1.Regional Situation

(1) European Union (EU)

The EU is a political and economic entity consisting of 28 member states with a total population of about 510 million that generates about 22% of the world's GDP. Sharing basic values and principles, the EU is an important partner for Japan in addressing global issues.

〈Recent Development of the EU〉

Following on from the previous year, Europe was under pressure to respond to various challenges including the influx of refugees and frequent terrorist attacks. In this context, the EU faced the situation of the withdrawal of a member state for the first time in the history of European integration as a result of the referendum by the UK in June. The 27 EU countries, excluding the UK, held informal summit meetings in June, September and December to discuss the procedures and structures on the EU side pertaining to the withdrawal negotiations, and clarified their position that it would be necessary to accept all of “the four freedoms” of labor, goods, capital, and services in order for the UK to have access to the single market after withdrawal, and they would not recognize an “à la carte” approach.

Furthermore, taking into account the fact that skepticism of the EU is growing in each member state, the EU urgently needed to present measures for effectively responding to the refugee issue. In addition to the EU-Turkey agreement in March, the leaders of the 27 EU countries adopted the Bratislava Declaration and Roadmap in September in Bratislava (Slovakia), stating goals and specific measures related to the response to the refugees. Moreover, the EU presented a rapid-fire series of responses including stronger cooperation with Turkey and the African countries, establishment of the European Border and Coast Guard staffed with approximately 1,500 border guards, encouragement of the relocation of refugees within the EU, and the establishment of central processing facilities to accelerate the procedures for refugees to seek asylum.

In the security area, a few days after the decision by the UK to withdraw from the EU in June, the EU Global Strategy for Foreign and Security Policy was announced due to an initiative of the High Representative of the Union for Foreign Affairs and Security Policy, Federica Mogherini. It emphasized the unity of Europe and clarified again its stance of actively contributing to the various issues faced by the international community as a global player. In October, the EU Foreign Affairs Council clearly stated that this strategy would lead the foreign policy of the EU over the next few years and stipulated the priority areas when implementing the strategy. Since then, the Council has been working on strengthening defense cooperation and EU-NATO cooperation.

Moreover, the EU and the European countries worked on the improvement of the situations in Syria and Libya, which are one of the factors of the influx of migrants and refugees into Europe, and strengthened their measures to combat terrorism in Europe by the Islamic State of Iraq and the Levant (ISIL). Furthermore, regarding the Ukraine issue, they worked on improving the situation by urging the parties to implement the Minsk agreements.

The EU showed a stance of greater involvement in Asia as well. The aforementioned EU Global Strategy clearly states that the EU will increase its involvement in Asia, not only in the area of economy but also on the security front, and taking into account the increasingly tense situation in the South China Sea, High Representative Mogherini, as the representative of the 28 EU member states, issued declarations emphasizing the importance of the rule of law at sea two times, in March and July.

Regarding the economy, the moderate recovery continued in the Eurozone, though it lacked strength overall. Furthermore, the high unemployment rate and vulnerability of the financial condition of some financial institutions in the southern European countries have been indicated. It was, as such, a year that faced a variety of risks, though it did not reach a critical situation.

〈Japan-EU Relations〉

In 2016, the bonds of trust among the leaders were further strengthened and, following on from the previous year, there were major developments toward strengthening Japan-EU relations in a comprehensive manner. In May, Prime Minister Abe, who was visiting Brussels, held the Japan-EU Leaders Meeting with President of the European Council, Donald Tusk and President of the European Commission, Jean-Claude Juncker. Furthermore, in July at the time of the ASEM Summit Meeting held in Ulaanbaatar (Mongolia), a Leaders Meeting was held for the second time in the year. At this meeting, in response to the result of the EU referendum in the UK in June, Prime Minister Abe requested the EU and the UK coordinate to clarify the prospect for their future negotiations in order to dispel the sense of uncertainty and enhance predictability. Furthermore, both leaders agreed to aim for early agreement in principle on the Japan-EU Economic Partnership Agreement (EPA) and the Japan-EU Strategic Partnership Agreement (SPA).

Regarding the economy, strong commitment at the leader's level toward the conclusion of a Japan-EU EPA was reaffirmed at the Japan-EU leaders meetings held in May and July, and in the joint statement issued on the occasion of the G7 Ise-Shima Summit in May. A total of 17 rounds of negotiations were held between Japan and the EU by December 2016. Discussions were held on a wide range of areas including trade in goods, trade in services, intellectual property rights, non-tariff measures, government procurement, investment, and other issues (see 3-3-1 (1) for the details).

(2) United Kingdom

The EU referendum promised by Prime Minister David Cameron in May 2015, General Election was held on June 23, 2016. The Prime Minister called for the UK to remain in the EU, but the result of the referendum was that support for withdrawal was in the majority (withdraw 51.9%, remain 48.1%). It has been pointed out that the background to this was that there was dissatisfaction with the increase in EU-level regulations which the UK Parliament could not be involved in decision making, and dissatisfaction among the citizens of the UK, in particular, the middle class, with the increase in migrants from central and eastern European countries as a result of the expansion of the EU. In response to this result, Prime Minister Cameron resigned, and after that, election for the leader of the Conservative Party, Home Secretary Theresa May became Prime Minister on July 13. The UK Government plans to give formal notification of its intention to withdraw to the EU by the end of March 2017, and negotiations will commence to conclude an agreement stipulating the arrangements regarding the withdrawal of the UK, in principle within two years of the notification. Japan is closely monitoring what kinds of relations will be built regarding points such as regulations on migrants and access to the single market, and will convey the position of Japan at the right times (see 3-3-2 (4)). In January 2017, the UK Supreme Court ruled that the act of Parliament authorizing the withdrawal was necessary for giving the notification of withdrawal to the EU and as a consequence, the Government of the UK submitted the European Union (Notification of Withdrawal) Bill to parliament on February 2. Furthermore, Prime Minister May gave a speech on January 17 about the direction of the UK's withdrawal from the EU and emphasized that the UK would continue to promote free trade and actively play a global role.

Japan and the UK have been strengthening bilateral ties through policy coordination and exchanges at various levels including the prime ministers and foreign ministers. Prime Minister Abe visited the UK in May and held a Summit Meeting with Prime Minister Cameron at the UK Prime Minister's office and the official country residence of the UK Prime Minister (Chequers) and received an audience with Her Majesty Queen Elizabeth II. Furthermore, the two leaders also held a Summit Meeting when Prime Minister Cameron visited Japan on the occasion of the G7 Ise-Shima Summit in May. Also with Prime Minister May, who had taken office later, Prime Minister Abe held a brush-by meeting at the G20 Hangzhou Summit (in China) and a Summit Meeting on the occasion of the United Nations General Assembly in September. Foreign Minister Kishida and UK Foreign Secretary Hammond held a foreign ministers' meeting on the occasion of the G7 Hiroshima Foreign Ministers' Meeting and held the 5th Japan-UK Foreign Ministers' Strategic Dialogue in January 2016. In July, former Mayor of London Boris Johnson was appointed as Secretary of State for Foreign and Commonwealth Affairs in the new May cabinet, and a Foreign Ministers' Meeting was held on the occasion of the UN General Assembly in September.

In recent years, security and defense cooperation has been advanced between Japan and the UK. At the Second Japan-UK Foreign and Defence Ministers' Meeting (“2+2”) held in Tokyo in January 2016, the ministers confirmed promotion of security and defense cooperation in a wide range of areas and shared their recognition regarding regional situations around the world. In October and November, a Royal Air Force Unit including Typhoon fighters visited Japan from the UK and conducted a joint exercise with the Japan Air Self-Defense Force out of Misawa Air Base. This was the first joint exercise that the Japanese Air Self-Defense Force had conducted with a country other than the U.S. inside Japan. Furthermore, in response to the agreement of the Second “2+2”, cooperation in assistance for capacity building of Southeast Asian and African countries progressed. They include a humanitarian assistance/disaster relief seminar for ASEAN countries co-hosted by Japan and the UK (January, in the Philippines), collaboration to clear landmines in Angola (August), and collaboration to assist for enhancement of border control capabilities of an airport in Tunisia (September). Moreover, in January 2017 in London Foreign Secretary Johnson and Japan's Ambassador to the UK, Koji Tsuruoka, signed the Japan-UK Acquisition and Cross-Servicing Agreement (Japan-UK ACSA).

(3) France

With regard to domestic affairs, improvement of the unemployment rate in excess of 10% is the most important challenge for the Hollande administration, and in August, a law revising the labor laws aimed at reforming the rigid labor market was passed regardless of large-scale protests by the public. Regarding counterterrorism, in response to the series of terrorist attacks in Paris in November 2015, the government strengthened its measures to combat terrorism by issuing a declaration of a state of emergency and currently that declaration has been extended to July 2017. However, together with measures for the refugees coming in from the Middle East, North Africa, etc., counterterrorism still remains an important issue. For example, a terrorist attack that resulted in 85 deaths occurred in Nice in southern France in July. Furthermore, in the lead-up to the presidential election held in April and May 2017, both the left-wing and the right-wing are strengthening their election campaigns. In November, a primary election was held by the Republicans, the largest opposition party, and former Prime Minister François Fillon was elected as their candidate, while in the ruling Socialist Party, President Hollande announced in December that he would not run in the next presidential election. Prime Minister Manuel Valls announced his candidacy and resigned as prime minister. As a consequence, a new cabinet was inaugurated in December led by former Minister of the Interior Bernard Cazeneuve.

On the diplomatic front, France has played a leading role in the international community regarding the Middle East issue. For example, it hosted a ministerial meeting on peace in the Middle East in June and co-hosted a ministerial meeting with Iraq aimed at the stabilization of Mosul (Iraq) in October.

As for its relations with Japan, when Foreign Minister Kishida visited France in March, he had a meeting with the Minister of Foreign Affairs and International Development, Jean-Marc Ayrault, and they confirmed cooperation toward the G7 Hiroshima Foreign Ministers' Meeting in April. When Foreign Minister Ayrault visited Japan to attend this meeting, a bilateral meeting was also held and the Ministers issued a joint press release on Japan-France cooperation in Africa. In May when Prime Minister Abe visited France, a summit meeting was held with President Hollande and they confirmed cooperation toward the success of the G7 Ise-Shima Summit, and they agreed to hold “Japonismes 2018” in France in 2018, which collects together and presents the stylishness of Japanese culture on a large scale.

In addition, at the 6th Tokyo International Conference on African Development (TICAD VI) held in Kenya in August, the “Japan-France Partnership for Africa” was held, the first official side event co-hosted by Japan and France. Furthermore, cooperation is progressing in the security and defense cooperation area as well. At the Third Japan-France Foreign and Defense Ministers' Meeting (“2+2”) held in Paris in January 2017, the Ministers agreed to start negotiations for an Acquisition and Cross Servicing Agreement (ACSA), and confirmed they would materialize the first collaboration project between Japan and France under the Agreement concerning the Transfer of Defense Equipment and Technology that entered into force in December. Furthermore, they agreed to closely cooperate to secure a free and open Indo-Pacific region.

(4) Germany

In Germany, the number of migrants and refugees coming into the country has rapidly increased since 2015 and, in response, concerns and unease about the worsening of public safety have spread among the citizens. Support for Federal Chancellor Angela Merkel fell partly because she refused to set an upper limit on the number of refugees accepted. Since the spring of 2016, the number of refugees coming into the country has dramatically fallen due to the strengthening of border control and the agreement between the EU and Turkey, etc., and the pressure on Chancellor Merkel weakened temporarily. However, criticisms flared up again after a series of terrorist attacks in southern Germany in July were committed by people with migrant or refugee backgrounds.

In late November, Chancellor Merkel announced she would stand again as a candidate for chancellor in the federal elections in autumn 2017 on the grounds that her experience and competence was required at a time of uncertainty and instability. Approximately a month after that, in late December a terrorist incident occurred in Berlin in which a Tunisian man whose application for refugee status had been rejected drove a truck into the Christmas Market, killing and injuring many people. Under this situation, concerns regarding public safety measures and refugee policy have been growing in Germany again.

In this context while the Christian Democratic Union (CDU), the ruling party led by Chancellor Merkel, suffered defeats in five elections for state legislatures held from spring to autumn 2016, Alternative für Deutschland (AfD), a political party criticizing the refugee policy of Chancellor Merkel, made great advances. As of the end of 2016 AfD held parliamentary seats in 10 of the 16 states in Germany.

Regarding the economy, Germany maintained solid growth even in the context of the feeling of uncertainty about the future caused by the issue of the withdrawal of the UK from the EU. The federal government forecast that the real GDP growth rate for 2016 would be 1.8%, and stated that the reasons for the comparatively strong growth were the increase in government spending due to measures to handle the large influx of refugees, low oil prices, and the depreciation of the Euro. Furthermore, the labor market is also expanding, the number of unemployed people fell for 36 consecutive months, and the unemployment rate maintained the historically low figure of 5.8% (as of December 2016).

Regarding diplomacy, the international situation is undergoing large changes, and the leaders of the countries, including the major EU countries, are being replaced. In this context the status and presence of Germany, which is supported by the long-term administration of Chancellor Merkel and solid economic growth, is rising not only in Europe but also in the international community, and it is substantially leading the response to the various crises that the international community is facing including the Ukraine issue, the refugees issue, the situation in the Middle East and North Africa, the issue of the withdrawal of the UK from the EU, etc.

As for its relations with Japan, following on from 2015, a number of high-level visits realized including the visit to Japan of Federal Minister for Foreign Affairs Steinmeier (April, G7 Hiroshima Foreign Ministers' Meeting), the visit to Germany of Prime Minister Abe (May), the visit to Japan of Chancellor Merkel (May, G7 Ise-Shima Summit), the visit to Japan of Federal President Joachim Gauck (November), etc. In the Foreign Ministers' Meeting in April the ministers discussed the regional situation and agreed to cooperate closely in order to achieve concrete outcomes in UN Security Council reform. In the summit meeting between Prime Minister Abe and Chancellor Merkel in May and the summit meeting between Prime Minister Abe and President Gauck in November, the leaders held discussions on a variety of areas including bilateral relations, the regional situation, in particular the Ukraine situation, and confirmed that Japan and Germany would cooperate even more closely while working together with the international community for the peace and stability of the world. Furthermore, in response to the agreement in the summit meeting in May, the Japan-Germany cyber security consultation was launched, and its first meeting was held in Tokyo in September.

(5) Italy and Spain

A Italy

2016 was the year commemorating the 150 anniversary since Japan and Italy concluded the Japan-Italy Treaty of Amity and Commerce in 1866, and many commemorative events were held in both countries under the banner of the “150th anniversary of diplomatic relations between Japan and Italy” (See column “150th anniversary of diplomatic relations between Japan and Italy”). Many VIP visits also took place. In March, Foreign Minister Kishida visited Italy and held a meeting with Foreign Minister Gentiloni, and they signed the Agreement on the Security of Information between Japan and Italy (which entered into force in June). In April, Foreign Minister Gentiloni visited Japan to attend the G7 Hiroshima Foreign Ministers' Meeting and visited Tokyo and Hiroshima. In May, Prime Minister Abe visited Florence, the hometown of Prime Minister Matteo Renzi, to hold a summit meeting, and the leaders confirmed that they would cooperate closely as the current and next chair countries of the G7 Summit. Also in May, Prime Minister Renzi visited Japan to attend the G7 Ise-Shima Summit.

Foreign Minister Kishida and Foreign Minister Gentiloni contributed to Japanese and Italian media simultaneously on August 25, the day in 1866 when the two countries established diplomatic relations. In his contribution, Foreign Minister Kishida indicated the latent possibility of cooperation in the area of transfer of defense equipment and technology between Japan and Italy and called for the deepening of cooperation between the two countries in the security and defense area.

With regard to domestic affairs, in response to the rejection of a bill to amend the Constitution in a national referendum in December 2016, Prime Minister Renzi resigned. Then Foreign Minister Gentiloni was appointed as the prime minister, and the Gentiloni administration, that succeeded the previous administration's reform policies, was inaugurated in December.

B Spain

In Spain, in the general elections for both Houses held in December 2015, the ruling People's Party failed to win a majority of seats. The subsequent negotiations to form a coalition ran into trouble, and a new election was held in June 2016. The ruling People's Party once again failed to win a majority but the largest opposition party, the Spanish Socialist Workers' Party (PSOE), abstained from voting in the nomination vote for Prime Minister Mariano Rajoy, and as a result, the second Rajoy administration was established in November.

The number of travelers between Japan and Spain is becoming larger and in October direct flights between Tokyo and Madrid resumed for the first time in approximately 20 years.

(6) Ukraine

In eastern Ukraine, temporary improvements in the situation were seen (May and September), but there were constant violations of ceasefires throughout the year, so the unstable situation continued. In October, the leaders of Ukraine, Germany, France, and Russia held four-way talks for the first time in a year and agreed to the creation of a roadmap toward implementation of the Minsk Agreements but in December coordination between the four countries ran into trouble.

With regard to domestic affairs, in April, Prime Minister Yatsenyuk resigned against the backdrop of poor approval ratings and a new cabinet with former Chairperson of the Verkhovna Rada, Volodymyr Groysman, as prime minister was inaugurated. This cabinet announced that fighting corruption and judicial reforms were its priority reform areas, and it has continued to make efforts to accelerate reforms, including the adoption of a constitutional amendment bill in the judicial area in June and the start of a system for an electronic declaration of the assets of public officials in September, etc.

Regarding diplomacy, due to the Deep and Comprehensive Free Trade Agreement (DCFTA) between the EU and Ukraine entering into force in January and the resulting suspension of the Commonwealth of Independent States (CIS) Free Trade Agreement (FTA) between Russia and Ukraine, the EU's share of total trade with Ukraine increased and Russia's share declined. Furthermore, negotiations with the EU toward visa liberalization progressed and Ukraine continued paving the way towards European integration, and in its relations with Russia, Ukraine has worked to escape from its dependence on Russia in the energy area, for example by stopping purchases of Russian natural gas since November 2015.

Regarding relations with Japan, many high-level communications took place, such as the visit of President Petro Poroshenko to Japan in April, a summit meeting on the occasion of the UN General Assembly in September, the visits of Minister of Internal Affairs Avakov to Japan in October, First Vice Prime Minister, Minister of Economic Development and Trade, Stepan Kubiv, in November, etc. Furthermore, in November the 6th Japan-Ukraine Economic Joint Meeting and in December the 4th meeting of the Japan-Ukraine Joint Committee for the Cooperation to Advance Aftermath Response to Accidents at Nuclear Power Stations and the Japan-Ukraine Security Council consultations were held, so bilateral relations steadily advanced. Regarding Japan's assistance to Ukraine, Japan pledged additional aid of approximately 1.5 billion yen in January and in addition dispatched a Japanese expert to Ukraine as an advisor to the finance minister of Ukraine.