter to these principles. Further, since Japan's participation is based on the "five principles," even the troops of Self-Defense Forces to be dispatched to the U.N. Peace-keeping Operation shall not use force in a manner as prohibited by the Constitution.

This bill was approved by the Diet in June 1992 after almost 90 hours of deliberations in the House of Representatives and more than 100 hours in the House of Councillors. The law on cooperation in the U.N. Peace-keeping Operations and other operations (hereafter called as the "International Peace Cooperation Law") was enacted and took effect in August that year. During the Diet debate, a revision was made to the bill submitted by the Government so that the participation of the Self-Defense Forces in the main part of the peace-keeping forces shall not be realized until the date to be determined by another law, and that a prior Diet approval will be required on this part. It is fair to say that the International Peace Cooperation Law reflects broad opinion in the public and has gone through careful deliberations.

Upon the enactment of the International Peace Cooperation Law, Japan decided to participate in the second U.N. Angola Verification Mission (UNAVEM II) and the U.N. Transitional Authority in Cambodia (UNTAC) based on the new law.

In Angola, civil war continued between the government and UNITA after its independence from Portugal in 1975. As the relations between the United States and the Soviet Union improved a peace agreement was reached between the two parties. Followingly, the U.N. Security Council decided to establish the U.N. Angola Verification Mission (UNAVEM) in January 1989 to super-vise the cease-fire and verify the local police activities. The two parties then agreed to hold a general election, and UNAVEM II was set up with the additional mandate of monitoring the elections. Japan sent three election monitors for this purpose. The presidential and parliamentary elections were held in Angola in September 1991.

UNTAC is a complex Peace-keeping Operation and the largest in the U.N. history (Note). Its mandate includes supervision and monitoring of the cease-fire and the disarming of the parties, super-vision and monitoring of the existing administrations to ensure a neutral political environment and organizing and conducting of elections until a new Cambodian government is established through free and fair elections. Many countries in Asia, Europe, Africa and Latin America are participating. Upon request by the United Nations, Japan, for its part, decided to dispatch 600 construction unit personnel, eight military observers, and 75 civilian police monitors in September 1992, all of whom began their work in October. At present, the construction unit of the Self-Defense Forces is engaged in repairing the national highways (No.2 and 3), the military observers are observing any violations at checkpoints, and the civilian police monitors are supervising and advising the local police in various parts of Cambodia. In addition, Japan provided medicines, radios, and other goods as in-kind assistance on the basis of the International Peace Cooperation Law. Japan is also considering sending election monitors for the constitutional assembly election scheduled in May 1993.

The costs required for the U.N. Peace-keeping Operations increased from about $600 million in 1991 to nearly $2 billion in 1992, or more than 1.5 times the regular budget (the regular budget for 1992 was about $1.2 billion). Early payment of the Member States' contributions is important both for the regular budget and for Peace-keeping Operations. However, since Peace-keeping Operations are often established in emergencies and that the size of the activities is difficult to forecast, early action by Member States are sometimes difficult. At the same time, financial need of Peace-keeping Operations is most acute at the initial phase as procurement of materials and transport are necessary. Securing the necessary funds at this stage holds the key to smooth implementation of the operations. Along with the expansion of Peace-keeping Operations, discussions on their financial aspect have also become more and more active. From the end of 1991 through early 1992, various proposals were made by former U.N. Secretary-General Javier Perez de Cuellar and the current Secretary-General Boutros Boutros-Ghali. Japan announced in the address by Foreign Minister Michio Watanabe at the General Assembly in September 1992 its intention to submit a resolution to the General Assembly to ensure that financial requirements at the start-up phase of Peace-keeping Operations would be met without imposing new financial burdens on Member States. Based on this Japanese proposal, a resolution was adopted by consensus in December 1992 to establish a "peace-keeping reserve fund"($150 million). Through this resolution, the financial basis of Peace-keeping Operations became much more solid and stable.

The international security framework to ensure international peace and the role of the United Nations to that end has been attracting a growing worldwide interest. This was triggered particularly by the holding of the Summit Meeting of the Security Council in January 1992 and the U.N. Secretary-General Boutros Boutros-Ghali's "An Agenda for Peace" announced in June in response to the request of the Council.

In January 1992, upon a proposal by Prime Minister John Major of the United Kingdom, the Security Council met at the level of Head of State and Government for the first time in the history of the United Nations. Almost all the Heads of State and Government, including Japan's Prime Minister Kiichi Miyazawa, attended the meeting, and reaffirmed the importance of the role of the United Nations and the Security Council for the international peace and security at a time when expectations toward the United Nations are becoming ever greater after the end of the Cold War. This, indeed, was politically of enormous significance. At the same time, a number of representatives, especially from the developing countries, expressed views that the composition of the Security Council and the privileges of its permanent members should be reviewed, which rather focused on the worldwide attention on the issue of the reform of the Security Council. In this context, Prime Minister Miyazawa stressed that the United Nations itself should evolve while adapting to a changing world and that it is important to consider thoroughly the functions and composition and other aspects of the Security Council.

Russia, which inherited the permanent membership of the Soviet Union, attended the Summit Meeting of the Security Council for the first time.

"An Agenda for Peace" is a report made public by Secretary-General Boutros Boutros-Ghali pursuant to a Note by the President of the Security Council inviting him to prepare his analysis and recommendations on ways of strengthening the capacity of the United Nations for preventive diplomacy, for peace-making and peace-keeping within the framework of the U.N. Charter. While most of the content was based on discussions of various U.N. committees, the report contained ambitious and epoch-making recommendations reflecting the Secretary-General's personal character and triggered considerable repercussions within the U.N. circle. In particular, the concept of "preventive deployment," which aims at establishing U.N. organs to prevent conflicts (such deployment could take place when a country fears cross-border attack and requests the deployment of U.N. presence), and the proposal to create "peace-enforcement units," consisting of troops voluntarily made available by Member States and more heavily armed than Peace-keeping Forces caused both positive and negative echoes.

In Foreign Minister Watanabe's address to the 47th session of the U.N. General Assembly, Japan commended the initiative of Secretary-General Boutros Boutros-Ghali while expressing his view that the concept of "preventive deployment" and the "peace-enforcement units" requires careful consideration in light of the basic principles of U.N. Peace-keeping Operations.

"An Agenda for Peace" was made public under the circumstances where the context of recent regional conflicts has been changing and the involvement of the United Nations in those issues is being increasingly called for.

In Bosnia-Herzegovina as well as in Somalia, an enormous number of average citizens having nothing to do with warfare are suffering in despair, facing life or death. The international community has been making every effort to help them out of this disaster, through, for example, humanitarian relief activities by the U.N. High Commissioner for Refugees (UNHCR), and the international Committee of the Red Cross (ICRC), etc. The Security Council, for its part, decided to deploy Peace-keeping Operations to assist these relief activities. For all these efforts, however, delivery of relief goods to the displaced persons have been, time and again, impeded. Even those relief and peace-keeping personnel were sometimes targets of armed attack. In both cases, the Peace-keeping Operations have proved insufficient to improve the situation. It cannot be denied that in certain circumstances the efforts for international peace and security based on the conventional way of peace-keeping are at an impasse.

In Somalia, despite the Security Council resolution to deploy Peace-keeping Operation (UNOSOM) in all parts of Somalia, the situation continued to deteriorate because the agreement of the conflicting parties could not be attained. In December 1992, the Security Council adopted unanimously Resolution 794 authorizing all Member States to take all necessary means to establish a secure environment for humanitarian relief operations in Somalia. Based on this Resolution, an Unified Task Force (UNITAF) was formed. This task force landed in Somalia and is now operating to fulfill the objective of the Security Council Resolution. After the UNITAF completes its tasks, UNOSOM II is supposed to take its place. How the shift from the UNITAF to UNOSOM II will take place, and what kind of activities UNOSOM II will undertake remain to be carefully watched.

In Bosnia-Herzegovina, the Security Council adopted in August 1992 Resolution 770 authorizing Member States to take all necessary means, nationally or through regional arrangements, to assist humanitarian relief activities. However, military action by the Member States was not taken based on this Resolution, and instead, it was decided that the U.N. Protection Force (UNPROFOR) would be deployed in all parts of Bosnia-Herzegovina in an irregular way, because the troop-contributing countries are bearing their own costs or participation.

In any case, questions are now being posed on the international community and the United Nations as to how to ensure peace in the face of new developments in the international situation.

This could inevitably throw a new perspective on the debate in Japan over how its contribution to international peace and stability should be. Japan, after a nationwide debate, enacted the International Peace Cooperation Law. For the time being, Japan should make its efforts based on this Law as much as possible in terms of human resources. Further, the review of this law will be due in three years time. It will be important, therefore, to embark on serious discussions on this issue, in light of these new developments in the international situation.

The evolution of the role of the United Nations in its efforts for international peace and stability in a sense has been a mirror reflecting the times of the age. And with the end of the Cold War, it is clear that the role of the United Nations has become more important than ever, as signified by the efforts U.N. Peace-keeping Operations deployed worldwide are undertaking in trying to solve conflicts. On the other hand, these efforts are confronted with difficulties, thus the search for how the U.N. efforts in the future should be is currently underway.

Further, the international community is today called upon not only to ensure international peace and security, but also tackle effectively such issues of global concern as poverty, environment, refugees, drugs and terrorism. These problems require coordinated multilateral efforts, and in each of these cases, cooperation through the United Nations will be of crucial importance.

Under these circumstances, there is growing recognition of the need to strengthen the United Nations so that it is in fact capable of effectively resolving these new issues.

In February 1993, Secretary-General Boutros Boutros-Ghali, shortly after assuming office in January, announced the restructuring of the U.N. Secretariat including the streamlining of five political-related departments, such as the Office for Political and General Assembly Affairs and Secretariat Services; transforming the Office of Special Political Affairs into the Department of Peace-keeping Operations; integration of the five economic development-related departments, including the Office of the Director-General for Development and International Economic Cooperation into the Department of Economic and Social Development; and the establishment of the Department of Humanitarian Affairs. This reorganization was accompanied with a reduction in the number of high-level posts, including nine Under-Secretary-Generals and five Assistant Secretary-Generals.

This announcement was a surprise to most Member States, and caused great international repercussions. It is, however, aimed at streamlining the complicated organization and its echelons of staff and thus appear to be contributing to strengthening U.N. activities.

Thereafter, in December 1992, Secretary-General Boutros Boutros- Ghali announced his second phase of restructuring which divided the Department of Economic Development into three separate departments - Department for Policy Coordination and Sustainable Development, Department of Economic and Social Information and Policy Analysis, and Department of Development Support and Management Services. The third phase of restructuring of the Secretariat focusing on U.N. subsidiary organs and regional economic commissions might be announced soon.

U.N. Member States, including Japan, would generally assess that the reorganization of the secretariat as aforementioned could be basically in line with the objective of strengthening the functions of the United Nations as well as consolidating the organizational and personnel aspects which had become complicated.

As U.N. efforts for international peace and stability come increasingly under the spotlight, worldwide interest in the activities and the structure of the Security Council, which is the core of the United Nations, is also mounting. In the U.N. General Assembly, the question of "equitable distribution on and the increase in the membership of the Security Council" has always been on the agenda since 1979, but there were no substantive discussions on the matter since 1980. At the 47th session of the General Assembly in 1991, however, eight countries expressed their views, thus triggered the discussions for the first time in 11 years. The summit meeting of the Security Council in January 1992 and the addressing of the issue by the Members on the Council on that occasion accelerated the increase in the interest in the role and the structure of the Security Council.

At the summit meeting of the countries of Non-Aligned Movement in Jakarta in September 1992, the United Nations reform, including the Security Council became the major topic, and a high-level workshop was established to deliberate these issues. In the 47th session of the General Assembly which began in late September 1992, more than a dozen countries referred to the need to restructure the Security Council.

In November 1992, a resolution was submitted to the General Assembly on the question of the "equitable distribution on and the increase in the membership of the Security Council" which, followingly, was adopted in consensus in December. This resolution, calls on all Member States to submit their views on the possible review of the membership of the Security Council to the Secretary-General by the end of June 1993, and invites the Secretary-General to submit a report to the 48th session of the General Assembly.

On the occasion of Prime Minister Miyazawa's address at the Summit Meeting of the Security Council in January 1992 as well as Foreign Minister Watanabe's statement at the General Assembly in September, Japan stressed that the United Nations itself should evolve while adapting itself to the changing international circum-stances, and that the organization and functions of the United Nations including the Security Council be reviewed. It further emphasized the need for the United Nations to begin to tackle these issues. It is expected that, in response to the U.N. resolution, deliberations will be further deepened at the 48th session of the General Assembly beginning in September 1993, and future developments need to be closely followed.

In building world peace and prosperity after the end of the Cold War, there has been increasing international attention on respect for human rights. At the Munich Summit in 1992, the G-7 expressed their wish to develop a new partnership in the post-Cold War world based on common values of political and economic freedom, human rights, democracy, justice and the rule of law. This was following the declaration on human rights at the Arche Summit in 1989, which made it clear that human rights are a matter of legitimate international concern. It was also reconfirmed at the Munich Summit that recognition of the inherent dignity and of the equal and inalienable rights of all members of the human family are the foundation of freedom, justice and peace in the world.

Japan's peace and prosperity today are founded on its consistent respect for fundamental human rights, freedom and democracy during the postwar period. As a responsible member of the international community, it has become increasingly important for Japan to take actions based on the basic philosophy that human rights are a universal value for all mankind and are the basis for world peace and stability. As part of this move, the ODA Charter adopted at the Cabinet meeting in June 1992 includes the following as one of its principles in executing the ODA. That is, full attention to be paid to efforts for promoting democratization and the situation regarding the securing of basic human rights and freedom in providing ODA to developing countries.

The United Nations stipulated in its Charter that international cooperation to encourage and promote respect for basic human rights and freedom is one of its objectives, and has played a major role in international cooperation to promote human rights. To promote human rights around the world, Japan has played an active part in these U.N. activities through its successive membership in the Commission on Human Rights since 1982. In addition, Japanese members have served in their personal capacities on the following: Subcommission on Prevention of Discrimination and Protection of Minorities under the Commission on Human Rights since 1984, the Human Rights Committee set up on the basis of the International Covenant on Civil and Political Rights (the so-called B covenant) since 1987, and a committee set up for the International Covenant on Economic, Social and Cultural Rights (the so-called A covenant) since January 1993.

In the U.N. General Assembly in 1991, a resolution was adopted without voting, appointing the Under Secretary-General in charge of human rights as the coordinator for the International Year for the World's Indigenous Peoples (1993), and to promote public relations and other activities as part of the action plan for this International Year. Based on the resolution, the opening ceremony for this International Year was held at the United Nations headquarters in December 1992 when the General Assembly was in session.

In the General Assemblies of 1991 and 1992, no new international treaties were adopted, but the United Nations continued its efforts to set up international criteria for human rights. At the 1991 General Assembly, the "Principles for the Protection of Persons with Mental Illness and for the Improvement of Mental Health Care," and in 1992 the "Declaration on the Rights of Persons Belonging to National or Ethnic Religious and Linguistic Minorities," and the "Declaration on the Protection of All Persons from Enforced Disappearance" were adopted.

Japan submitted to the Diet Session for approval in March 1992, the "Convention on the Rights of the Child" adopted at the U.N. General Assembly in 1989 and signed by Japan in September 1990.

Deliberations on human rights by member countries are made annually in the U.N. General Assembly and in the U.N. Commission on Human Rights. It should particularly be noted that the international community harshly criticized the violation of human rights caused by the ethnic conflicts since June 1991 in the former Yugoslavia. The U.N. Commission on Human Rights held special sessions in August and November 1992, and appointed a special rapporteur to examine the situation and strongly censured all violations of human rights in the former Yugoslavia including "ethnic cleansing" taking place mainly in Bosnia-Herzegovina. In the General Assembly at the end of that year, based on a resolution adopted at the special session of the U.N. Commission on Human Rights in November, a resolution was passed which held the Republic of Serbia mainly responsible for ethnic cleansing and called for immediate end to all human rights violations including ethnic cleansing. Through this resolution, the grave concern of the international community, including Japan, about human rights in the former Yugoslavia was expressed. Japan supported this resolution.

Resolutions concerning human rights in Sudan, Estonia and Latvia were adopted for the first time in the General Assembly in 1992.

As for Sudan, the Assembly adopted a resolution expressing its grave concern about violations of human rights of victims of disasters, ethnic minorities and personnel of international humanitarian aid organizations. This resolution was adopted with over-whelming support, including Japan's. With respect to Estonia and Latvia, the Assembly adopted without a vote a resolution calling on countries concerned to dispel concerns which were largely expressed by Russia about human rights of Russian ethnic minority groups in Estonia and Latvia.

On the question of human rights in Iraq, following resolutions adopted by the United Nations in 1991, the U.N. Human Rights Commission in early 1992 and at the General Assembly in the end of the same year, a resolution strongly criticizing grave human rights violations, particularly the immediate arbitrary execution of the northern Kurds and the southern Shiites, was adopted by an over-whelming majority vote, including Japan's.

The human rights question in Myanmar has been discussed in the U.N. Human Rights Commission since 1989, and a resolution was adopted for the first time at the General Assembly in 1991, expressing concern about human rights and expectations for an early transition to democracy. Following this move, the U.N. Human Rights Commission in early 1992 appointed a special rapporteur to survey the human rights situation in Myanmar. At the General Assembly of the same year, a resolution seeking respect for human rights and promotion of democratization was adopted without voting. After the new chairman, Than Shwe, assumed his post in April 1992, Japan noted this move as a positive action in principle toward democratization. On the other hand, with the expectation that the Myanmar Government will undertake further measures to promote democratization and to improve its human rights record in response to the expectations of the international community, Japan participated in the non-voting adoption of the abovementioned resolution.

As for human rights in Cuba, deliberations were made in the U.N. Commission on Human Rights, and a resolution was adopted for the first time by the General Assembly in 1992 deploring human rights violations recorded in a large number of reports.

Based on the resolution by the General Assembly of 1990, the World Conference on Human Rights will be held in Vienna in June 1993. It will be the first Conference for 25 years since it was held in Teheran in 1968. Its objective will be to review the progress made in human rights since the adoption of the World Declaration on Human Rights in 1948 and to seek ways to improve U.N. activities and implementation of treaties on human rights. At present, deliberations on the procedural rules, participants, agenda and drafting of final documents are being made in the preparatory committee which was set up for the preparation of the Conference. Regional preparatory meetings for the Vienna conference have been held or are scheduled in Africa, Latin America, and Asia. Endorsing the significance of the World Conference on Human Rights, Japan has been the joint proposer of various related resolutions. In view of the vital role the preparatory process plays for the success of this Conference, Japan has played an active role on the preparatory committee to make this Conference a new catalyst in promoting respect for human rights worldwide, Japan will actively join in the discussions along with other industrialized democracies.

With a view to ultimately eliminating nuclear weapons, Japan has been making great efforts to promote nuclear disarmament. For instance, at the Conference on Disarmament in Geneva it proposed a step-by-step approach to nuclear test ban. Also, against the background of changes in the international environment such as the end of the Cold War and the Gulf Crisis, the transfers of weapons of mass destruction, the proliferation of missiles and transfers of conventional weapons between the North and the South have become major issues in recent years. The fact is that the Political Declarations of the summit meetings of the G-7 industrialized countries in the last three years have emphasized the importance of tackling those non-proliferation issues. In all of these areas, Japan is increasingly expected to make further contributions, as it has laid down a unique policy of the three non-nuclear principles and the three principles on arms exports. Japan played a leading role in initiating the "United Nations Register of Conventional Arms" set up in January 1992 in an effort to heighten the transparency in transfers of conventional weapons. It also played an active role in sponsoring the Tokyo Workshop on Transparency in Armaments (June 1992) and the U.N. Conference on Disarmament Issues (June 1992 in Hiroshima), the fourth meeting of this kind since 1989. As for nuclear non-proliferation, Japan is endeavoring to strengthen the Nuclear Non-Proliferation Treaty (NPT). Examples include its efforts to bring about China's accession to the NPT. China announced that it would accede to it at the time of Prime Minister Toshiki Kaifu's visit to China in August 1991. In addition, Japan's Vienna Representative serves as the contact point for London Guideline Part 2, which is the framework for regulating exports of nuclear-related substances. This guideline was launched in April 1992.

With the favorable developments in the relationship between the United States and the former Soviet Union, or Russia, as well as the end of the Cold War, there has been a historic advancement in nuclear disarmament. This underscores the transition from the era of preventing the nuclear arms race to an era of substantially reducing nuclear weapons.

On the other hand, non-proliferation of nuclear weapons has been given a top priority, as Iraq's nuclear weapons development program was revealed and North Korea is still suspected of developing secretly a nuclear program despite the entry into force of the safeguards agreement with the International Atomic Energy Agency (IAEA).

The following countries have newly acceded to the NPT - which is the pillar of the nuclear non-proliferation regime: Lithuania, Zimbabwe (September 1991), Estonia, Latvia (January 1992), China (March 1992), Slovenia (April 1992), Uzbekistan (May 1992), France (August 1992), Azerbaijan (September 1992), Namibia, Niger (October 1992) and Myanmar (December 1992). As a result, all nuclear weapon countries, namely, the United States, the United Kingdom, France, Russia and China have become NPT State Parties, making the total number of State Parties more than 150 countries. Thus, the Treaty's universality has been remarkably enhanced. However, some countries, notably Israel, India and Pakistan, which possess sophisticated nuclear technology, have not yet adhered to the Treaty. Based on Article 10, Item 2 of the NPT, a conference shall be convened in 1995 to decide whether the Treaty shall continue in force indefinitely, or shall be extended for an additional period or periods. Taking into consideration the important role NPT plays in maintaining the international peace and security, Japan will continue to make efforts in cooperation with other industrialized democratic countries so that the NPT system will be maintained stably for a long period after 1995.

As for the Tratelolco Treaty that established nuclear-free zones in Central and South America, France, the only country which had not ratified one of the Additional Protocols of this Treaty, deposited the instrument of its ratification in August 1992. Three countries, Brazil, Argentina and Chile, which are not yet parties to this Treaty, announced their intention to accede to the Treaty. These developments have further strengthened the Tratelolco regime.

Other countries have also taken the positive initiative toward nuclear non-proliferation. Japan, in its principles of Japan's Official Development Assistance (ODA) Charter approved by the cabinet in June 1992, made it clear that, when extending its ODA, full attention should be paid to trends in recipient countries' military expenditure, their development and production of weapons of mass destruction and missiles as well as their arms exports and imports. Canada also announced in May 1992 its nuclear non-proliferation initiative in which it would suspend economic assistance to those countries which undermine the basis of NPT. In July of the same year, the United States also announced non-proliferation initiative in which it would not produce plutonium or highly enriched uranium for weapons purposes, and, when extending technical assistance, it would take into consideration the observance of non-proliferation norms by the recipient countries.

With the collapse of the Soviet Union, international concern has risen over the proliferation of weapons of mass destruction, including nuclear weapons and the technology of their manufacture from that region. In order to cope with this problem, Japan, the United States and the EC agreed to make a joint financial contribution (Japan contributed $20 million) to establish an International Scientific and Technology Center in Moscow with the objective of preventing the outflow of scientists and engineers who were engaged in weapons production in the former Soviet Union. An agreement to establish the Center was signed in November 1992.

As for nuclear tests, prominent international moves toward restricting nuclear tests have been seen. In October 1992, the United States enacted the Energy and Water Development Appropriations Act, which includes a clause temporarily suspending nuclear testing until July 1993 and totally banning nuclear tests from October 1996, after a three-year grace period. In October 1992, Russia decided to extend the nuclear test moratorium starting from October 1991 until July 1, 1993. France is also continuing a moratorium which started in 1992.

North Korea became a party to the Nuclear Non-proliferation Treaty in December 1985, but failed to meet the Treaty's obligation which requires concluding the Safeguards Agreement with the IAEA within 18 months after its participation. The international community including Japan has since urged North Korea to conclude the Agreement. Also, in September 1991, U.S. President George Bush took the initiative on nuclear arms reduction, and, in December 1991, South Korean President Roh Tae Woo made a "Nuclear Non-existence Declaration." Against these backgrounds, North Korea finally concluded the Agreement in April 1992, which took effect on the day of conclusion. In accordance with the Safeguards Agreement, the IAEA is conducting ad hoc inspections to verify the content of the design information and initial report submitted by North Korea. After subsidiary arrangements are formulated and entered into force with North Korea, regular inspections will be carried out.

On the other hand, it has been made known, from North Korea's own account in the initial report, and from the facts that emerged during the mid-May visit to North Korea by IAEA Director-General Hans Blix, that a large-scale "Radiochemical Laboratory" exists -which could become a reprocessing plant when completed-and that North Korea has extracted plutonium, albeit "small" in quantity. The concern of the international community about possible nuclear weapons development by North Korea is yet to be dispelled, and there is a need to continue the efforts to work on North Korea until the concern is removed.

As part of the international responses to nuclear non-proliferation problems in the post-Cold War period, there have been moves to strengthen the export control regime in the nuclear area. In March 1991, the first meeting of Nuclear Supplier Group was convened, and the 26 participating countries of the Guidelines for Nuclear Suppliers (the so-called the London Guidelines), met for the first time in 13 years since its creation. They deliberated on measures to strengthen the export control system and help prevent nuclear proliferation. The second meeting was held from March to April 1992. In addition to the export controls on items which are specifically used for nuclear power plants, a new guideline (the London Guideline Part 2) was initiated to cover nuclear-related dual-use items that have both nuclear and non-nuclear purposes. Regarding this effective system to ensure nuclear non-proliferation, Japan has made its utmost efforts to launch this guideline. Since its efforts have been highly acclaimed by the international community, it was decided at the second Nuclear Suppliers Conference, that Japan function as a contact point of this framework. In December 1992, Japan chaired the first meeting to prepare the implementation of the framework, and it was agreed that the participating countries would cooperate further on its complete and smooth implementation starting in January 1993.

The IAEA Secretariat has conducted its review of the Safeguards system, responding to calls for improvements and strengthening of the system at the Fourth Review Conference of the NPT in 1990. The IAEA Board Meeting in February 1992 reaffirmed the Agency's right to undertake special inspections in undeclared facilities and agreed to an early submission of nuclear facility design information. This confirms that IAEA can carry out special inspections in undeclared facilities if there is concern about an unreported activity based on the information acquired through cooperation of relevant countries or through IAEA's own information or as a result of routine inspections. This was in response to Iraq's secretive nuclear development in non-compliance with the IAEA Safeguards Agreement. In addition, previously the submission of the design information on a nuclear facility had been done immediately before the nuclear material was received to the facility (about 180 days prior); it was agreed that the submission would be made much earlier.

(a) Chemical Weapons Convention (Convention on the Prohibition of the Development, Production, Stockpiling and Use of Chemical Weapons and on their Destruction)

(i) Conclusion of the Negotiations The Conference on Disarmament in Geneva adopted in September 1992 the Draft Text of Chemical Weapons Convention, which was contained in its report to the 47th U.N. General Assembly to be held n autumn that year. This completed the negotiations for this Convention which had lasted over 20 years. The U.N. General Assembly adopted the resolution to commend this Convention and to call upon all states to sign the Convention and to become parties to it. In response to this resolution, this Convention became open for signature for all states at the signing ceremony in Paris in January 1993. The ratification by 65 countries is required for its entry into force and at the earliest it can enter into force in 1995.

The negotiations took some 20 years for the following reasons: 1) resolving conflicting national interests had been difficult due to the very complex nature of the content of the Convention including its verification system; 2)the negotiation had been hampered by confrontations between the Eastern and Western blocs under the Cold War; and 3) as the top priority in arms control and disarmament negotiations for both the United States and the Soviet Union was placed on nuclear disarmament, they had found it difficult to expand its reach to the field of chemical weapons at that time. However, such moves as the end of the East-West tensions and the Gulf Crisis highlighted the importance of the non-proliferation of chemical weapons. As a result, the momentum to conclude the negotiations on banning chemical weapons heightened, eventually leading to the successful conclusion this time.

(ii) Contents of the Convention This Convention aims at eliminating chemical weapons on a global scale and therefore contains the following epoch-making points:

1) Comprehensive Ban of Chemical Weapons While the Geneva Protocol of 1925 banned the use of chemical weapons in wartime only, the Chemical Weapons Convention also bans the development, production and possession of chemical weapons. Moreover, the State Parties are obligated, firstly, to declare their chemical weapons and chemical weapons production facilities within 30 days after the Convention takes effect for the State Parties. They are, secondly, required to submit them for verification and, eventually, destroy them within 10 years, in principle, after the Convention enters into force.

The State Parties, regardless of whether facilities concerned are government-owned or privately-owned, are required to declare annually the production volume and production facilities of highly dangerous toxic chemical agents that can be converted into chemical weapons. At the same time, they should accept inspections to verify that activities in the facilities manufacturing toxic chemical agents do not violate the Convention.

In this respect, the challenge inspection, the so-called surprise inspection, is designed specifically to enhance the verification function of this Convention. If a request for a challenge inspection is made by another State Party upon a suspected violation of the Convention, regardless of whether the facility is declared or undeclared and whether it is government-owned or privately-owned, the State Party must accept an international inspection team. This establishment of the challenge inspection system is regarded as an important and highly effective deterrent against violations.

Japan plans to sign the Convention at the signing ceremony in January 1993, and will consider arranging necessary framework for domestic implementation of the Convention to ensure its eventual ratification. In implementing this Convention, there is a need to gain the full understanding of those concerned, because the declaration of toxic chemical agents and acceptance of inspections stipulated by the Convention have considerable influence on the private industrial sector.

In order to proceed with preparations for the entry into force of the Convention, a preparatory commission and a provisional technical secretariat are to be established in early 1993. These organizations will specifically consider the details for the implementation of the Convention, such as the setting up of the guidelines of inspection procedures and training of inspectors until the Convention enters into force and the official Organization for Prohibition of Chemical Weapons is established. It is expected that Japan will actively participate in such consideration and contribute to them.

(b) Biological Weapons Convention [Convention on the Prohibition of the Development, Production and Stockpiling of Bacteriological (Biological) and Toxic Weapons and on their Destruction]

The Third Review Conference on Biological Weapons Convention was held in September 1991. Against the background of the dispatch of a U.N. inspection team to Iraq to inspect the Iraqi development of biological weapons, the discussion at this Conference centered on strengthening the Convention regime. As a result, expansion and strengthening of the existing confidence-building measures, which already contained the declarations of microbiology-related facilities and defense research programs, were taken. The declarations of national laws and vaccine production facilities were added to these measures. Furthermore, since this Convention originally lacked verification provisions, the need for rectification was strongly recognized. A special government experts group was established to consider the verification issues.

This expert group held its first meeting in March 1992 and started its deliberations to examine from the professional viewpoint whether it is possible to conduct inspections under the Convention, and what kind of inspection methods are desirable. The experts will report their conclusions by the end of 1993, and Japan is expected to positively participate in this deliberation and contribute to it.

The Australia Group is an export control regime on the material and technologies related to the development and production of biological and chemical weapons. It consists of 24 countries, including Japan. In 1985, the first AG meeting was held with the initiative of Australia and the AG has since been meeting twice a year to deliberate on the strengthening and enhancement of the effective export control regime for the prevention of chemical weapons proliferation. Also, since 1989, discussions have been held on ways to prevent proliferation of biological weapons. At present, the AG members implement export controls on chemical weapons precursors and biological weapons-related agents as well as dual-use equipment which could be used to produce biological and chemical weapons.

Regarding the non-proliferation of missiles, industrialized democracies, including Japan, have been implementing, since 1987, export controls on equipment and technology which could be used to manufacture missiles capable of delivering nuclear weapons. These measures are in accordance with the common guidelines of the Missile Technology Control Regime (MTCR). In July 1992, it was agreed that this regulation be expanded to cover not only nuclear missiles but also all missiles capable of delivering weapons of mass destruction including biological and chemical weapons. Against the background of increasing apprehension about the proliferation of missiles, the MTCR participating countries, of which membership has expanded to 22 as of the end of 1992 from the original seven countries, have been encouraging non-participating countries to adhere to the guidelines.

5-3. Activity of the U.N. Special Commission (UNSCOM) on the Elimination of Iraqi Weapons of Mass Destruction

In accordance with paragraph C of the resolution for a formal cease-fire of the Gulf Crisis (UNSC Resolution 687) adopted by the U.N. Security Council in April 1992, Iraq decided to unconditionally accept to destroy, remove or render harmless, under international supervision, its weapons of mass destruction, ballistic missiles and related facilities. The UNSCOM, established on the basis of this resolution, dispatched 45 teams to Iraq as of October 1992 to inspect on-site the situation concerning weapons of mass destruction, to supervise their complete destruction and to ensure Iraq's non-possession of such weapons in the future. (As regards nuclear weapons, the IAEA is taking the leading role. UNSCOM, for its part, is playing a cooperative role.)

It was confirmed through on-site inspections that Iraq has a development plan for nuclear weapons, though they are not yet at a manufacturing stage. It was also confirmed that Iraq had enriched uranium, as well as separating and extracting plutonium. Further-more, it was confirmed that Iraq had manufactured nuclear fission substances, albeit on a small scale. All those activities, conducted without any declaration, violate the IAEA safeguards agreement. At present, equipment and facilities related to the nuclear weapons program are being destroyed, and inspection and supervision will be continued to see if Iraq continues to adhere to the resolution. As regards chemical weapons, a volume which far exceeded the amount reported by Iraq was found by the inspection. Weapons that could be safely transported were taken to the destruction facility and weapons that are too heavily damaged to be moved were destructed on site. At present, destruction by Iraq is under surveillance. As regards biological weapons, actual weapons have not been discovered although materials for biological weapons were found. At present, Iraq's non-possession is under surveillance. With respect to ballistic missiles, the following measures have been taken: inspections of the Iraqi plan to develop ballistic missiles (including super-guns), its destruction of discovered missiles and confirmation of destruction of the Scud missiles, which Iraq insists that it has already destroyed. However, inspections have continued as concealed activities are still suspected.

Japan is supporting the activities of UNSCOM, believing that it plays an important role in restoring peace and stability of the Gulf region. With its financial contribution of $2.5 million during FY 1991, Japan has been cooperating with UNSCOM's activity. For instance, it has dispatched an expert on chemical weapons as a member of UNSCOM ever since UNSCOM was established in May 1991. Japan has also dispatched experts on protection against chemical weapons as part of the Chemical Weapons Survey Mission and the supervision group on destructing chemical weapons.

Against the background of the Iraqi invasion of Kuwait lay Iraq's massive import of weapons. This fact renewed the danger that a country, even though a non-producer of weapons, could become a military power which undermines the regional military balance by importing weapons far exceeding the volume required for self-defense. On the other hand, a country has no choice but to deter possible invasions from other countries with its own military capability. It must also be acknowledged that procuring weapons from foreign countries for self-defense requirements is allowed under Article 51 of the U.N. Charter stipulating self-defense rights.

Thus, transfers of conventional weapons has two dimensions .On the one hand, they are necessary for the self-defense of a sovereign state. On the other hand, such transfers can become a destabilizing factor for the region. Since it is difficult to define the requirement of self-defense, there have been large differences of opinion among the various countries regarding regulation of transfers of conventional arms.

At present, the international community is grappling with this problem by promoting transparency and openness and reinforcing a framework of voluntary restriction framework of arms suppliers.

If the international community is equipped with a framework that enhances transparency and openness of the transfers of conventional weapons, it will be able to identify, at an early stage, excessive accumulations of weapons. A nation's participation in such a framework is an expression of its determination toward mutual confidence-building among the participants. Although attempts had been made from this viewpoint to adopt a U.N. resolution in support of international publication of transfers of weapons, conflicting views among various countries have prevented an adoption of such a resolution.

With the heightened international attention to this problem, triggered by the Gulf Crisis, Japan proposed the establishment of a register system in March 1991 under the auspices of the United Nations regarding the transfers of conventional weapons. At the U.N. General Assembly in the fall of that year, in cooperation with the EC countries which had also made a similar proposal, Japan submitted a draft resolution on the U.N. Arms Register. This proposal was adopted with an overwhelming majority of 150 for, 0 against and 2 abstentions in December of that year, and in January 1992, the U.N. Arms Register was established at the U.N. headquarters.

In order to consider technical procedures and the modalities for an early expansion of the scope of the Register, a panel of govern-mental experts met in New York three times between January and July of 1992. (Ambassador Mitsuo Donowaki participated.) The panel submitted a report to the Secretary-General of the United Nations. The U.N. General Assembly, in 1992, adopted a resolution proposed by Japan and other countries, which endorsed the report and called on all countries to participate in the Register (the first registration for arms transfers throughout 1992 is to be made by the end of April 1993).

In order to exchange views on transparency in armaments, Japan held a Tokyo Workshop in June 1992, inviting experts from various countries.

To ensure effectiveness of the U.N. Arms Register, it is indispensable that many countries indeed submit data and information to the Register. However, since each country participates in the Register on a voluntary basis, the understanding and cooperation of each country are called for. Japan, which does not export weapons and pursues transparency in its weapons imports, is determined to make efforts to promote this system.

(3) Improvement and Reinforcement of Framework of Voluntary Restrictions by Arms-supplying Countries

For more than 20 years Japan has followed a very strict policy on exports of weapons in accordance with its " Three Principles on Arms Exports." From this standpoint, Japan has emphasized on various occasions to the international community the importance of voluntary restraint on arms supplies that could undermine the regional military balance.

In an attempt to form a framework for voluntary restrictions on arms transfers, meetings were held among five major arms suppliers (the United States, the United Kingdom, France, Russia and China). The meeting was proposed by U.S. President George Bush in an effort to tackle the problems of weapon transfers in the Middle East. Following the meeting held in Paris in July 1991, a second meeting was held in London in October, in which a guideline on transfers of conventional weapons was adopted. At the same time, it was agreed that exchange of information for consultation would be made among the five countries regarding transfers of seven types of weapons to the Middle East region. In the Washington meeting of May 1992, a guideline on the non-proliferation of weapons of mass destruction and missiles was proposed.

The Strategic Arms Reduction Treaty (START I), which provided the reduction in strategic arms for the first time in history, was signed by the United States and the Soviet Union (at the time) in July 1991. However, the collapse of the Soviet Union at the end of 1991 caused apprehensions about the control of nuclear weapons of the former Soviet Union, not to mention the viability of the Treaty itself. The START I protocol was signed in May 1992 as a result of coordination efforts made between the United States and the four former Soviet republics (Ukraine, Kazakstan, Belorussia and Russia) where strategic nuclear weapons were deployed. This protocol made all the above five states party to the Treaty. At the same time, the protocol stipulated that Ukraine, Kazakstan and Belorussia should adhere to the Nuclear Non-proliferation Treaty (NPT) as non-nuclear weapon states in the shortest possible time. Moreover, the presidents of these three countries sent letters to the President of the United States, pledging that they would eliminate all nuclear weapons now deployed on their respective territories within the seven years of the destruction term of the START Treaty.

Japan has steadfastly supported efforts by the United States in the START negotiations. It has also appealed to the countries of the former Soviet Union to fulfill their obligations for arms control and disarmament and to ensure unified control of nuclear weapons in the period of uncertainty around the time of the collapse of the Soviet Union. Japan particularly urged the three republics of Ukraine, Kazakstan and Belorussia, where strategic nuclear arms continue to be deployed, to accede to the NPT as non-nuclear-weapon states.

In the Summit Meeting between the United States and Russia in Washington D.C., in June 1992, an agreement was reached to reduce strategic nuclear arms to the level that far exceeds the level of the abovementioned START. This agreement bas epoch-making elements such as the reduction of strategic nuclear warheads held by the United States and Russia to between 3,000 and 3,500, respectively (one third of the present holdings or half the number of the START level) by the year 2003 or by 2000 at the earliest. It also stipulated the total elimination of multiple warheaded Inter-Continental Ballistic Missiles (ICBM). This agreement was turned into a Treaty (START II) and signed in January 1993 in the U.S.-Russian Summit. It is hoped that an early ratification and full implementation of the new Treaty together with START I will be attained.

Outline of the 2nd Strategic Arms Reduction Treaty

(START II)

1. Reduction of the strategic armed forces within 7 years starting on the entry into force of START I

(1) Total number of warheads of each country: 3800 - 4250

(2) Number of MIRVed ICBM warheads: 1200

(3) Number of heavy ICBM warheads: 650

(4) Number of SLBM (Sea-launched Cruise Missiles) warheads: 2160

2. By the year 2003 (by the end of 2000 if the United States gives financial support to Russia in elimination of strategic arms)

(1) Total number of warheads of each country: 3000 - 3500

(2) All MIRVed ICBMs: None

(3) Number of SLBM warheads: 1750

In September 1991, when the control of nuclear weapons within the then Soviet Union appeared to be a cause for concern as a result of the failed coup d'etat, U.S. President George Bush announced the initiative on disarmament. This initiative included elimination of all ground-launched short-range nuclear weapons and withdrawal of all sea-deployed tactical nuclear weapons. It also called on the Soviet Union to reciprocate the United States regarding tactical nuclear weapons. In response, the then Soviet President Mikhail Gorbachev announced in October that year his intention to reciprocate the United States on the reduction of tactical nuclear weapons. These initiatives characterized by a unilateral reduction of their respective country s weapons thus marked a different approach to the nuclear disarmament process which traditionally required long-term negotiations. Therefore, they were epoch-making in terms of both the content and the methods.

The Treaty on Conventional Armed Forces in Europe under which the party-states agreed to reduce conventional weapons for the first time after World War II was signed in November 1990 by the 16 member states of the North Atlantic Treaty Organization (NATO) and the 6 members of the former Warsaw Pact. Against the background lay democratization in Central and Eastern European countries and easing tensions between the East and the West since the summer of 1989. However, the collapse of the Soviet Union at the end of 1991, just prior to its entry into force made it necessary to undertake legal adjustment of the CFE Treaty. In June 1992, it was confirmed that the eight former Soviet republics (Note) would inherit the position of the Soviet Union which was the original signatory to this Treaty. In July 1992, 29 member states of NATO and the former Warsaw Pact signed the document which shall apply provisionally to the CFE Treaty. Thereafter, all 29 countries ratified the Treaty and the CFE Treaty entered into force in November. Along with the provisional application document, CFE-1a document was also signed. This document stipulates limits to the numbers of personnel of various countries.

5-6. Deliberations at the United Nations and the Conference on Disarmament in Geneva

The 46th Session in 1991 and 47th Session in 1992 of the U.N. General Assembly were held just in the period of the collapse of the Cold War structure. During this period, great achievements bad been made in arms control and disarmament, such as the progress in nuclear disarmament between the United States and Russia and the conclusion of negotiations on Chemical Weapons Convention. Changes in voting attitudes at these sessions showed that the former Soviet Union and the Eastern European countries no longer can be viewed as a solid political group. As a result, the non-aligned countries had weakened support for their resolutions which had been submitted for many years, such as those concerning nuclear disarmament, because of the weakened backing from the former Eastern bloc countries on nuclear disarmament issues. Efforts were made to restructure conference operation by reducing the number of resolutions itself and by increasing that of consensus-adopted resolutions. Major developments on individual items included the adoption of the resolution on the Transparency in Armaments, unification of the resolutions on Comprehensive Test Ban Treaty (both at the 46th Session) and the resolution recommending the Chemical Weapons Convention (47th Session).

Deliberations at the Conference on Disarmament in Geneva in 1992 took place three times, from January to March, May to June and August to September, respectively, and nine agenda items including Chemical Weapons and the Transparency in Armaments (Transparency in Armaments was taken up for the first time in 1992) were discussed.

As regards nuclear tests, due to conflicting opinions of the countries concerned, an ad hoc committee to deliberate the nuclear test ban issue was not established during the 1992 Session.

As regards the Chemical Weapons Convention negotiations, serious deliberations were made and, as mentioned above, negotiations were concluded during the 1992 Session.

Epoch-making developments took place in COCOM, reflecting the end of the Cold War. In May 1992, Hungary, whose strategic threat had diminished and whose export control system was well established, was deleted from the COCOM list of proscribed countries for the first time in the organization's history. In November 1992, COCOM member countries held an unofficial dialogue called the "COCOM Cooperation Forum" with the COCOM proscribed countries which are promoting a large-scale reform and are willing to establish effective export control system. In this forum, the establishment of effective export controls by the proscribed countries, and the promotion of access by the proscribed countries to COCOM controlled goods and technologies for civil end-use were discussed. In the future, it is expected that cooperation with the proscribed countries on export controls will be promoted with emphasis on bilateral cooperation and that relaxation of COCOM export control will be considered in accordance with the progress made.

Now that the Cold War has ended, it is all the more important for the international community to cooperate to build international peace and prosperity based on the common values, such as freedom, democracy, human rights and a market economy, as a beacon for the international community.

In the countries of the former Soviet Union and in the Central and Eastern European countries, efforts are underway toward the establishment of democratic institutions and the transition to market economies amidst economic and political difficulties. In Asia, Latin America and Africa, similar reform efforts are being undertaken. For example, as for Asia, a multi-party general election was held in May 1991 in Nepal for the first time in 32 years; Mongolia held its first general election under the new Constitution in June 1992; and democratization is further proceeding in such countries as Bangladesh.

To support these reforms toward democracy and market economies, it is extremely important for the industrialized democracies such as Japan, the United States and European countries, to cooperate closely. These countries share the basic values and, together, account for more than 70 percent of world GNP. The Political Declaration of the Munich Summit of July 1992 recognized that "Partnership will flourish as common values take root, based on the principles of political and economic freedom, human rights, democracy, justice and the rule of law."

Based on this recognition, Japan has not only worked with other industrialized democracies on the multilateral front but also provided active assistance bilaterally. As an Asian nation which was a latecomer to the ranks of the advanced, industrialized countries, Japan has its own expertise which it learned from the experience of other advanced countries. In view of such expertise, Japan is expected, in particular, to further encourage those countries on their efforts toward democracy and market economies by extending its economic aid and intellectual support through dialogue.

6-2. Support to the Former Soviet Union and the Central and Eastern European Countries

The transformation of the countries of the former Soviet Union and Central and Eastern Europe from communism and socialism to democracy and market economies is a historic effort. In assisting such reforms, the following points are important:

First, assistance to these countries should be premised on their own efforts to help themselves in moving toward democracy and a market economy.

Second, in extending assistance, it is important for these countries to change the military structure established during the Cold War era, particularly to reduce military spending and convert military industries to civilian ones. This view was also expressed by the Political Declaration of the Munich Summit.

Third, coordination among the donor industrialized democracies is indispensable in light of the scale of the aid to the countries of the former Soviet Union and Central and Eastern Europe. To make its assistance most effective, each donor needs to make use of its own expertise.

Many of the countries of the former Soviet Union and Central and Eastern European economies suffer from decreased production, fiscal deficits, high inflation and currency instability. They are also plagued by their insufficient knowledge of market economic principles and a lack of understanding of the values and behavior which are the foundation of a market economy. Under the circumstances, there is a need to combine various forms of assistance. They include aid for macroeconomic stabilization. They also include such micro-economic assistance as improvement of infrastructure to underpin the shift to the market economy, human resource development through training and other means. Furthermore, there is a need for promotion of trade and investment which helps integrate their economies into the world economy.

Technical assistance to help build the foundations of a market economy on a microeconomic level, such as human resource development in the public sector, improvement of basic infrastructure including distribution, development of competitive private corporations and training of their workers, remains important in the countries of the former Soviet Union and Central and Eastern Europe. The Government of Japan is playing an active role in providing assistance in these fields. Multilaterally, assistance is underway at, among others, the Organization for Economic Cooperation and Development (OECD) through the Center for Cooperation with the European Economies in Transition, established in March 1990. Examples include seminars, economic surveys and dispatch of missions in the field of defense conversion, market policies and privatization, in all of which the OECD has know-how.

For the countries of the former Soviet Union and the Central and Eastern Europe, it is important to formulate and implement comprehensive economic reform programs for macroeconomic stabilization in collaboration with the International Monetary Fund (IMF) and the World Bank. Such programs are not only indispensable in receiving loans from industrialized countries and making them effective, but also imperative in helping to curtail fiscal deficits, to check inflation and to stabilize currencies. As seen below, various forms of assistance are underway on the international front to aid such efforts for macroeconomic stabilization in these countries.

(c) Integration of the Former Soviet Union and the Central and Eastern European Countries into the International Economic and Trade System

To promote economic reforms in the countries of the former Soviet Union and the Central and Eastern Europe, it is important to integrate them into the international economic and trade system through expansion of trade, investment and other means. To this end, the following assistance is underway on the international front.

As an attempt to build the international framework to expand the trade and investment of the countries of the former Soviet Union and the Central and Eastern Europe, efforts have been made to formulate the European Energy Charter which aims at integrating the competitive energy sectors of these countries into the world energy market. The Charter was signed in December 1991. In 1992, nearly all the countries of the former Soviet Union became members of the IMF and the World Bank. Efforts also continue in the GATT to integrate these countries into the multilateral free trade system.

It is important to improve the access to international markets for products from these countries, which will encourage their self-help efforts. As regards the countries of the former Soviet Union, the Economic Declaration of the Munich Summit stressed "the need for the further opening of international markets to products from the new States. Most-favored-nation treatment should be applied to trade with the new States and consideration given to further preferential access." It also pointed out the need to further open the Central and Eastern European markets.

Russian President Boris Yeltsin has advocated democracy, the rule of law, and respect for human rights and basic freedom. In January 1992, he executed radical reforms including price liberalization, and tight fiscal and monetary policies as part of the moves toward a market economy. However, the radical economic reforms have faltered, and it is still premature to conclude that the progress toward democracy and a market economy has taken firm root in light of the confrontation between the President and parliament, the rising nationalist factions and the resistance of various domestic groups whose vested interests are threatened by the economic reforms.

Under the circumstances, international efforts to assist the reforms in the countries of the former Soviet Union have been further enhanced. At the Munich Summit, a financial assistance totaling $24 billion was announced to underpin Russia's comprehensive economic reform plan devised with the cooperation of the IMF. In addition, the Conference on Assistance to the New Independent States were held three times in 1992, and undertook coordination for such areas as food, housing, technical, medical assistance and energy. At the final meeting in October 1992 in Tokyo, it was decided to establish country-specific coordinating groups led by the World Bank for all the New Independent States, including Russia, as a new coordinating mechanism to take over the function of this meeting.

Japan hosted the third Conference on Assistance to the New Independent States in October 1992. It has played a substantial role in offering a moratorium of the official debts of the countries of the former Soviet Union, and has played an active part in the $24 billion assistance package. Although there remains the task of concluding a peace treaty through the settlement of the Northern Territories Issue, Japan has provided various forms of bilateral assistance (See Chapter 3, Section 4).

In addition to its aid to Russia, Japan has striven to provide assistance to other countries of the former Soviet Union. For instance, Japan took the initiative at the Development Assistance Committee (DAC) of the OECD, in including the five republics of Central Asia (Uzbekistan, Kazakhstan, Kirgistan, Tajikistan and Turkmenistan) in the List of the Developing Countries eligible for Official Development Assistance (ODA). As a result, these five countries were officially listed from the beginning of 1993.

The transition of the Central and Eastern European countries to democracy and a market economy is seen as irreversible despite some complications. However, destabilizing factors such as rising ethnic nationalism still persist. Progress in economic reforms differs from country to country. Central European countries (Poland, Hungary, Czech and Slovakia), in particular, have made some progress in achieving macroeconomic stability through tight fiscal policy and in creating the structures of a market economy. But in other countries, there has been inadequate progress in macroeconomic performance, and in the building of a market economy, and in other fields. They also suffer from serious economic difficulties. Furthermore, Central and Eastern European countries in general must undertake reforms on the supply side such as fostering the competitive private sector.

Assistance from industrialized countries to Central and Eastern Europe is being implemented mainly through the Group of 24 for Economic Assistance to Central and Eastern Europe (G-24) and through the European Bank for Reconstruction and Development (EBRD) established by the agreement reached in the Arche Summit in July 1989. According to G-24, a total of about $56 billion was extended as of June 1992.

Of that $56 billion, Japan contributed over $4.5 billion (about 8.3 percent) in technical, food and financial aid. Japan's aid centers on the following areas: technical cooperation to use its postwar reconstruction experiences, fostering private companies, improving the international balance of payments, environment-related assistance, and promotion of investment and trade.

Reforms toward democracy and market-oriented economies are underway in many developing countries in Asia, Latin America and Africa. Assistance to these reforms is important as it helps solve problems of poverty and build partnership based on universal values transcending differences between the North and the South. Japan is actively aiding these moves toward democracy and market-oriented economies not only in the Asian countries such as Mongolia, Nepal and Bangladesh, but also in Latin America and Africa.

It is increasingly believed that it is imperative to approach developing countries in an appropriate manner, using aid as a tool of foreign policy, in the event of the violation of human rights or reversals to democratization. The Political Declaration of the Munich Summit pointed out that "political and economic freedom are closely linked and mutually reinforcing, and that, to that end, good governance and respect for human rights are important criteria in providing economic assistance."

In its ODA Charter of June 1992, Japan laid down the principles in which it would take into account the following factors in providing aid: trends of military expenditures, efforts for promoting democratization and introduction of a market-oriented economy, and the situation regarding the securing of basic human rights and freedoms. Japan will continue to assist the efforts of developing countries toward democracy and a market-oriented economy. If any situation arises which could be a problem in light of the principles of its ODA Charter, Japan will persistently encourage the recipient country to take voluntary actions to correct such a situation. At the same time, Japan may reconsider its aid policy to the relevant recipient country if the situation cannot be overlooked by Japan and the entire international community.

The world economy has been on a decelerating trend since 1990, as governments of industrialized countries attempted to rectify the excesses of the latter half of the 1980s. A partial recovery was seen in 1992, but the pace is slow against the backdrop of slow growth in industrialized economies. The adjustment process is underway. According to the Organization for Economic Cooperation and Development (OECD) data, the real economic growth rate for its member countries fell from 2.4 percent in 1990 to 0.8 percent in 1991, and is forecast to remain at about 1.5 percent in 1992.

Among the industrialized countries, signs of economic recovery, though gradual, emerged in the United States in 1992, after its real growth rate fell to -1.2 percent in 1991. The Japanese economy began to experience slower growth from the end of 1990 and entered an adjustment phase by the latter half of 1991. Severe conditions continued throughout 1992 affected by the slowdown in final demand. In the European Community, after slow growth in 1991, a moderate recovery path is projected with growth of 1.1 percent in 1992 and 1.2 percent in 1993. (The above growth rates are all from OECD data.)

In the various multilateral fora where the economic policies of the industrialized countries are coordinated, such as the OECD and the G-7 Summit, the U.S. fiscal deficit, high German interest rates and slower growth in Japanese domestic demand have especially been discussed in the context of efforts for the recovery of the world economy.

The United States failed to reduce its massive fiscal deficit (4.4 percent of GNP in FY 1992). This significantly diminished the income redistribution function of fiscal policy. This also prevented a decline in long-term interest rates, due to firmly-rooted inflationary expectations, resulting in discouraged private investment. Furthermore, it is pointed out by the International Monetary Fund (IMF) that the fiscal deficit is an important cause of the massive U.S. external deficit, and also a potential source of tensions in financial and foreign exchange markets.

In Germany, the economic slowdown has been accelerated by its tight monetary policy against the background of the fears about increased inflationary pressure accompanying German unification, Also, European countries have been beset by the "European dilemma," in which they are compelled to resort to tighter monetary policy management within the framework of the European Monetary System (EMS) in view of defending their own currencies.

Since autumn 1992, the EMS has gone through upheaval, as is seen in a shift to the floating system by the British pound and the Italian lira, as well as currency realignments within the system. The market has not yet recovered its stability fully.

Despite slow growth in the industrialized economies, China, particularly its southern region, and the members of the Association of Southeast Asian Nations (ASEAN) continue to record high growth. The overall growth rate of developing countries is projected to rise to a 10-year record of 6.1 percent in 1992 and 5.7 percent in 1993 from 3.2 percent in 1991. On the other hand, in southern and eastern Africa, the economies are forecast to deteriorate further because of civil wars and drought.

The economies of the countries of the former Soviet Union, now in the process of transition to market economies, continue to be in confusion with decreased production, rising inflation, diminished trade and difficult debt payment. Although the decline in output has been arrested in some of the Central and Eastern European countries, the region in general still faces decreasing mining and manufacturing production, increasing unemployment and rising prices. (According to OECD data, real economic growth in this region in 1993 is forecast to improve from -6.0 percent to zero.)

In addition to helping the economic development of the developing countries and preserving the global environment, the world economy faces, in the aftermath of the Cold War, new challenges such as assisting the former Soviet Union and Central and Eastern European countries toward market economies, thereby integrating their economies into the world economy. To address these problems, it is increasingly important to maintain and strengthen the vitality of the world economy. Toward that end, it is essential that the trilateral economies of the United States, Europe and Japan, which account for nearly 70 percent of the world's GNP, coordinate their macroeconomic policies to restore growth, and that individual industrialized countries make efforts to pursue structural adjustments so as to increase the prospects of future growth. Such policy coordination is already underway in such multilateral fora as the G-7 Summit Meeting, the G-7 meeting of the Finance Ministers and Central Bank Governors, and the Organization for Economic Cooperation and Development (OECD). In 1992, the recovery of economic growth was discussed as a priority task in these international fora, against the background of the slow growth in the world economy.

In particular, in the Economic Declaration of the Munich Summit in July 1992, G-7 countries agreed to further continue policy coordination efforts toward stronger sustainable growth. More specifically, the G-7 agreed on specific guidelines including pursuit of sound monetary and fiscal policies, reduction of excessive fiscal deficits and lower interest rates, limiting public spending, and integration of environmental and economic growth objectives. Expectation was also expressed that the Uruguay Round negotiations would be concluded within 1992.

Against the backdrop of slower growth of their economies, the industrialized countries found it difficult to take new expansionary macroeconomic measures in view of their fiscal deficits as well as the need to defend their own currencies. It was thus extremely important that Japan formulated, in August 1992, a comprehensive economic stimulus package to stimulate domestic demand. It was unprecedented for its amount of \10.7 trillion and was highly regarded for its important contribution in the context of international policy coordination.

In the medium-term, it is vital to address the rising global demand for funds. New capital demand stems from the continuously strong development-related demand in developing countries and the emergence of new demands from the former centrally-planned economies in transition to market economies. In addition, as the population of industrialized countries are increasingly aging, there is a concern that the global demand and supply situation for capital will be tightened. This worldwide fund shortage would raise real long-term interest rates and increase the burden of developing countries suffering from accumulated debts. It would also curb private investment, which is a vital source of growth. Based on this recognition, the Economic Declaration of the Munich Summit confirmed the guideline of the need for lower interest rates through the reduction of excessive budget deficits and the promotion of savings.

As medium-and long-term tasks for the world economy, the analyses and adjustments of mutual linkage among different policy sectors and the international harmonization in areas which have traditionally been considered to be domestic policies are attracting attention in response to progress in economic globalization. Some of these issues are considered to be priority issues in the post-Uruguay Round. Examples include deliberations on relations between trade and environmental policies in the OECD and the GATT, on the relations between trade and competition policies and on the tasks of improving and harmonizing competition policy in the OECD. They are noteworthy as efforts for policy coordination in anticipation of the future important tasks of the world economy.

In the energy sector, the momentum for dialogue and cooperation between the oil producing and consuming countries has been growing in recent years, against the background of rising interest in environmental issues and the pursuit of a new world order after the Gulf Crisis. Japan is taking a careful approach toward dialogue of this sort, so as not to interfere with the market mechanism. Yet, considering that the exchange of information has the merit of improving the transparency of the market as well as contributing to mutual understanding, Japan has taken part in various meetings of producer-consumer dialogue. In July 1992, a ministerial-level work-shop was held in Norway, where a wide range of issues related to energy and the environment were discussed in addition to the traditional theme of needs for investment in oil producing countries and stable oil prices.

The collapse of the Soviet Union and the end of the Cold War have had major effects on the international energy situation. In December 1991, Japan, together with the major industrialized countries, the countries of the former Soviet Union and Central and Eastern Europe, signed the European Energy Charter. Its objective is to create a framework to promote private sector trade and investment in energy by integrating the energy sectors of the countries of the former Soviet Union and Central and Eastern Europe into the global energy market. Under this Charter framework, negotiations are underway to establish a legally binding Basic Agreement and individual Protocols covering energy efficiency, the environment, oil and natural gas, atomic energy, etc. Japan is actively participating in all of these discussions.

In line with the spirit of the "Mayekawa Report" submitted in April 1986, Japan has pursued policies aiming at an external balance and external economic relations which are internationally harmonious. Japan has steadily implemented structural adjustment measures such as greater market access and deregulation, as well as domestic demand-oriented economic management. Against the background of such efforts, the Japanese economy expanded briskly led by private sector capital spending and personal consumption to achieve average real economic growth of more than 5 percent a year between 1987 and 1990, realizing growth based on domestic demand. Against this backdrop, Japan's current account surplus fell from $87 billion in 1987 to $35.8 billion in 1990.

However, the prolonged high growth since 1987 fulfilled demand for capital spending and durable consumer goods such as automobiles in circles. In addition, monetary policy was tightened to check the inflationary pressures. This triggered the sharp decline of asset values which had been surging. As a result, the Japanese economy entered an adjustment phase in the latter half of 1991. As weak domestic demand has persisted, corporate and household confidence has not shown visible improvement. The adjustment phase is still underway. In the meantime, the J-curve effect accompanying the appreciation of the yen as well as decelerating imports because of weak domestic demand have contributed to the increase in the current account surplus. The current account surplus reached $72.9 billion in 1991 and $117.6 billion in 1992 (preliminary), exceeding the previous record of $87 billion registered in 1987.

To alleviate the negative effects of the economic adjustment and to ensure sustainable growth without inflation and a shift to more harmonious external imbalances, Japan took less stringent monetary measures, such as the series of reductions of the official discount rate. In March 1992, Japan adopted the Emergency Economic Measures, consisting of seven types of measures, including the frontloading of public works spending to the first half of the fiscal year. This was followed in August by an unprecedentedly large package of economic measures totaling \10.7 trillion (equivalent to 2.3 percent of GNP). This series of measures were highly regarded by the international community, as they not only responded to domestic demand to stimulate the economy but also reinforced its domestic demand-oriented structure, therefore meeting international expectations for stable expansion of the world economy.

In addition, in June 1992 the Government of Japan came up with a new economic plan called "The Five-Year Economic Plan - Sharing a Better Quality of Life around the Globe" which indicates a medium-and long-term direction for the management of the Japanese economy. This plan aims to reduce annual working hours to 1,800 between FY 1992 and 1996. For the metropolitan areas, including Tokyo, the plan sets a specific objective to enable people to acquire quality housing at a sum equivalent to around five times the annual income of an average working household. The plan also envisions a 1992-96 Japanese economy led by domestic demand, indicating a 3.75 percent annual contribution from domestic demand, and -0.25 percent from external demand (Note). The medium-and long-term vision of this plan attempts to realize the domestic needs for a better quality of life and external expectations for solidifying a domestic-oriented economic structure in a harmonious way. Therefore, it was received favorably by the international community.

8. Progress in Regional Integration and Regional Cooperation, and Strengthening the Multilateral Free Trade System

In recent years, there have been prominent moves toward regional integration in many parts of the world, including developing countries, and some progress has been achieved. Some regional integration such as in the case of the EC and NAFTA cover not only tariff reduction in intra-regional trade but also such fields as investment and services. These moves of regional integration are one of the major tides in the world economy today. The outcome of the Uruguay Round of GATT negotiations will be one of the most important factors which affect the future direction of these moves of regional integration.

The market integration process of the European Community (EC) that began in 1985 was mostly completed at the end of 1992. As the next stage of market integration, basic agreement was reached at the European Council at Maastricht, the Netherlands, in December 1991 toward realizing Economic and Monetary Union within the EC. Following the basic agreement, the Maastricht Treaty was signed in February 1992. The Maastricht Treaty aims at, among others, establishing a European Central Bank and introducing a single currency. Its ratification procedures are now proceeding in the PC member countries (Note). Such moves toward the European Union are an indication of the EC member countries' willingness to make further progress toward a "single Europe," even by transferring their sovereignty on economic and monetary policies to the Union.

European regional integration is also expanding geographically. In May 1992, the Agreement on the European Economic Area was signed between the European Free Trade Association (EFTA) members - including Switzerland, Austria, Sweden and Finland, and the EC - to establish the European Economic Area (EEA) that will allow free movement of people, goods, services and capital. In addition, in December 1991, the EC signed with Poland, Hungary, and the then Czechoslovakia a treaty aimed at establishing a free trade region, with the objective of eventual free movement of people, capital and services in the future. EC's neighbors led by the EFTA countries have increasingly applied for affiliation with the EC in recent years. (For details see Chapter 3, Section 3, Item 1)

In North America, the free trade agreement reached in 1989 between the United States and Canada developed into the North American Free Trade Agreement (NAFTA), which was signed by the United States, Canada and Mexico in December 1992. NAFTA contains not only mutual elimination of tariffs among the three nations over the next 15 years but also frameworks encompassing new areas such as service trade and intellectual property rights. NAFTA is expected to take effect in January 1994 after the ratification by the countries concerned. In this connection, there is a suggestion that a selective expansion of NAFTA to the Asia-Pacific countries be pursued. It should be noted, however, that this kind of thinking is tantamount to dividing the Asia-Pacific region, and is therefore undesirable.

The new U.S. President, Bill Clinton, in an election campaign speech in October 1992 expressed his support for NAFTA in principle, saying that he would not demand renegotiations. On the other hand, he called for the conclusion of supplemental agreements concerning such matters as the protection of environment and workers' rights.

Moves toward regional integration are also seen in Asia. In the Singapore Declaration of the 4th ASEAN Summit Meeting held in January 1992, agreement was reached on establishing an ASEAN Free Trade Area (AFTA) through a Common Preferential Tariff System within 15 years starting January 1993.

As a result of deliberations within ASEAN the East Asia Economic Group (EAEG) proposed by Prime Minister Mahathir of Malaysia was developed into the East Asian Economic Caucus (EAEC) at the ASEAN Economic Ministers' Meeting held in October 1991. Details of the proposal of the EAEC are now under consideration within ASEAN.

Other moves toward regional integration are also in progress in Central and South America as well as in Oceania (between Australia and New Zealand).

The major factors contributing to such active moves for regional integration are: firstly, progress of economic interdependence across national borders as a result of technological innovations, such as developments of means of transportation and communications, and activities of multinational corporations; secondly, policy efforts to revitalize regional economies in a time of sluggish world economy through realizing economies of scale through integration; thirdly, a policy objective particularly in the EC, to emulate the competitiveness of the economies of Japan and North America; and lastly, the concern about the future multilateral free trading system due to the stalled Uruguay Round negotiations.

Japan has achieved today's economic prosperity under the postwar multilateral free trading system based on the GATT, without being affiliated with any regional integrations through agreements with relevant countries. Japan places the highest priority on strengthening and maintaining the multilateral free trading system and attaches great importance to the early conclusion of the Uruguay Round negotiations.

With respect to regional integration, Japan considers that any form of regional integration must first be consistent with the principles of the General Agreement on Tariffs and Trade (GATE) and the Organization for Economic Cooperation and Development (OECD). Japan also believes that regional integration should aim to promote open cooperation that does not lead to exclusive economic blocs, and should pay full considerations to the trade and investment benefits of third countries. Japan has been taking every opportunity to enunciate this basic position at various fora such as the GATT and the OECD, and to those countries which are members of the EC, NAFTA and other regional integrations. To prevent regional economic integration moves from becoming protectionist ones, there is a need to conduct rigorous review and deliberations through direct consultations or by using such international fora as the GATT and the OECD.

Asia Pacific Economic Cooperation (APEC) is a form of regional economic cooperation body that differs in character from "regional economic integrations" through free trade agreements among countries within a region. APEC is a forum which aims to promote "open regional cooperation" for the economic development of the Asia Pacific region through projects and consultation on regional economic trends, to which Japan has been giving its active support. In 1991, the participation of China, Hong Kong, and Taiwan (as Chinese Taipei) was achieved. An agreement was reached at the 4th Ministerial Meeting held in September 1992 to establish a secretariat in Singapore and to create the APEC Fund, a development which further solidifies its foundation.

The driving force of the dynamic growth of the postwar world economy has been the free trading system based on the market economy. The GATT since its foundation in 1947 has made significant contributions to the expansion of world trade and economic growth as the institution promoting free trade.

Seven rounds of multilateral negotiations had been conducted at the GATT, beginning with the first tariff negotiations in 1947 until the Tokyo Round which lasted from 1973 to 1979. It achieved great success resulting in maintaining and developing the free trading system by formulating trade rules and cutting tariff rates. However, since the end of the 1970s during which the Tokyo Round was concluded, there has been a trend among the GATT contracting parties to depart from the GATT rules, with the background of the expanding trade imbalances among the industrialized countries. This trend includes such measures as voluntary export restraints, abuses of anti-dumping duties and unilateral measures not consistent with the GATT. As a result, it is widely recognized that there is a need to strengthen the existing GATT rules and to establish new rules in such sectors as trade in services, intellectual property rights and trade-related investment measures which have been outside the GATT framework. The Uruguay Round started in September 1986 in an effort to respond to such needs.

The objective of the Uruguay Round is to establish new rules in response to developments in international trade. Its success is expected to expand international trade and make significant contribution to the world prosperity. For Japan, strengthening the multi-lateral free trading system is not only for its own benefits, but its responsibility as a major trading nation. The maintenance of free trade and the prevention of protectionism are therefore the basis of Japan's trade policy. Based on this recognition, the Government of Japan regards the successful conclusion of the Uruguay Round negotiations as a top priority task in its foreign policy and has been making active contributions toward that goal.

(a) From the Brussels Ministerial Meeting to the Presentation of the Draft Final Act

The Uruguay Round negotiations were scheduled to be concluded at the Ministerial Meeting in Brussels in December 1990. However, the negotiations failed to reach an agreement mainly because of the disagreement between the United States and the Cairns countries (Note), on the one side, and the European Community (EC), on the other, over agricultural issues. The negotiations were subsequently to be continued into 1991.

In February 1991, it was officially decided to resume the negotiations at the Trade Negotiations Committee. The subsequent negotiations were accelerated from September of the same year. Finally, GATT Director-General Arthur Dunkel (Chairman of the Trade Negotiations Committee) presented the Draft Final Act (the so-called Dunkel paper) in December 1991. This paper is a comprehensive document encompassing draft agreements on all areas of the Uruguay Round. Japan considers this document as an important step that helps establish momentum to bring the Uruguay Round to a successful conclusion.

At the Trade Negotiating Committee meeting in January 1992, Director-General Dunkel suggested a mid-April deadline for the negotiations, and an agreement was reached to conduct negotiations on a four-track approach based on the Draft Final Act as follows:

4. Track Four: examining whether and if it is possible to adjust the package in certain specific places.

Negotiations were resumed in Geneva on this four-track approach, but the entire negotiations became deadlocked because of the dispute between the United States and the EC on agricultural issues. While the negotiations were at a standstill, Japan made as much effort as possible to reinvigorate the negotiations. For example, it submitted its country list for market access negotiations and its offer for services negotiations to meet the deadline. It also called for the early resumption of multilateral negotiations.

At the end of November 1992, an agreement was reached between the United States and the EC on agricultural issues, and full multilateral negotiations were resumed in Geneva early in December, where energetic consultations were held at various levels on Track One, Track Two and Track Three. However, as problems in the Dunkel paper were raised in the areas other than agriculture during the consultation process, it became difficult to reach a political conclusion before the end of 1992. It was consequently agreed at the Trade Negotiations Committee in December to continue negotiations early in 1993.

Recently, the international climate for developing countries has undergone significant changes and this has caused corresponding changes in the nature of developing countries' problems. Firstly, there has been a rapidly growing diversity among the countries that, in the past, tended to be categorized as "developing countries" as a whole. Developing countries can no longer be seen as one entity: While some countries are achieving remarkable economic development, notably the Newly Industrializing Economies (NIEs) of the Republic of Korea, Singapore, Hong Kong and Taiwan, as well as the member countries of the Association of Southeast Asian Nations (ASEAN), there are countries which continue to face such problems as the population explosion, poverty and hunger. Secondly, as a result of the end of the Cold War, the traditional role of developing countries in the international political scene has also changed. In the Cold War structure, both the East and the West paid particular attention to developing countries in an effort to expand their political influence. With the end of the Cold War, however, their political interests in the developing countries have relatively diminished. Now many developing countries are concerned about prospects of decreased aid flows because the attention of industrialized countries appears to be shifting toward the former Soviet Union and the Central and Eastern European countries. Thirdly, as seen in the 10th Conference of Heads of States and Chief Ministers of Non-Aligned Nations in Indonesia in September 1992, some of the moderate developing countries are starting to reconsider the past unproductive and confrontational North-South approach, in the hope of establishing meaningful relations which will lead to promoting development of the South. Some are seeking a new dialogue with the industrialized countries. Fourthly, as there is an emerging need for the mankind to resolve global environmental problems such as global warming and depletion of the ozone layer, a new form of cooperation between the industrialized and developing countries is being sought.

The maintenance of political stability and the steady economic development of the developing countries are extremely important for world peace and stability as they account for about 70 percent of the countries in the world and about 80 percent of the total world population. Japan, in particular, has close interdependent relations with these countries, as its trade with them accounts for more than 40 percent of its total trade. Moreover, from a humanitarian stand-point, supporting the self-help efforts of the developing countries facing a vicious circle of poverty is a responsibility of Japan, which as a major economic power, accounts for 14 percent of the world's total GNP. Based on such basic stance, Japan is determined to positively contribute to solving the problems of the developing countries by using both bilateral and multilateral frameworks, while taking into consideration the diversity of those countries as well as newly emerging issues like environmental problems.

The economic growth rate in real terms for all developing countries in 1991 (excluding the former Soviet Union and the Central and Eastern European countries) was 3.2 percent (according to IMF sources). One could argue that this figure represents a relatively good performance of the developing countries, compared with the industrialized countries whose real economic growth rate was 0.6percent. Yet, the growth rate in real per capita terms of the developing countries was a mere 1.3 percent. Moreover, there was the significant regional disparities. In fact, the per capita growth rate of Asia was 4.1 percent, while that of Africa was -2.0 percent.

Many developing countries continue to face high population growth rates, poverty, depressed commodity prices, accumulated external debt problems and difficulties in accomplishing domestic economic reforms. They are also confronted with macroeconomic instabilities as well as political confusion and natural disasters. At the same time, there are also some brighter prospects. Some developing countries which were in economic difficulty are making progress in structural adjustments as well as increased direct foreign investment. The aggregate net resource transfers (Note) to developing countries in total, which had been negative for the past five years, has turned positive again since 1989. According to World Bank estimates, the figure was $45.8 billion in 1992.

Such Southeast Asian countries as the Asian NIEs and ASEAN countries have continued to enjoy high growth rates and have become the world's growth center in the midst of the sluggish global economy. Also, in recent years, China and Vietnam have been pursuing economic liberalization, thus attracting expectations for their development. Moreover, Latin American countries are advancing economic structural adjustments in the following areas: trade liberalization, deregulation and privatization of national corporations. Latin American countries, while in varying degree, are registering an overall real economic growth rate rising from -0.1 percent in 1990 to 2.9 percent in 1991. Economic structural adjustment measures are bearing fruit in some parts of Africa.

Exports of commodities are an important source of foreign currency earnings in many developing countries. Yet, commodity prices are more volatile than those of manufactured industrial goods, being susceptible to the demand-supply situation. Therefore, the trend of commodity prices has a significant impact on the economies of the developing countries. Since the latter half of the 1980s, there has been a downward trend of commodity prices (excluding oil). In 1992, the commodity prices have dropped continuously for four years. Coffee and cocoa prices in particular recorded sharp falls of more than 50 percent in 1992 compared with 1985, adversely affecting the economies of the developing countries which are dependent on these exports.

International commodity agreements which aim at securing market transparency or price stability represent an international cooperation to solve the problem of commodities. As a country dependent on importing many of the commodities from developing countries, Japan is an active participant in most commodity agreements. As such, it needs to make further efforts to strengthen these agreements.

The accumulated external debt problem still remains an important problem in the 1990s not only for the developing countries, but also for the world as a whole. The outstanding external debts of all developing countries (including the former Soviet Union and Eastern Europe) totaled $1,703 billion at the end of 1992, representing about 40 percent of their aggregate GNP and 1.8 times as much as their total exports (according to World Bank estimates). Many debtor countries have not yet fully restored a repayment capability due to such factors as sluggish export growth, delays in structural adjustments, internal strife and natural disasters. Furthermore, with the continued reluctance of private banks in providing loans, the amount of money flowing out of developing countries to repay the principal and interest on their debts has exceeded the total amount flowing into them as new loans since 1984 (in 1992, the net outflows totaled $3.6 billion, according to World Bank estimates).

However, recently, some of the countries which faced serious debt problems in the 1980s, such as Mexico, are showing signs of recovering their external creditworthiness. Also, international efforts among the industrialized countries, debtor countries and international organizations are progressing.

The "Strengthened Debt Strategy," (the so-called "Brady Plan") announced in March 1989 offers a framework to reduce the commercial bank debts and has been applied to the relatively richer developing countries (middle-income countries) such as Mexico and Venezuela. Based on this strategy, Brazil (in July 1992) and Argentina (in December 1992) reached a basic and a final agreement respectively with the bank advisory committee.

For the poorest countries which have fragile economic foundations and require special assistance for economic reconstruction, including Sub-Saharan African countries like Tanzania and Zambia, a specific measure for debt relief has been devised. This is the so-called the "Enhanced Toronto Terms" (an improved scheme of the "Toronto Terms" originally agreed in October 1988) which includes a 50 percent reduction of bilateral official debts. It has been applied successively since December 1991. Furthermore, for lower middle-income countries where income levels are higher than the poorest countries but which also rely heavily on bilateral official loans, such as Morocco and Ecuador, a relief measure, the "Houston Terms" (agreed in September 1990) centering on rescheduling continues to be applied.

Economic reconstruction of the debtor countries is indispensable for the fundamental solution to the external debt problem. To this end, both the debtor and industrialized countries alike need to promote a favorable environment.

The debtor countries must steadily implement sound economic policies and structural adjustment programs. Within the scope of these, it is particularly important that they make efforts to improve their own investment environment and to recapture flight capital so as to increase their capital inflows. For their part, the industrialized countries, in cooperation with the international financial institutions, should take comprehensive measures that take account of each debtor country's situation so as to support their earnest economic reconstruction efforts. Such measures include maintaining sustainable growth in their own industrialized economies and improving their market access as well as ensuring flows of funds to the debtor countries necessary for their economic needs.

The Government of Japan is supporting the self-help efforts of the debtor countries through concrete measures. Under the Fourth Medium-term Target of Official Development Assistance (ODA), Japan has been making efforts to improve both the quantitative and qualitative aspects of its ODA. Moreover, in order to expand resource flows to the developing countries, Japan is steadily implementing various measures including a capital recycling scheme of more than $65 billion (during 1987-92, completed in June 1992).

To countries like Mexico and the Philippines, to which the Strengthened Debt Strategy was applied, Japan has actively provided financial support under the capital-recycling scheme of more than $65 billion. As to bilateral official debts of the poorest and lower middle-income countries, Japan has been successively applying debt relief measures under concerted international agreements. Moreover, through the grant aid for debt relief and the non-project grants for structural adjustment support aid, Japan is supporting the economic reconstruction efforts of the least developed countries (LLDC) such as Sub-Saharan Africa.

Such contributions by Japan are highly acclaimed by the international community.

As developing economies increasingly diversify, some Asian economies, which registered prominently high growth rates throughout the 1980s, have become an important factor to the management of the global economy.

Around 1987 and thereafter, the Western industrialized countries heightened their criticism against the expanded trade surpluses of the Asian NIEs. Japan emphasized that the dynamism of the Asian NIEs which was revitalizing the world economy should be positively appreciated while pointing out that it was also important for the Asian NIEs to play a role in the world economy that was commensurate with their economic strength. Japan also pointed out that those countries should be encouraged to expand their involvement in the management of the world economy such as international trade without decelerating their economic growth.

Japan has held the view that promotion of dialogue between the industrialized countries and the Asian NIEs is extremely important. For instance, as a result of Japan's efforts to establish a forum for such dialogue, the meeting between the Organization for Economic Cooperation and Development (OECD) member countries and the Asian NIEs was initiated in January 1989, hosted by the OECD. Thereafter, the dialogue has steadily developed, as it has become a dialogue with the Dynamic Asian Economies (DAEs) with the participation of Thailand and Malaysia. Through active exchanges of information and views among participants of industrial and academic circles as well as government officials, this dialogue has promoted mutual understanding on trade and economic policies as well as the economic situations of the DAEs. The DAEs, on their part, have been showing a more active attitude toward the dialogue, as the Republic of Korea has annually sponsored work-shops since 1990, and Singapore and Thailand also sponsored work-shops for the first time in 1991 and 1992 respectively.

Japan today is one of the most advanced countries in science and technology. The issue of how to address global problems, such as preservation of the environment through application of its sophisticated science and technology, is becoming an increasingly important task for Japan's foreign policy. Expectations and requests from other countries for cooperation in this field are also rapidly increasing. In dealing with this situation, Japan needs to make efforts particularly on the following.

First, domestic basic research needs to be improved. Japan has been highly regarded for applied research that leads to product development, but its international contribution in the area of basic research, the outcome of which is an intellectual asset to mankind, does not match its economic and scientific stature. It is well known that there are few Japanese Nobel Prize laureates in natural sciences, especially in comparison with major Western countries. In addition, obsolescence of the facilities of the major institutions of basic research is becoming a serious social problem. Accordingly, the new General Guidelines for Science and Technology Policy adopted by the Cabinet in April 1992 sets forth as an important policy goal the doubling of the government's investment in research and development as soon as possible in an effort to improve the research base of universities.

Another problem is the disparity in international exchanges of researchers which is closely related to lagging basic research. There are far larger number of Japanese researchers in European and North American countries, than those of these countries doing research in Japan. The results of basic research originally done in these countries are applied to many products such as automobiles, VTRs and industrial robots. Japanese enterprises have a competitive edge in these products in the global market. The disparity in exchange of scientists against the background of Japan's enormous trade surplus, is a cause for concern, inviting criticism that Japan is free-riding on the basic research done in these countries. Being aware of these criticisms, the Government of Japan is expanding its programs for inviting foreign researchers. To improve this disparity, though it is essential to upgrade the research environment itself, making Japanese research institutions more attractive and open to foreign researchers.

The second priority area of Japan's contribution concerns international cooperation in big scientific projects. With advances in science and technology, research projects that require a massive amount of funds are increasing, especially in the areas of space, nuclear fusion and high-energy physics. In these fields, international cooperation is necessary to coordinate the contents of research and share their cost. It is also expected that their results will benefit the international community as a whole. While Japan has been making active contributions in these fields, there still is a need for Japan to play a more active role in leading the big scientific projects.

Third, there is a need to secure openness for Japanese technology. Sophisticated manufacturing technology is one of the fields of technology in which Japan has a leading edge. In this area, greater attention tends to be paid to competition than to cooperation. Caution should be paid to avoid "technology enclosure," which goes beyond sound competition. In areas of generic technology, research work should continue to be pursued with open access for foreigners. In addition, transfer of technology to developing countries should be promoted.

Based on the aforementioned recognition, the Government of Japan promotes, among others, the following international cooperation.

Japan signed science and technology cooperation agreements with the United States and 17 other countries, and is actively implementing measures to encourage cooperation, such as joint research and researcher exchanges. There was also major progress in multilateral cooperation in various areas of science and technology in 1992.

Based on the Japan-U.S. Agreement on Cooperation in Research and Development in Science and Technology signed in June 1988, the third Joint High Level Committee (ministerial level) meeting was held in Tokyo in October 1991, followed by the fifth Joint Working Level Committee (Director-General level) meeting in September 1992 in Washington, D.C. Both sides shared the view that the term of the agreement which will expire in June 1993 should be extended. Further progress was also made in exchanges of researchers and scientific and technological information. Examples include the establishment of the Japan Reprographic Rights Center in September 1991 which handles domestic reproduction right issues and the launching of a science fellowship program in September 1992 by the Japan Foundation Center for Global Partnership to invite American scientists.

Cooperative activities within a new framework were launched between Japan and France. These included the first Joint Advisory Council on Science and Technology meeting in Paris in October 1992, based on the Japan-France Agreement on Cooperation in Science and Technology signed in June 1991, and the first High Level (ministerial level) meeting held in Tokyo in November 1992.

The HFSP is a project designed to promote multilateral joint research aiming at elucidating the sophisticated mechanisms of living organisms, such as their way of thinking, memorizing and physical exercising functions, by way of providing funds for research. This program was proposed by Japan at the Venice Summit in 1987. At the inter-governmental meeting of participating countries in Tokyo in January 1992, the significance of HFSP was highly appreciated. An agreement was reached to boost its activities by increasing the financial contributions of the member countries.

Japan, the United States, the European Community (EC) and Russia are cooperating on the International Thermonuclear-fusion Experimental Reactor (ITER) project for research and development of nuclear fusion, which is said to be the ultimate source of clean and unlimited energy. The agreement on engineering design activities was concluded in July 1992, after the conceptual design activities from 1988 to 1990 had been completed. A joint central team for the engineering design activities was formed with its activities being pursued in Naka in Ibaraki Prefecture along with those in San Diego in the United States and Garching in Germany. Many foreign and Japanese researchers are involved in the joint research.

In September 1988, Japan, the United States, Canada and the European Space Agency (ESA) member countries signed the manned space station agreement which outlines detailed planning, development and operation, and cooperation in the use of the station. Japan accepted the agreement in September 1989. Subsequently, the United States also accepted it in January 1992, thereby putting the agreement into effect officially between the two countries.

Also, in September 1992, in the first space-laboratory material experiment project, (FUWATTO '92), Mamoru Mohri of the National Space Development Agency of Japan became the first Japanese astronaut on a space shuttle. The Japanese public was captured by this event. The year 1992 was termed as "international space year," and, diverse activities were held throughout the world. Japan, on its part, hosted the Asia-Pacific International Space Conference in November in Tokyo.

The Protocol on Environmental Protection to the Antarctic Treaty was adopted in October 1991, offering a comprehensive protection plan for the area. It stipulates on the prohibition of mining, the conservation of Antarctic fauna and flora and proper waste disposal and management within the region. By September 1992, the countries concerned, including Japan, all completed the signing. Preparations are now underway for its ratification in each country.

Recognizing the need to create an organization to promote cooperation on exchanges of information and data concerning oceanography, meteorology and maritime biology in the North Pacific, Japan, the United States, Canada, China and the then Soviet Union adopted a convention for establishing an organization for maritime science in the North Pacific in December 1990. This convention entered into force in March 1992, and the first Governing Council Meeting was held in Victoria, Canada, in October 1992.

The United States is constructing a huge proton accelerator in Texas to make protons collide at nearly the speed of light with the aim of elucidating the ultimate structure of substances and the origin of space from reactions of the protons. The United States is requesting cooperation from other countries, including Japan. At the Japan-U.S. Summit meeting in January 1992 during President George Bush's visit to Japan, the two countries agreed to establish a joint working group to discuss issues that need to be cleared in considering Japan's cooperation.

The OECD member countries held a Ministerial Conference on Science and Technology in March 1992 to discuss issues on science and technology that should be tackled by the international community in the 1990s. Among them were cooperation on megascience projects in basic science, scientific and technological cooperation with Central and Eastern European countries and technological innovation systems of each country and international interdependence.

Based on these discussions, a Megascience Forum was established to consider international cooperation in megascience in more specific manner. Its first meeting was held in July 1992.

This forum is expected to provide information concerning megascience at an early stage to the government and scientists and become a place where views are exchanged on possible international cooperation on new projects from their planning stage. Experts' meetings were held already on "astronomy" and "deep-boring of the earth" in October and in November 1992, respectively. In the future, based on the interest of member countries, such themes as "climatic change of the earth" are scheduled to be taken up.

Japan depends on foreign sources for more than 80 percent of its energy needs, and on petroleum for approximately 60 percent of its overall energy needs. Japan strives to maintain an energy supply structure that is not overly dependent on any one resource, with due regard to the economy of energy resources and the harmony with the global environment. It regards nuclear energy, which is superior to oil in terms of energy supply stability, as a main alternative source for oil. Unlike fossil fuels, nuclear power is a clean source of energy which does not generate emissions that cause acid rain or global warming. The use of nuclear power is also indispensable in accomplishing the goal of reducing CO2 emission based on the Framework Convention on Climate Change signed in Brazil in June 1992.

To use uranium resources efficiently and to secure stable supply of energy through nuclear power generation, Japan attempts to establish "nuclear fuel recycling" in which used nuclear fuel is reprocessed and the recovered plutonium is utilized as nuclear fuel. In pursuing this policy, it is essential to obtain the understanding of the international community that research, development and use of nuclear power in Japan are conducted only for peaceful purposes. At the time of the plutonium transport from France in November 1992 to January 1993, the Government of Japan sought the understanding of the countries concerned, offering explanation to them, individually about Japan's policy for the use of plutonium and measures taken to ensure the safety of its transport. It is important to further continue these efforts.

(i) Assistance for Improving the Safety of Nuclear Power Plants in the Former Soviet Union and Central and Eastern Europe

It is essential to ensure the safety in using nuclear energy. Since the accident at Chernobyl Nuclear Power Station, international concern about the safety of nuclear power stations has heightened. In the Economic Declaration of the London Summit in July 1991, the response by the international community was called for to improve the safety of the nuclear power plants in the former Soviet Union and Central and Eastern European countries. At the same time, international safety assessment projects mainly by the International Atomic Energy Agency (IAEA) and assistance programs by EC countries as well as bilateral cooperation projects were started. The urgency and needs for international action were further recognized by the accident at the then Leningrad nuclear power plant in Russia in March 1992. This issue was again taken up in the Munich Summit in July 1992 as one of the main items on the agenda. Its Economic Declaration stated that special efforts should be made to improve the safety of these nuclear power plants, and called upon the international community to extend their support within the framework of a multilateral programs of action.

Japan believes that ensuring the safety of nuclear power stations is a common task of the international community. From this point of view, Japan is vigorously grappling with the problems. For instance, at the time of the accident at the Leningrad nuclear power station, the Government dispatched an official mission to discuss the possibility of Japanese cooperation with Russia. In addition to its special contribution and sending experts to the IAEA programs, Japan is actively extending bilateral cooperation, including international training programs. At the Munich Summit meeting, Prime Minister Kiichi Miyazawa announced bilateral assistance of $25 million, and is having close consultation with the Government of Russia for this implementation, including cooperation in establishing a temporarily named "nuclear power operation technology center" and cooperation in providing a leak detection system.

Japan has been actively cooperating with developing countries on peaceful uses of nuclear energy as a part of its efforts to contribute to their economic development by applying its high-level nuclear technology, while paying respect to nuclear non-proliferation and safety requirements. In the areas of multilateral cooperation, Japan has contributed not only to the IAEA's Assessed Contribution but also to its Technical Assistance and Cooperation Fund. In both fields, Japan is the second largest contributor, next to the United States. It has also extended large technical and financial contributions for projects implemented under the IAEA's Asian Regional Cooperative Agreement (RCA) for research, development and training related to nuclear science and technology. As bilateral cooperation, Japan has been providing technical cooperation on a governmental basis through the Japan International Cooperation Agency (JICA), including acceptance of trainees in Japan and dispatch of experts abroad.

Note : The CFE Treaty, which aims to reduce conventional forces, covers the region from the Ural Mountains to the Atlantic Ocean.

Note : The host countries of future APEC Ministerial Meetings are the United States for the 5th Meeting (1993), Indonesia for the 6th Meeting (1994), the Philippines for the 8th Meeting (1996) and Canada for the 9th Meeting (1997).

Note 1: Development studies on the validity of development plans and projects that are conducted by dispatching missions to assist improvement of infrastructures for socioeconomic development in developing countries.

Note 2: A comprehensive technical cooperation package that efficiently and organically combines three elements of dispatching of experts, acceptance of trainees and provision of equipment.

Note 3: Cooperation which combines soft-loan funds and technical assistance (dispatching experts, accepting trainees and research studies) to promote Japan's private sector development projects in developing countries.

Note 1: Financial assistance enabling development countries with acute food shortages to purchase grains (rice, wheat, maize, etc.) and transportation services.

Note 2: Financial assistance to purchase fertilizers, pesticides, farming equipment, etc. required for increased production of food.

Note : The basic principles for participation in the U.N. Peace-keeping Forces: Based on the following principles, Japan shall participate in U.N. Peace-keeping Forces.

1) Agreement on a cease-fire shall have been reached among the parties in the conflict.

2) The parties in the conflict, including the territorial state(s), shall have given their consent to deployment of the peace-keeping forces and Japan's participation in the Force.

3) The peace-keeping force shall strictly maintain impartiality, not favoring any party in the conflict.

4) Should any of the above guideline requirements cease to be satisfied, the Government of Japan may withdraw its contingent.

5) Use of weapons shall be limited to the minimum necessary to protect the personnels' lives.

Note : As of November 1992, the total number of personnel is more than 20,000, including 15,739 military personnel from 31 countries and 3,223 civilian police monitors from 31 countries. Within UNTAC, there are seven components: military, civil police, election, administration, repatriation of refugees and displaced persons, rehabilitation and human rights.

Note : Of the countries of the former Soviet Union, the CFE Treaty covers the eight states (Armenia, Azerbaijan, Ukraine, Kazakstan, Georgia, Belorussia, Moldova and Russia) between the Ural mountains and the Atlantic Ocean.

Note : The growth rate of domestic and external demands are calculated in units of 0.25. Because there are liquid factors in domestic and external affairs, the above figures should be viewed with a certain degree of fluctuations.

Note : As of November 1992, France, Greece, Ireland, Luxembourg, Italy and Belgium completed ratification. Although Denmark voted against its ratification in a referendum, it may again hold a referendum by spring 1993 at the earliest.

Note : A group consisting of agricultural product exporting countries - Canada, Australia, New Zealand, Thailand, the Philippines, Malaysia, Indonesia, Argentina, Chile, Brazil, etc. - advocating stricter discipline on agricultural trade.

Note : Aggregate net resource transfers = [official finance (grants and loans) + private lending + direct foreign investment] - [repayments of the principal amount and interest + reinvested and remitted profits]