1.United States

(1) Situation of the United States

A. Politics

In the situation where the U.S. Congress was being “divided,” reflecting that the majority parties were different in the Senate and the House of Representatives, President Obama delivered his State of the Union Address on 28 January, 2014, and regarded the year 2014 as “a year of action.” In the area of domestic affairs, he cited such issues as job creation for the middle-class, correction of disparities by raising the minimum wage and implementing tax reform, trade policy, climate change, immigration reform, and gun control as his priorities, and stated that he would not hesitate to exercise his executive powers if he did not obtain cooperation from Congress on his agenda. In the area of foreign policies, he made it clear that he would promote efforts on the Iranian nuclear issue, and also identified other issues, such as counterterrorism, Syria, and the peace process in the Middle East, as his priorities. Furthermore, he reiterated the continuation of the U.S. rebalance policy toward the Asia-Pacific.

While the Obama Administration continuously worked on measures to improve the economy and employment, it produced little achievement with Congress and faced difficulties in staying in control of the government amid the accumulated challenges, including the flawed healthcare system for veterans provided by the Department of Veterans Affairs, a rapid increase of unaccompanied illegal immigrant minors from Latin America and the Caribbean, the situation in Ukraine and the Middle East, the Ebola outbreak, the Iranian nuclear issue, among others. President Obama was driven into such a tough situation that his approval ratings had been in the low 40% since fall 2014, and without the improvement of such unfavorable situation, he had to face the midterm elections on November 4. As a result of the midterm elections, the Republican Party won in the election of the Senate and the House of Representatives as well as the gubernatorial elections, whereby the Republican became the majority in both the Senate and the House of Representatives at the 114th Congress started from January 2015. In general, the midterm election has an aspect of a vote of confidence in the president and the ruling party, and the Presidents’ party tends to lose its seats in Congress. This election also followed suit, and although the U.S. economy and employment was showing signs of recovery, it was a difficult election campaign for the ruling Democrats, largely reflecting a lack of realization of such recovery as well as a high degree of dissatisfaction among voters with the circumstances surrounding the United States. Attention is currently focused on the future management of the government: how the Obama Administration will confront the Republicans ruling both the Senate and the House of Representatives and carry out the policies during the rest of the term.

After the mid-term elections, so-called a lame-duck session, attended by the members of the 113th Congress, was held from November 12 until the end of the second session of the 113th Congress. Attention was paid to how the Obama Administration and the Republican Party would cooperate with each other during the session the results of the midterm elections. Regarding immigration issue, on November 20, President Obama announced additional administrative measures including a three-year suspension of deportation measures for those satisfying certain conditions, but the Republicans broadly criticized the President. Furthermore, with regard to the Affordable Care Act, the House of Representatives filed a suit against the President alleging that the execution of the administrative authority announced by the President on November, 2013 was unconstitutional, which was one of the cases representing there was a persistent and severe confrontation between the parties. On the other hand, a certain degree of bipartisan cooperation in the case of the continuing budget resolution to be adopted by December 11, whereby both parties coordinated strenuously to a great extent in order to avoid the shutdown of the federal government agencies, which eventually led to the adoption of the omnibus appropriations bill for FY2015¹.

In addition, with regard to major domestic incidents, such as the shooting of a young African American by a Caucasian police officer in Ferguson, Missouri, and the release of a report by the Senate Intelligence Committee on CIA’s detention and interrogation program, triggered public controversy at home and overseas.

• 1 Twelve annual appropriations bills are drafted in accordance with each of the 12 spending areas in principle; however, the twelve appropriations bills may be packaged into one consolidated (omnibus) bill. In the deliberation for the appropriations bills for FY2015, in December 2014, the appropriations bill to fund the Department of Homeland Security, which is the executive agency for the administrative measures related to the immigration reform announced by President Obama, was passed as a continuing resolution through February 27, 2015, and the remaining 11 annual appropriations bills were enacted as the Consolidated Appropriations Act through the end of September 2015. The appropriations bill for the Department of Homeland Security was enacted in March 2015 after deliberations at newly convened Congress to the effect that the budget for the fiscal year ending September 30, 2015, is approved.

B. Economy

(a) Current economic situation

The U.S. economy continued its consistent and moderate recovery in 2014. The real GDP (preliminary figures) in the fourth quarter (October–December) of 2014 increased 2.2% on a quarter-to-quarter basis. The unemployment rate had been improving and reached 5.5% in February 2015. While the U.S. economy is expected its continuing recovery, it is necessary to note possible influence of the move toward the monetary policy normalization.

(b) Economic policy

In the State of the Union Address in January 2015, regarding the economic policy, President Obama stated that the middle-class economy worked, mentioning achievements including economic growth, debt reduction and job creation, and pledged to make further efforts in executing policies for the middle-class such as improving labor environment rebuilding infrastructure and promoting exports, science, technology and R&D. Especially, with regard to trade policy, the President mentioned that while China wanted to write the rules for the world’s fastest growing region, it should be the U.S. that should write those rules, and asked both parties to grant Trade Promotion Authority (TPA) to protect American workers, with strong trade deals from Asia to Europe that are just not free but fair.

Regarding the monetary policy, the Federal Reserve Board (FRB) scaled down the Quantitative Easing program 3 (QE3) since December 2013, which was introduced in 2012 and had directed to purchase U.S. Treasury Bonds and residential mortgage-backed securities, and FRB decided to end QE3 at the Federal Open Market Committee (FOMC) meeting in October 2014. As for a period to maintain the federal funds target rate (time axis), in March, taking into account a wide range of information, including measures of the labor market conditions, inflationary pressures, readings on the financial developments, the FOMC announced that it would be appropriate to maintain the current target range for a considerable time after the asset purchase program ended, when, in particular, the following two requirements were met: i) the projected inflation rate continues to run below the target rate of 2%, and ii) long-term inflationary expectations remain well anchored. In December, while acknowledging that the concept itself in modified wording was consistent with that in the previous statement, the FOMC changed the wording expressing that it could be patient in beginning to normalize the stance of monetary policy. In the FOMC in March 2015, the wording was changed to the statement that it would be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market and was reasonably confident that inflation would move back to the 2% objective over the medium term². Under these circumstances, the timing for raising interest rates (the lifting of the zero-interest-rate policy) will be a focus of attention in the future.

• 2 With regard to the change, it was estimated that the possibility of raising the interest rate at the FOMC meeting in April would be low.

(2) Japan-U.S. Political Relations

Japan and the United States have strengthened the Japan-U.S. Alliance, which is the linchpin of Japan’s diplomacy and security, by enhancing the relationship of trust and close coordination of policies at all levels including Summit and foreign ministerial level.

In February, 2014, Foreign Minister Kishida visited the United States and held meetings with John Kerry, Secretary of State, Susan Rice, National Security Advisor to the President, Chuck Hagel, Secretary of Defense and others their views on such issues as bilateral issues and situations in the Asia-Pacific region.

In April, Prime Minister Abe held a Japan-U.S. Summit Meeting with President Obama, who was visiting Japan as a state guest. On that occasion, Prime Minister Abe welcomed President Obama’s visit to Asia, stating that the visit underlined the U.S. rebalance policy which emphasizes its engagement with the Asia-Pacific region. The two leaders mutually appreciated and welcomed respectively Japan’s policy of “Proactive Contribution to Peace” and the U.S. rebalance policy, both contributing to peace and stability of the region, and confirmed a leading role of the Japan-U.S. Alliance in ensuring a peaceful and prosperous Asia-Pacific. With regard to security issues, Prime Minister Abe explained Japan’s efforts, such as the establishment of the “Three Principles on Transfer of Defense Equipment and Technology” and the deliberation made in the Advisory Panel on Reconstruction of the Legal Basis for Security. In response, President Obama expressed his welcome and support for such Japan’s efforts. In addition, Prime Minister Abe stated that he would like to proceed with the construction for the relocation of Marine Corps Air Station (MCAS) Futenma promptly and steadily with strong determination, and requested the cooperation of the United States regarding the Agreement to Supplement the Japan-U.S. Status of Forces Agreement (SOFA) on Environmental Stewardship. In response, President Obama said that he would like to continue making efforts to reduce the impact on Okinawa while ensuring smooth operations of U.S. forces in Japan. With regard to the TPP, the two leaders fully shared the view that the TPP is strategically important, and in order to resolve the remaining issues between Japan and the United States taking the opportunity of this Japan-U.S. Summit Meeting, it was decided that Minister Amari in charge of Economic Revitalization and U.S. Trade Representative Froman will continue vigorous and sincere negotiations. Furthermore, regarding people-to-people exchanges, Prime Minister Abe explained that through 6,000 Japanese students will be sent to the United States by the support of the Japanese Government.

With regard to the situation in Ukraine, Prime Minister Abe stated that he values the strong initiative that the United States had shown. He also stated that any attempts to change the status quo by force cannot be tolerated in the contemporary international community, and this is an issue not just for one region, but for the whole international community. Both leaders concurred to cooperate on the issue within the G7 members.

Regarding the Asia-Pacific regional situation, both leaders concurred on the importance that placing Japan and the United States at the core, two countries should maintain a free and open Asia-Pacific region in cooperation with relevant countries and engage China therein. Regarding China, Prime Minister Abe stated that it is important to clearly express oppositions to China’s attempt to change the status quo by force and to demonstrate the robustness of the Japan-U.S. Alliance as well as the strong commitments of the United States to Asia. President Obama responded that Article 5 of the Japan-U.S. Security Treaty covers all the territories under the administration of Japan, and such territory includes the Senkaku Islands. President Obama also affirmed that the United States will oppose any unilateral action that seeks to undermine Japan’s administration of the Senkaku Islands.

Regarding North Korea, both leaders concurred to continue to closely cooperate trilaterally among Japan, the United States, and the Republic of Korea (ROK)　 over the nuclear development by North Korea. Prime Minister Abe asked for President Obama’s continued understanding and cooperation in relation to the abduction issue, to which President Obama expressed his support.

Furthermore, the two leaders exchanged views on the Japan-ROK relations and the situation in the Middle East, as well as global issues including the empowerment of women, nuclear security, and disarmament and nonproliferation. In addition, the Japan-U.S. joint statement (“Japan and the United States: Shaping the Future of the Asia-Pacific and Beyond” (for the details, see Chapter 3, “Japan-U.S. Security Arrangement,” Section 1, Paragraph 2)) as well as the Fact Sheet (Japan-U.S. Global and Regional Cooperation) were issued.

In August, Foreign Minister Kishida, who was visiting Myanmar to attend the ASEAN-related Foreign Ministers’ Meeting, held a meeting with Secretary of State Kerry. With regard to the situation in Ukraine, Minister Kishida introduced the result of his visit to Ukraine in July and explained the concrete support measures of Japan including the economic support up to 1.5 billion U.S. dollars that Prime Minister Abe launched in March. Minister Kishida and Secretary Kerry confirmed that Japan and the United States would work together and make a unified response with the G7 members as well. Secretary Kerry explained the recent targeted airstrikes by the United States in Iraq. In response, Minister Kishida said that Japan had heretofore supported the fight against terrorism by the Government of Iraq and the United States, and that he understands that the recent targeted airstrikes by the United States were carried out as part of such fight with the consent of the Government of Iraq. Furthermore, both ministers discussed North Korea, the situation in Gaza, and climate change.

In September, during his visit to New York, Foreign Minister Kishida held a Japan-U.S. foreign ministers’ meeting again with Secretary of State Kerry. Secretary Kerry said that the Japan and the United States were making progress on the coordination about regional affairs and global challenges, and expressed his appreciation for the role that Japan is playing in these issues. With regard to the situation in Iraq and Syria, Minister Kishida said that Japan supports the international community’s fight against the ISIL and explained that Japan decided to provide additional support to Iraq and its neighbors. In response, Secretary Kerry appreciated Japan for its support in responding to the ISIL. Regarding the Ebola outbreak, Foreign Minister Kishida explained Japan’s measures, and Secretary Kerry expressed his appreciation. The two foreign ministers further discussed the situation in Ukraine, the situation in Asia, the Iranian nuclear issue, and the review of the Guidelines for Japan-U.S. Defense Cooperation.

Also in September, Prime Minister Abe, visiting New York to attend the UN General Assembly, received a courtesy call from Vice President Biden. Vice President Biden appreciated Japan’s recent efforts for the improvement of the Japan-ROK relations and Japan-China relations. In response, Prime Minister Abe introduced that Japan-ROK foreign ministers’ meeting and Japan-China foreign ministers’ exchange of opinion were held on the occasion of the United Nations General Assembly. Regarding the TPP, both sides confirmed that the top leaders of Japan and the United States would, while exercising their leadership, give instructions to negotiators and continue with flexibility to make efforts for an early conclusion of the TPP negotiations.

In November, Foreign Minister Kishida held a Japan-U.S. foreign ministers’ meeting with Secretary of State Kerry on the occasion of the APEC Ministerial Meeting held in Beijing. Minister Kishida said that Japan was accelerating its response to Ebola virus disease and explained Japan’s initiatives including additional financial assistance amounting to up to 100 million US dollars. In response, Secretary Kerry said that Japan’s assistance and leadership were excellent and would have an extremely significant impact, which he sincerely appreciated. With regard to North Korea, Minister Kishida explained that the dispatch of Japanese Government officials to Pyongyang in October. He further explained that Japan’s policy of aiming at a comprehensive resolution of outstanding issues of concern, such as the abductions, nuclear and missile issues unchanged. Both ministers shared the view that they will continue to place importance on cooperation among Japan, the United States, and the ROK. Minister Kishida expressed his respect for Secretary Kerry’s efforts to resolve the Iranian nuclear issue and the two ministers concurred that they will continue their close cooperation on this matter. In addition, the two ministers discussed countermeasures against the ISIL, the situation in Ukraine, and the TPP.

Secretary of State Kerry and Foreign Minister Kishida at the Japan-U.S. foreign ministers’ meeting (November 7, Beijing, China)

Also in November, Prime Minister Abe held a Japan-U.S. Summit Meeting again with President Obama on the occasion of the G20 Summit held in Brisbane, Australia. The two leaders concurred to advance security and defense cooperation on a broad range of fields, including the review of the Guidelines for Japan-U.S. Defense Cooperation. Prime Minister Abe announced that, subject to the approval of the Diet, Japan intends to make a financial contribution up to 1.5 billion US dollars to the Green Climate Fund (GCF), while taking into consideration the pledges made by other countries. President Obama expressed his appreciation in response. Regarding the Japan-ROK relations, Prime Minister Abe said that he echoes with the comment by Ms. Park Geun-hye, President of the ROK, on realizing a Japan-China-ROK trilateral meeting, and that he intends to aim for an early realization of the meeting as well. President Obama responded by expressing his appreciation and expectation over the efforts to improve the Japan-ROK relations.

(3) Japan-U.S. Economic Relations

Close cooperation in the economic area between Japan, the third-largest economic power in the world, and the U.S., the largest of all, is also essential not only to vitalize the economies of both Japan and the U.S., and also to further strengthen the Japan-U.S. Alliance and grow of the global economy as a whole. From this perspective, two countries will continue to strengthen the bilateral trade and investment and promote cooperative relationships in various areas including energy.

With regard to the TPP negotiations as well as U.S.-Japan B parallel Negotiations on Motor Vehicle Trade and Non-Tariff Measures, both Japan and the U.S. identified a path forward on important bilateral issues in the U.S.-Japan Joint Statement in April 2014. Following the path identified, ministers and working-level officials have vigorously conducted negotiations. At the TPP Leaders Meeting held in Beijing in November, it was shared among the Leaders that the end of the TPP negotiations was coming into focus, and at the subsequent Japan-U.S. Summit Meeting held in Brisbane, both countries shared the view that they would continue making further efforts for an early conclusion of the TPP. In order to develop new rules for trade and investment, both countries will continue to cooperate in the negotiations.

With regard to energy cooperation, amid the increasing demand for Liquefied Natural Gas (LNG) due to the shutdown of nuclear power plants in the aftermath of the Great East Japan Earthquake, diversification of suppliers is a pressing issue to secure stable and low-cost LNG, as Japan is dependent on other countries for almost all of LNG. To this end, the Government of Japan has taken advantage of high-level meetings, including summit-level, to realize imports of LNG produced in the U.S. As a result, by September, the U.S. government approved exports of LNG as well as the construction and operational measures of all the LNG projects in the US in which Japanese companies are involved and the export of U.S. LNG is expected to realize in FY2016³. In addition to the export of LNG, both Japan and the U.S. closely cooperate with each other in other areas. In December, U.S.-Japan Energy Strategic Dialogue was held in Washington, D.C. and attended by representatives from MOFA, the Agency for Natural Resources and Energy of the Ministry of Economy, Trade and Industry, and the Ministry of Defense on the Japanese side, and the Department of State, the Department of Energy, and the Department of Defense on the U.S. side. The two delegations had fruitful discussions on topics including global energy and transportation, Japan-U.S. energy cooperation, and Asia gas market.

As a symbol of Japan-U.S. cooperation, Japan has proposed the introduction of the superconducting linear (maglev) technology to the Northeast Corridor of the U.S.. The innovative maglev technology may reduce travel time between Washington, D.C. and New York from more than two hours to approximately one hour, if put into practical use. At the Japan-U.S. Summit Meeting in April, Prime Minister Abe once again proposed the introduction of maglev technology to President Obama. Furthermore, Prime Minister Abe visited the Yamanashi Maglev Test Line with Caroline Kennedy, the U.S. Ambassador to Japan, and took a test ride together. At the reception of the 50th Anniversary of the Tokaido Shinkansen bullet train in October, Prime Minister Abe emphasized the advantages of the maglev technology to railway officials and others from abroad, including the U.S.. In addition to such top-level sales activity, the Japanese Embassy in the U.S., with Kenichiro Sasae, Ambassador of Japan to the United States, in the lead, has aggressively publicized the significance of the introduction of the maglev technology through a seminar hosted by a think tank and other activities. In October, State Minister for Foreign Affairs Yasuhide Nakayama received a courtesy call from those engaged in marketing activity locally in the U.S., including Tom Daschle, a former U.S. Senator, and confirmed the progress in the introduction of the maglev technology.

In addition, when Prime Minister Abe visited New York in September, he attended a session and luncheon with officers and directors of the Council on Foreign Relations (CFR) and business leaders at the CFR office, and in his greetings at the Investment Japan Seminars hosted by the JETRO, Prime Minister Abe made remarks on the Japanese economy and the growth strategy and called for investment to Japan. In October, when Secretary of Commerce Penny Pritzker visited Japan with executives from 20 U.S. companies, Prime Minister Abe and Chief Cabinet Secretary Suga explained issues such as the growth strategy and the empowerment of women and called for investment in Japan.