The Asia-Oceania region is home to many of the emerging countries. The region has been driving world growth and has been increasing its global presence. Realizing affluence and stability throughout Asia-Oceania is indispensable for Japanese peace and prosperity. In economic terms, the region has been supported by abundant human resources and has consequently achieved a high rate of growth. Of the world population of 7 billion, approximately 3.4 billion people live within East Asia Summit (EAS) member nations(*4) (excluding the U.S. and Russia), which is 49.2% of the world’s population.(*5) The combined nominal GDP of ASEAN members, China and India grew by a factor of four over the last 10 years(*6) (world average growth was a factor of two). It is expected that with the expanding middle class, purchasing power will soar. Total exports and imports of EAS members excluding the U.S. and Russia is US$10 trillion, making it the second largest market behind the EU at US$12 trillion. 44.2% of these exports and imports are intra-regional,(*7) illustrating the close economic ties between the nations and their advanced economic interdependence. In recent years, driven by foreign investment led by Japan, tight-knit supply chains that extend across the entire region are being established. Encouraging strong growth, capturing the huge demand for infrastructure and tapping into the purchasing power of the large middle class in the region will also bring affluence and vitality to Japan.
　On the other hand, the security environment surrounding Japan within the Asia-Oceania region continues to prove increasingly challenging. North Korea engages in provocation such as missile launches and a nuclear test; modernization of military forces of the countries in the region is being modernized while their maritime operations have become more active; and tensions within the region over maritime issues, including the issues in the South China Sea, are growing. Furthermore, there are other issues hindering the stable growth of the region, including developing financial markets, environmental pollution, tight food and energy supplies and aging populations.
　The strategic environment within the region is undergoing significant change as illustrated. This gives greater importance to Japan’s efforts to strengthen cooperation with nations throughout the region. In its effort to play an active role in ensuring the peace and prosperity of the region, Japan will strengthen its cooperative relationship with neighboring countries while also enhancing the Japan-U.S. alliance. To this end, Japan will drive regional cooperation. Efforts will not be limited to bilateral relationships and will extend to trilateral partnerships such as Japan-China-the ROK, Japan-U.S.-ROK, Japan-U.S.-Australia, as well as other frameworks including Japan-ASEAN, ASEAN+3(*8), EAS, and APEC.
　As mentioned above, the importance of strengthening the Japan-U.S. alliance as a diplomatic linchpin for the purpose of ensuring the peace and prosperity of the Asia-Pacific region continues to heighten and it is from this perspective that Japan welcomes the United States’ rebalancing toward the Asia-Pacific. It is crucial that Japan and the U.S. work together to allow rules rather than force to govern the region. Through this, Japan strives to fulfill its responsibility of ensuring the peace and prosperity of the region.
　China has cultivated a strong relationship with Japan in a broad range of fields, such as culture and human exchanges, and is an important neighbor of Japan. In recent years, the rapid economic development of China has helped increase its presence in the international community in various fields. Relations with China are one of Japan’s most important bilateral relationships and it is imperative that both countries seek a Mutually Beneficial Relationship Based on Common Strategic Interests from broad viewpoints by cooperating and exchanging in a practical manner. The year 2012 marked the 40th anniversary of the normalization of diplomatic relations between Japan and China and almost 670 commemorative projects were carried out through the year. However, the situation over the Senkaku Islands had a serious impact on the Japan-China relationship in 2012. Furthermore, in February 2013, an incident occurred in which a fire-control radar was directed to a Japan Self-Defense Forces’ vessel by a Chinese navy vessel.
　The Senkaku Islands are clearly an inherent part of the territory of Japan, in light of historical facts and based upon international law and the islands are under the valid control of Japan. There exists no issue of territorial sovereignty to be resolved concerning the Senkaku Islands. Japan conducted surveys of the Senkaku islands beginning in 1885 through which it confirmed that there was no trace of having been under the control of the Qing Dynasty of China and then formally incorporated the Senkaku islands into the territory of Japan in January 1895. Later, with the permission of the Japanese Government, enterprises, such as the manufacturing of bonito flakes, were conducted on the island and many Japanese citizens resided on the islands. After World War II the Senkaku Islands were placed under the administration of the U.S. in keeping with the San Francisco Peace Treaty. During this period, China and Taiwan did not make any objections.
　An academic investigation conducted by the UN Economic Commission for Asia and the Far East (ECAFE) in 1968 indicated the possible existence of untapped petroleum in the East China Sea, consequently drawing attention to the Senkaku Islands. Later, after 1970, China and Taiwan began making their own assertions on territorial sovereignty over the Senkaku Islands. In December 2008, the Chinese Government intentionally had two vessels intrude into Japanese territorial waters surrounding the Senkaku Islands for an extended period of time. Furthermore, following the incident in September 2010, where there was a collision between a Chinese fishing vessel and a Japan Coast Guard vessel within the Japanese territorial water off the Senkaku Islands, the Chinese Government began to have their vessels frequently enter waters surrounding the Islands. Additional intrusions into Japanese territorial waters also occurred on numerous other occasions.
　On September 11, 2012, the Japanese Government acquired ownership, from a Japanese private citizen, of three of the Senkaku Islands, consequently making the islands state-owned property. In response, the Chinese Government, based on its own assertions, intensified its claims and unilaterally drew territorial baselines, submitted a coordinate and marine chart of the claimed baselines to the UN, gave own “names” to them and published a “white paper,” among other efforts, to propagate its claims to the international community. Furthermore, with the exception of periods of severe weather, Chinese vessels have traversed within the waters surrounding the Senkaku Islands almost daily with more than twenty separate occasions of territorial water intrusions between September 11, 2012 and the end of that year. These frequent violations have persisted ever since. Immediately after the acquisition of three of the Senkaku Islands, a large scale of anti-Japan demonstrations broke out throughout China. A large amount of physical damage, including acts of violence against Japanese nationals and destruction of assets of Japanese companies and Japan’s diplomatic establishments, was incurred by the demonstrations.
　Japan cannot by any means tolerate the behavior of the Chinese Government, based on their own claims. At the same time, Japan will maintain its calm and firm stance in addressing the issues surrounding the Senkaku Islands. Japan is ready to continue communication with China in order to alleviate tensions.
　Taiwan is an important partner and has close economic ties and active people-to-people exchange with Japan. In line with the 1972 Japan-China Joint Communique, Japan-Taiwan relationship has continuously been maintained on the basis of working relations at non-governmental level while developing working cooperation to promote closer economic ties.
　Making the most of the frequent high-level dialogues held due to the 40th anniversary of the establishment of Japan-Mongolia diplomatic relations in 2012, Japan will strive to strengthen the mutually beneficial and complementary relations in order to develop a “Strategic Partnership,” which is a common diplomatic goal of the two countries. This effort will include enhancing economic and other bilateral relations and strengthening cooperation within the region and broader international arena.
　The ROK is Japan’s most important neighboring country, which shares fundamental values and interests, such as democracy and market economy. In August 2012, President of the ROK Lee Myung-Bak landed on Takeshima, Shimane Prefecture. The Government of Japan maintains a consistent position that Takeshima is clearly an inherent territory of Japan, in light of historical facts and based upon international law. Japan intended to resolve the Takeshima issue in a peaceful manner based upon international law. Japan will continue to make efforts to build future-oriented and multi-layered relations with the ROK in the light of the current situation in East Asia.
　Since Kim Jong-Il, Chairman of the National Defense Commission (NDC) passed away, in December 2011, North Korea has established a succeeding regime led by Kim Jong-Un, the First Chairman of the NDC. North Korea conducted missile launches in April and December 2012 in violation of the UNSC Resolutions, as well as a nuclear test in February 2013 which is another violation of the Resolutions. North Korea’s nuclear and missile development remains a threat not only to the region but also to the entire international community. Japan will continue to closely coordinate with countries concerned including the U.S., the ROK, China and Russia in urging North Korea to take concrete actions toward denuclearization and other goals in compliance with the Six-Party Talks Joint Statement and the relevant UNSC Resolutions. As for Japan-North Korea relations, at the Japan-North Korea Government-level Consultations in November 2012, wide-ranged discussion took place concerning issues of interest of either party including the abductions issue. However, following North Korea’s announcement in December to launch a missile, Japan communicated its intention to North Korea to postpone the second Consultations. Japan will continue working in close coordination with countries concerned toward a comprehensive resolution of the outstanding issues of concern such as the abductions, nuclear and missile issues.
　ASEAN countries have been increasing their presence within the region, Due to their strong economic development and other factors. As a dialogue partner of ASEAN,(*9) Japan has been working to strengthen relations with each of the member nations based on the longstanding friendly relations. Among ASEAN countries, Indonesia is the only G20 member, and as a core member of ASEAN. The country has been playing a more important role in promoting the stability and prosperity of the region. Indonesia has always been an important country for Japan as a resource supplier, market and investment destination. Moreover, Japan and Indonesia have recently been cooperating beyond the framework of bilateral relations as strategic partners that together address regional and broader international issues.
　Led by President Thein Sein, Myanmar has been advancing its efforts to achieve democratization, national reconciliation and economic reforms. In order to assist the country’s reform efforts, Japan is providing support, particularly for (1) the improvement of people’s livelihoods; (2) human resources and institutional development; and (3) an infrastructure-sector. On January 31, 2013, Japan implemented its arrears clearance operation for Myanmar. Moving forward, as a longstanding friend of Myanmar, Japan will continue to assist the country in a wide range of areas, including providing assistance to ethnic minorities, while following the progress of the reform efforts.
　Australia and New Zealand are important partners of Japan within the region and share our fundamental values. The two countries have been working with Japan in addressing regional and global issues. In addition to the deepening complementary economic ties with Australia, which include trade and investment, Japan and Australia have been steadily strengthening the relationship in security area as strategic partners which work together for the peace and stability of the international community. The 60th anniversary of diplomatic relations between New Zealand and Japan presented the two countries with an opportunity to reaffirm the ties of the two countries. Furthermore, the relationship of the two countries saw further advancement, as Japan and New Zealand agreed on further liberalization of air travel based on the Air Services Agreement and revision of the tax treaty.
　Many of the Pacific Island nations are friendly toward Japan and are important partners of Japan in the context of cooperation within the international community and in the supply of fisheries and mineral resources. In Okinawa in May 2012, the Sixth Pacific Islands Leaders Meeting (PALM 6) was held for the first time in three years. The leaders issued the Okinawa “Kizuna” Declaration, which confirmed the cooperation of the participating nation members, particularly in five areas, including response to natural disasters.
　With a large population of approximately 1.6 billion and its geopolitical importance, South Asia has been increasing its weight in the international arena, while many countries in the region continue high economic growth. Japan will further strengthen its economic relations with countries in the region, with which Japan traditionally has a friendly and cooperative relationship, and continue to cooperate on their own efforts in such areas as national reconciliation as well as promotion and consolidation of democracy. Japan has been striving to further strengthen relations with India, with which Japan established the Strategic and Global Partnership in 2006 and share such values as democracy and the rule of law, in a wide range of areas, including in the field of security, economy and people-to-people exchanges. With regard to Pakistan, which has a key role in counter-terrorism, Japan will continue cooperation with the country while encouraging its own efforts towards the peace and stability of the region and the entire international community.
　In addition to strengthening the above mentioned bilateral cooperative relations, it is important that Japan utilizes various multilateral and regional cooperative frameworks. Japan, together with China and the ROK, promotes cooperation between the three countries. In May 2012, China hosted the fifth Japan-China-ROK Trilateral Summit, where the three nations agreed that they will strengthen their relationship in a wide range of fields, such as trade and investment, environment and energy, people-to-people and cultural exchanges, and maritime cooperation.
　Furthermore, Japan understands that the leadership of the increasingly integrated ASEAN in driving regional cooperation is extremely important for the stability and prosperity of the entire East Asia region. For this reason, Japan places importance on its relationship with ASEAN in the context of regional cooperation. In July 2012, a Japan-ASEAN Foreign Ministers’ Meeting was held and it was agreed that the ASEAN-Japan Commemorative Summit Meeting will be held in Japan in 2013 to mark the coming 40th anniversary in 2013 of the commencement of Japan-ASEAN cooperation. Furthermore at the Japan-ASEAN Summit Meeting in November 2012, it was agreed that the leaders will discuss at the Commemorative Summit the medium to long-term vision for the strengthening of Japan-ASEAN cooperation.
　In January 2013, Prime Minister Abe and Minister for Foreign Affairs Kishida visited ASEAN countries, which were their first official international visits. During the visits they confirmed that they will take the occasion of the 40th Year of ASEAN-Japan Friendship and Cooperation to further strengthen cooperative relations. Prime Minister Abe announced the five principles of Japan’s ASEAN Diplomacy while in Indonesia.
　Prime Minister Noda attended the 7th EAS held in November 2012 with the determination to develop the EAS into a leaders-led forum that reconfirms common principles and basic rules in the region, and leads to tangible cooperation in areas including politics and security. At the meeting, discussions took place on the topics of regional and international affairs, including issues concerning North Korea and the South China Sea, in addition to discussions concerning cooperation in maritime affairs, connectivity, low-carbon growth and disaster management.
　The Mekong region has been achieving remarkable growth, whereas, the region also faces problems like intra-regional disparities. A new cooperation policy, the Tokyo Strategy 2012 for Mekong-Japan Cooperation, was formulated at the Fourth Mekong-Japan Summit held in April 2012. The new policy focuses on three pillars of enhancing Mekong connectivity, developing together, and ensuring human security and environmental sustainability. On this occasion, Japan also announced the provision of 600 billion yen in ODA over three years beginning in 2013. Furthermore, at the Fifth Mekong-Japan Foreign Ministers’ Meeting held in July the same year, the Mekong-Japan Action Plan for realization of the “Tokyo Strategy 2012” was adopted.
　In the interest of improving intra-regional disparities within Southeast Asia, Japan supports the Brunei-Indonesia-Malaysia-Philippines East ASEAN Growth Area (BIMP-EAGA).(*10)
　The Bali Democracy Forum (BDF) has been annually held by Indonesia since 2008 as a ministerial-level meeting, however the forum in 2012 was held at summit-level for the first time. More and more countries join the forum year by year, and in 2012, representatives of more than 80 countries and regions, including 12 summit-level representatives joined the forum, reflecting its status as an important international forum that promotes democratization within the region. Japan has been proactively assisting the initiatives of Indonesia by, for instance, providing support for the hosting of seminars on democratization.
　Furthermore, Japan will drive its efforts to support the South Asian Association for Regional Cooperation (SAARC) in strengthening intra-regional connectively and to promote personal exchanges with them.

4 ASEAN (members: Indonesia, Malaysia, Philippines, Singapore, Thailand, Brunei, Vietnam, Laos, Myanmar, Cambodia), Japan, China, the Republic of Korea (ROK), India, Australia, New Zealand.
5 World Bank
6 The International Monetary Found (IMF) Direction of Trade Statistics May 2012
7 IMF Direction of Trade Statistics May 2012
8 Regional cooperative framework for ASEAN members, Japan, China and the ROK.
9 ASEAN exchanges views on regional affairs and important fields of cooperation with dialogue partners with which ASEAN has an extensive and constant cooperative relationship. There are currently ten ASEAN dialogue partners consisting of nine countries (Japan, the United States, Australia, New Zealand, Canada, Republic of Korea, India, China and Russia) and one region (EU).
10 Initiatives undertaken by Brunei (B), Indonesia (I), Malaysia (M), and Philippines (P) that target under-developed islands.