Section 3 Economic Diplomacy

Overview

The revitalization of the Japanese economy contributes to growth of the world economy. A strong economy is essential to robust diplomacy. Japan will strategically carry out economic diplomacy for creating an international economic environment that contributes to revitalizing the Japanese economy and for achieving dynamic growth.

Japanese Economy and World Economy

The Abe administration is committed to reviving the Japanese economy through the policy mix of “three arrows”: Bold monetary policy, flexible fiscal policy, and a growth strategy that encourages private investment. In June 2014, the administration revised “the Japan Revitalization Strategy”. Under the initiative of Minister for Foreign Affairs Fumio Kishida, the Ministry of Foreign Affairs (MOFA) continued to make earnest efforts in 2014 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. Owing to a series of initiatives known as “Abenomics,” in 2014 the Japanese economy made steady progress towards the exit from deflation and continued its moderate recovery trend, despite weak private consumption and other weaknesses following the consumption tax hike. With regard to the world economy, the economy is recovering in the United States and United Kingdom. However, the economic growth rate in the Eurozone remained at relatively low levels, and a divergence of growth rate levels was observed among emerging countries. In this regard, various economic trends were observed across different countries. Since autumn 2014, oil demand has decreased mainly due to the economic slowdown in Europe and emerging countries. However, supplies of oil production in non-OPEC (Organization of the Petroleum Exporting Countries) countries increased, such as shale oil produced in the United States. Such easing of the supply and demand in the oil market, among other factors, have caused oil prices to fall to their lowest levels since 2009. In the context of this international situation, Prime Minister Shinzo Abe explained at the Group of Seven(G7) and Group of Twenty(G20) Summits that Japan would contribute to the growth of the global economy through revitalization of the Japanese economy, and world leaders expressed their strong expectations.

Promotion of Economic Partnerships

The promotion of high-level economic partnerships constitutes one of the pillars of the Growth Strategy. The Japan-Australia Economic Partnership Agreement (EPA) was signed in 2014 after seven years of negotiations and is entered into force in January 2015. In July 2014, an agreement in principle was reached on the Japan-Mongolia EPA negotiations. In December, Japan-Turkey EPA negotiations launched. Notably with such efforts, the negotiations for economic partnerships has made steady progress. Japan’s negotiations for economic partnership agreements, 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 EPA, are carried out in parallel. By doing so, Japan aims to contribute to the global trade and investment rule-making. Additionally, it is important that such economic partnerships are developed in a mutually complementary manner, in a way that will also lead to the realization of the Free Trade Area of the Asia-Pacific (FTAAP). At the Asia-Pacific Economic Cooperation (APEC) Economic Leaders’ Meeting in Beijing in 2014, the Beijing Roadmap for APEC’s Contribution to the Realization of the FTAAP was endorsed. Japan will continue to promote regional economic integration, including the FTAAP, through active participation in APEC discussions.

Multilateral Trade Liberalization

While the negotiations for multilateral trade liberalization have remained in deadlock for many years, the multilateral trade regime centered on the World Trade Organization (WTO) plays a key role in creating new rules and implementing existing rules that include dispute settlement. In 2013, the Bali Package was reached, comprised of the three areas of trade facilitation, agriculture, and development. The Protocol of Amendment to insert the Agreement on Trade Facilitation into the WTO Agreement could not be adopted by the agreed July 31, 2014 deadline, and therefore, its implementation was dealt a setback. However, the Protocol was adopted at a special meeting of the WTO General Council in November 2014. If the Trade Facilitation Agreement enters into force, it will become the first binding agreement on all members of the WTO since its establishment. Japan will be proactively involved in the steady implementation of the Bali Package and towards the conclusion of the Doha Development Agenda (DDA) negotiations. With regard to the efforts of the WTO members who share the objective of advancing the further liberalization of trade, negotiations are proceeding with the aim of reaching an early conclusion on expansion of coverage of the Information Technology Agreement (ITA). Negotiations are also ongoing on the Trade in Services Agreement (TiSA). Furthermore, in July, negotiations commenced regarding the Environmental Goods Agreement (EGA). Japan will continue to engage in wide-ranging efforts for maintaining and strengthening the free and open global trading system.

Support for Japanese Companies and Promotion of Investment in Japan

The Japanese economy has shown signs of recovery. However, for such signs to be translated into steady growth, it is necessary to tap into the growth of other countries, including emerging countries, through promoting the overseas activities of Japanese companies. The activities of Japanese companies are promoted through public-private partnerships, under the command of the Headquarters for the Promotion of Japanese Business Support, headed by Minister for Foreign Affairs Kishida, at the MOFA, and under the leadership of the heads of Japan’s diplomatic missions overseas. Moreover, amid growing demand for infrastructure worldwide, the Government of Japan has announced a target of approximately 30 trillion yen 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 MOFA is striving to prevent reputational damage or misinformation stemming from the accident at Tokyo Electric Power Company’s Fukushima Daiichi Nuclear Power Station, and to promote exports of Japanese products to other countries. To this end, MOFA provides countries with up-to-date and accurate information regarding efforts in response to the accident, including the response on the issue of contaminated water, as well as steps taken to ensure the safety of Japanese products (e.g., Japanese inspection standards and systems, and shipment restrictions). Persistent efforts are being made to have import restrictions eased and lifted. The Japan Revitalization Strategy includes the target of doubling the balance of foreign companies’ direct investment in Japan to 35 trillion yen by 2020. In terms of efforts to promote investment in Japan, the MOFA makes use of international conferences, embassies, and consulates-general for publicity purposes. MOFA also conducts active PR on the websites of its diplomatic missions overseas.

Energy, Mineral Resources, and Food Security

It is urgent that Japan takes steps to ensure a stable supply of resources at reasonable prices, as Japan relies on other countries for many resources and has become increasingly dependent on fossil fuels since the Great East Japan Earthquake. Utilizing a variety of diplomatic tools, MOFA has conducted strategic resource diplomacy including the strengthening of comprehensive and mutually beneficial ties with resource-rich countries and diversification of its resource-supplying countries. In particular, Prime Minister Abe actively engaged in resource diplomacy by visiting major resource-rich countries, including those countries in the Middle East, Africa, Oceania, and Latin America and the Caribbean in 2014. In addition, MOFA has made use of the Special Assistants for Natural Resources appointed at diplomatic missions overseas which started as a system since 2013 to continue to strengthen its functions, including information gathering. In the face of expected world population growth and global food shortages, Japan makes efforts for ensuring food security. Japan plays an active role in the proper conservation and management of fishery resources. In July 2014, Japan became a Contracting Party to the Southern Indian Ocean Fisheries Agreement (SIOFA). In accordance with the Judgment of the International Court of Justice (ICJ), Japan cancelled the second phase of the Japanese Whale Research Program under Special Permit in the Antarctic (JARPAII).Taking account of the judgment, Japan then developed and submitted a new Proposed Research Plan to the Scientific Committee of the International Whaling Commission (IWC).　　

International Discussions Led by Japan

The year 2014 marked the 50th anniversary of Japan’s accession to the Organisation for Economic Co-operation and Development (OECD). Prime Minister Abe, Minister for Foreign Affairs Kishida, and three other ministers attended the Ministerial Council Meeting from Japan, which chaired the meeting for the second time in 36 years. At the meeting, Japan led the discussions among member states, based on the two pillars of “resilient economies and inclusive societies” and “strengthening ties between the OECD and Southeast Asia.” The resilience of the economy was addressed at the subsequent G20 Brisbane Summit, showing Japan’s leading role in creating trends of the global economy. Furthermore, OECD’s Southeast Asia Regional Programme, launched jointly by Prime Minister Abe, ASEAN ministers, and others, constitutes a highlight of OECD’s outreach activities (Southeast Asia is the only region for which outreach activities are carried out using OECD’s budget). Through the Programme, Japan will engage in efforts to improve the business environment in ASEAN member states and promote the expansion of Japanese companies in these countries.