Section 3 Economic Diplomacy

Overview

(Recognition of the Economic Situation and Japan’s Economic Diplomacy)

The world economy as a whole recovered moderately in 2015, despite concerns about the effects of a downfall in crude oil prices and geopolitical risks in the Middle East and other regions, while the U.S. actions toward the normalization of monetary policy and prospects for emerging countries including China drew attention. The Japanese economy is on a moderate recovery, helped by an improvement in corporate performance, which led to an improvement in the employment situation.

Based on this recognition of the economic situation, Japan revised its “Japan Revitalization Strategy” (hereinafter the “Growth Strategy”) in June 2015 to “ensure the movement towards the exit from deflation and reconstruct the basis for development in the future.” The “Growth Strategy” shows a course to incorporate the world’s growth into Japan’s growth through Japanese companies and citizens proactively entering into overseas markets and attracting the “global flow of people, goods, and money” into Japan.

Strengthening economic diplomacy as means of driving the growth of the Japanese economy is regarded as one of the three pillars of Japan’s foreign policy, alongside strengthening the Japan-U.S. Alliance and enhancing our relations with neighboring countries. Japan has made earnest efforts to strengthen it. In 2015, while taking into account the “Growth Strategy,” Japan carried out economic diplomacy from three aspects: (1) contributing to the growth of the Japanese economy, (2) building an attractive country where people can have peace of mind in life, and (3) making international rules.

(Contribution to the Growth of the Japanese Economy)

(1) Promotion of Economic Partnerships

The promotion of high-level economic partnerships constitutes one of the pillars of the Growth Strategy, which aims to raise the FTA ratio to 70% by 2018. In October, an agreement in principle was reached on the Trans-Pacific Partnership (TPP) Agreement and it was signed in February 2016. The TPP Agreement establishes new trade and investment rules among 12 Asia-Pacific countries. When the agreement enters into force, a huge economic zone that accounts for 40% of the world’s GDP and 10% of its population will be realized. Furthermore, in 2015, Japan made steady efforts on promoting economic partnerships. For example, the Agreement between Japan and Australia for an Economic Partnership (EPA) entered into force in January, and the Agreement between Japan and Mongolia for an Economic Partnership was signed in February. Based on these achievements, Japan aims to contribute to global rule-making on trade and investment, by striving to the early entry into force and expansion of participating economies of the TPP Agreement, and carrying out negotiations in parallel, such as the Japan-EU EPA, the Regional Comprehensive Economic Partnership (RCEP), and the Japan-China -ROK FTA.

(2) Support for Japanese Companies’ Overseas Business Expansion

To translate the signs of recovery of the Japanese economy into steady growth, it is necessary to tap into the growth of other countries, including emerging countries, through promoting the overseas business of Japanese companies. The activities of Japanese companies have been promoted through public-private partnerships, under the command of the Headquarters for the Promotion of Japanese Business Support, headed by Foreign Minister Kishida, at MOFA, and under the leadership of the heads of Japan’s diplomatic missions overseas. In September, the “Division for Promotion of Public and Private Partnership” was established to comprehensively handle these tasks.

In addition, to “achieve the government’s target of approximately 30 trillion yen in infrastructure exports by 2020” (“Growth Strategy”), Japan has made the most of the opportunities including mutual visits of dignitaries and conducted top-level sales to promote Japan’s infrastructure and technology overseas.

Aiming “to accelerate the achievement of the export value target of 1 trillion yen by 2020 ahead of schedule” (“Growth Strategy” and the “Comprehensive TPP-related policy framework”), MOFA has utilized its diplomatic missions overseas and actively promotes the attractive points of Japanese products. After the decision on the “Comprehensive TPP-related policy framework” in November, MOFA appointed staff in charge of supporting Japanese companies (food industry) at 58 diplomatic missions overseas. The Government of Japan has urged other governments to relax or remove import restrictions put in place due to the Great East Japan Earthquake and the accident at TEPCO’s Fukushima Daiichi Nuclear Power Plant as soon as possible based on scientific basis, and also promptly provided correct information.

(Building an Attractive Country Where People can Have Peace of Mind in Life)

As Japan relies heavily on imports of energy, mineral resources and food from other countries, MOFA has been making the following efforts to secure their stable supply and ensure people’s peace of mind in life.

(1) Energy, Mineral Resources and Food Security

It continues to be important that Japan takes steps to secure a stable supply of resources at reasonable prices, as Japan relies on other countries for many resources and has increased its dependence on fossil fuels to 90 % since the Great East Japan Earthquake. Utilizing a variety of diplomatic tools, MOFA has been exerting resource diplomacy strategically including through strengthening comprehensive and mutually beneficial ties with resource-rich countries and diversifying its resource-supply countries. In particular, Prime Minister Abe actively engaged in resource diplomacy by visiting major resource-rich countries, including countries in the Middle East, Asia and the Pacific, and Central Asia in 2015. In addition, MOFA has made good use of the inputs from “Special Assistants for Natural Resources” appointed at diplomatic missions overseas since 2013, and continued to strengthen its systematic functions, including information gathering.

As for food security, in the face of expected world population growth and global food shortages, Japan has been making efforts to contribute to securing stable food supply to Japan through balancing the world’s food supply and demand by increasing the world food production.

(2) Sustainable Use of Living Marine Resources

Japan plays also an active role in proper conservation and management of living marine resources and their sustainable use. “Convention on the Conservation and Management of High Seas Fisheries Resources in the North Pacific Ocean” entered into force in July, and the Secretariat of the North Pacific Fisheries Commission (NPFC) was established in Tokyo based on the Convention. Japan assessed that additional work pointed out by the Scientific Committee of the International Whaling Commission (IWC) had been completed. Therefore, Japan finalized the New Scientific Whale Research Program in the Antarctic Ocean (NEWREP-A) and decided to implement the plan from 2015.

(International Rule-Making)

To ensure the rule of law in the international economy and the stable development of the world economy, Japan has actively participated in rule-making in the World Trade Organization (WTO) and led international discussions in various fields such as economy and society at the Organisation for Economic Co-operation and Development (OECD), Asia-Pacific Economic Cooperation (APEC), G7 and G20 Summits, etc.

(1) Multilateral Trade Liberalization (WTO)

While the negotiations for multilateral trade liberalization have remained in deadlock for many years, the multilateral trading system centered on the World Trade Organization (WTO) plays a key role in creating new rules and implementing existing rules that include dispute settlement. As for creating new rules, conclusion of the Information Technology Agreement (ITA) expansion negotiations and the agreement on export competition in agriculture including export subsidies at the Tenth WTO Ministerial Conference (MC10) in December show that WTO’s negotiation function is still indeed working and effective. On the other hand, developed and developing countries have failed to converge their opinions about what WTO negotiations should be in the future, including whether to continue the Doha Development Agenda (DDA) negotiations, the biggest recent WTO issue, and there is no prospect on reaching an agreement. It is necessary to explore a new approach to revitalize and reinforce the WTO’s negotiation function, including “up-to-data” issues, which change over time. Japan would actively participate in such discussions. Japan also actively participates in implementing appropriate application of the existing rules.

(2) International Discussions Led by Japan

The G7 summit is a place where leaders of developed countries meet to make discussions for coordination of policy. The year 2015 marked the 70^th anniversary since the end of World War II and the 40^th anniversary since the Rambouillet Summit (the first summit in France). At the G7 summit in Schloss Elmau, Germany, in June, Prime Minister Abe pointed out that the G7 has underpinned the order of the international community, based on the fundamental values of freedom, democracy, human rights, and the rule of law and stated that it is the G7 that is capable of reacting from a global perspective, that the responsibility of G7 members is significant, and that the solidarity of the G7 is becoming increasingly important.

At the G20 Antalya Summit held in Turkey in November, the leaders exchanged frank opinions concerning specific initiatives for realizing strong, sustainable, and balanced economic growth. The “Antalya Action Plan” was announced, stating the current status and future plans of countries regarding individual macro-economic policies and growth strategies. The leaders strongly condemned the acts of terrorism in Paris, and agreed that the G20 countries will carry out measures against terrorism in a coordinated manner. A “G20 Statement on the Fight against Terrorism” was also issued.

The Asia Pacific Economic Cooperation (APEC) is an economic cooperation framework for the participation of 21 countries and regions (economies) in the Asia-Pacific Region. At the APEC Leaders’ Meeting in the Philippines in November, under the general theme of “Inclusive Growth,” vigorous discussions took place focusing on regional economic integration and building sustainable and resilient communities. Prime Minister Abe stressed the importance of strengthening the “rule of law in the economic field” and explained a target of realizing a “Society with the Dynamic Engagement of All Citizens” and measures supporting women’s empowerment.

The Organization for Economic Co-operation and Development (OECD) is the “world’s largest think tank,” covering a wide range of economic and social issues. The “OECD Southeast Asia Regional Program” was launched at the 2014 Ministerial Council Meeting chaired by Japan. Its first steering group meeting was held in March in Jakarta, Indonesia in March 2015. Japan became a co-chair and contributed to strengthen the relations between the Region and the OECD. Moreover, in June 2015, Japan communicated the importance of “quality infrastructure” as well as Japan’s contribution policy related to climate change at the Ministerial Council Meeting under the theme of “Unlocking Investment for Sustainable Growth and Jobs.”