3. Economic Diplomacy

The Abe administration is putting every effort into reviving the Japanese economy through the policy mix of its “three arrows”: Bold monetary policy, flexible fiscal policy and a growth strategy that encourages private investment. In June, the Cabinet decided to package its new growth strategy as the “Japan Revitalization Strategy.” Under the initiative of Minister Fumio Kishida, the Ministry of Foreign Affairs has made earnest efforts to strengthen economic diplomacy as a means of promoting the revitalization of the Japanese economy, presenting it as one of the three pillars of Japan’s foreign policy. In part owing to a series of initiatives known as Abenomics, the Japanese economy showed signs of a departure from deflation and moderate recovery in 2013. Although economies in industrialized countries took a favorable turn, characterized by signs of recovery in the United States and part of Europe, growth slowed down in emerging countries, which had been the driving force behind the world economy. Moreover, energy prices have remained at a high level on the whole for reasons such as increased energy demand mainly in emerging countries, resource nationalism in resource-rich countries and the impact of the situation in the Middle East. Against this backdrop, at the G8 and G20 summits, Prime Minister Shinzo Abe explained his intention to revitalize the Japanese economy and thereby contribute to growth of the global economy. For this he garnered praise, while stirring high expectations among world leaders.

Furthermore in 2013, Japan commenced economic partnership agreement negotiations on an unprecedented scale, such as the Trans-Pacific Partnership (TPP) agreement, the Regional Comprehensive Economic Partnership (RCEP), the Free Trade Agreement (FTA) between Japan, China and the ROK, and the Japan–EU Economic Partnership Agreement (EPA). It has become important to develop such economic partnerships in a mutually complementary manner, providing also a path to a Free Trade Area of the Asia–Pacific (FTAAP). Japan has recognized the importance of continuous contribution to the process of developing global trade and investment rules including through participation in the discussion toward the realization of a FTTAP in the Asia–Pacific Economic Cooperation (APEC), while steadily implementing Japan’s growth strategy.

Negotiations for multilateral trade liberalization have remained in deadlock for many years but the regime under the World Trade Organization (WTO) continues to play a key role in creating new rules and implementing existing rules that include dispute settlement. At the 9th WTO Ministerial Conference held in Bali, Indonesia in December 2013, the “Bali Package” agreement was reached, involving trade facilitation, agriculture and development. In particular, an agreement on trade facilitation generates benefits for both industrialized countries and developing countries, predominantly by speeding up and enhancing transparency in customs procedures. This was the first time, since the WTO was established, that all the Members agreed on the content of a multilateral agreement, prompting expectation that this would help reinvigorate the stymied Doha Development Agenda (DDA) negotiations. Meanwhile, the WTO members who share the objective for advancing the further liberalization of trade in services (23 countries and regions as of December 2013) have entered full negotiating mode since summer 2013 on the Trade in Services Agreement (TiSA). In addition, negotiations are proceeding on expansion of coverage of the Information Technology Agreement (ITA), with the aim of reaching early conclusion. Japan’s policy is to continue making contributions, to ensure that the free and open global trading system is maintained and strengthened.

The Japanese economy has shown signs of recovery. However, for such signs to be translated into steady growth, it is necessary to take in the growth of foreign countries, including emerging countries, through promoting overseas activities of Japanese companies. Over the years, the Ministry of Foreign Affairs has supported the activities of Japanese companies, including the establishment of the contact points for Japanese companies at the diplomatic missions overseas. To further strengthen this initiative, the Headquarters for the Promotion of Japanese Business Support, headed by Minister Kishida, was set up inside the Ministry, and the Business Support Division was established. Moreover, amid growing demand for infrastructure worldwide, the Government has announced a target of approximately ¥30 trillion in infrastructure exports by 2020. Prime Minister Abe, Minister for Foreign Affairs Kishida and other Cabinet members have conducted “top-level sales” to promote Japan’s infrastructure and technology overseas as a means of achieving this target, making the most of the opportunities including dignitaries’ visits. The Ministry of Foreign Affairs is striving to prevent reputational damage or misinformation after the accident at Tokyo Electric Power Company’s Fukushima Daiichi Nuclear Power Station, and to promote foreign exports of Japanese products. To this end, the Ministry provides other countries with up-to-date and accurate information regarding efforts in response to the accident, including its response on the issue of contaminated water, as well as steps taken to guarantee the safety of Japanese products (Japanese inspection standards and systems, and shipment restrictions, etc.). Strenuous efforts are being made to have import restrictions eased and removed.

Prime Minister Abe at the reception to promote Japanese cuisine on a visit to Russia (April 30, 2013; Source: Cabinet Public Relations Office)

The Japan Revitalization Strategy comprises the utilization of National Strategic Special Zones and invigoration of inward direct investment, mainly through fundamental reinforcement of the Government’s system of attracting and supporting foreign enterprise as part of the Strategy of Global Outreach. In terms of efforts to promote investment in Japan, the Ministry of Foreign Affairs makes use of international conferences, embassies and consulates-general for publicity purposes, and also conducts active PR activities on the websites of its diplomatic missions overseas. There is a pressing need to ensure a stable supply of resources at reasonable prices, as Japan relies heavily on foreign countries for resources and has become increasingly dependent on fossil fuels since the Great East Japan Earthquake. Utilizing a variety of diplomatic tools, the Ministry of Foreign Affairs has conducted a strategic resource-diplomacy through various efforts to strengthen comprehensive and mutually beneficial ties with resource-rich countries and to diversify its resource-supplying countries. In particular, Prime Minister Abe and Minister Kishida have actively engaged in resource-diplomacy by visiting major resource-rich countries and regions, including North America, Mongolia, Russia and the Middle East in 2013. In addition, the Ministry newly appointed Special Assistants for Natural Resources at diplomatic missions overseas with a view to strengthening its functions including information-gathering. In the face of expected world population growth and global food shortages, Japan has worked on efforts for ensuring food security. In 2013, Japan succeeded in inviting the Secretariat of the North Pacific Fisheries Commission to be established in Japan, in order to actively contribute to the international management of marine resources.

The year 1964 not only marked the Tokyo Olympics, but also Japan’s accession to the Organization for Economic Co-operation and Development (OECD), the nation thereby taking its place as one of world’s industrialized nations, both in reality and in name. Japan chairs the OECD Ministerial Council Meeting in May 2014 to commemorate the 50th anniversary of its accession to the OECD. In light of the Lehman Shock of 2008 and Japan’s experience with the Great East Japan Earthquake of 2011, this provides an opportunity to discuss such matters as resilience of the economies and societies and outreach activities for Southeast Asia, as well as make a strong impression both domestically and internationally regarding Japan’s economic revitalization including casting off deflation.

Revitalization of Japan’s economy returns Japan’s voice to the international community, allowing it to contribute to a favorable international economic environment and worldwide economic growth. Japan is in the midst of reconstruction from the Great East Japan Earthquake, and will continue along the path of strong economic diplomacy toward the revitalization of its economy.