Diplomatic Bluebook 2017

Chapter 3

Japan's Foreign Policy to Promote National and Worldwide Interests

1.Rule-Making to Bolster Free and Open Global Economic Systems

(1) Promotion of Economic Partnerships

Economic Partnership Agreements (EPAs) and Free Trade Agreements (FTAs) help capture the vitality of growing overseas market and strengthen the basis of the Japanese economy, through measures such as the reduction or elimination of tariffs on goods as well as trade barriers for services, and through trade and investment rule making. The Government of Japan has signed and brought into force 16 EPAs with 20 countries. In order to achieve the goal set out in the “Growth Strategy” to increase the FTA ratio in Japan's trade (the ratio of trade value with countries which have FTAs already signed or entered into force with Japan to the total trade value) to 70% by 2018 from 18.9% in 2012, Japan is strategically promoting economic partnerships including those with the Asia-Pacific region and Europe. Under these circumstances, an agreement in principle was reached on the Trans-Pacific Partnership (TPP) Agreement in October 2015, and it was signed in February 2016.

The new economic order that will be established by the TPP will serve as a basis for creating rules in the Free Trade Area of the Asia-Pacific (FTAAP), which is an even broader effort. Japan intends to work toward the entry into force of the TPP Agreement, and continues to promote other economic partnership negotiations in the future.

A Multilateral Cooperation (Mega FTAs)
(A) Trans-Pacific Partnership (TPP) Agreement

The TPP Agreement is an effort to establish new trade and investment rules in the fast-growing Asia-Pacific Region. The twelve countries, namely Japan, Singapore, New Zealand, Chile, Brunei, the U.S., Australia, Peru, Vietnam, Malaysia, Mexico, and Canada held negotiations and reached an agreement in principle at the TPP Ministerial Meeting held in Atlanta in October 2015, and the TPP Agreement was signed in February 2016. If the TPP Agreement enters into force, it will form a free and fair economic zone and create a huge value chain in a market encompassing 40% (3.1 quadrillion yen) of the global GDP and 800 million people.

This agreement will establish 21st century rules in a wide range of areas, including tariffs, services, investments, intellectual property, and state-owned enterprises. It will provide Japanese companies an opportunity to be more active in markets overseas, and will be a major driving force for the economic growth of Japan. Furthermore, strengthening the rule of law from an economic perspective through the TPP Agreement with countries that share fundamental values will have a strategic significance of contributing to Japan's security, and stability of the Asia-Pacific region.

In Japan, the TPP Agreement and its related bills were approved by the Diet in December 2016, and in January 2017, the Government notified New Zealand, which is designated as the Depositary of the Agreement, of the completion of domestic procedures for the TPP. Also in New Zealand, relevant domestic legislative amendments were approved in November 2016. In the United States, President Trump signed a Presidential memorandum to withdraw from the TPP, and the Office of the United States Trade Representative issued a letter for each country, including New Zealand, the Depositary, of its intention to withdraw the U.S. as a signatory to the TPP. However, Japan and the U.S. have agreed on the need to establish a free and fair economic zone in the Asia-Pacific region led by Japan and the U.S., and Japan intends to exercise leadership in the TPP Agreement to discuss what can be done to move forward with signatories to the TPP other than the U.S.

(B) Japan-EU EPA

After Japan decided to launch negotiations in March 2013 with the EU, which shares fundamental values with and is a major trade and investment partner for Japan, a total of 17 rounds of negotiations were held by December 2016. Japan and the EU discussed a wide range of issues, such as trade in goods, trade in services, intellectual property rights, non-tariff measures, government procurement and investments. Both leaders reaffirmed their strong commitment to the negotiations at Japan-EU leaders meetings held in May and July as well as through the joint statement issued on the sidelines of the G7 Ise-Shima Summit held in May. A decision was made in November by the cabinet to establish a Meeting amongst Main Ministers1 to ensure the early conclusion of negotiations, and a decision was made to set up the Task-force on the Japan-EU EPA, chaired by Deputy Chief Cabinet Secretary Hagiuda. In December, Foreign Minister Kishida and European Commissioner for Trade Malmstrom held a telephone conference and shared the aim to reach agreement in principle as early as possible. A sustained effort has been made in negotiations since then.

Current Status of EPA/FTA Negotiations, etc.

  • 1 Members include Chief Cabinet Secretary, Minister in Charge of Economic Revitalization, Minister of State in charge of general coordination on Japan-EU EPA negotiations, Minister for Internal Affairs and Communication, Minister for Foreign Affairs, Minister of Finance, Minister of Health, Labour and Welfare, Minister of Agriculture, Forestry and Fisheries, Minister of Economy, Trade and Industry, and Minister of Land, Infrastructure and Transport.
(C) Regional Comprehensive Economic Partnership (RCEP)

The RCEP negotiations aim at realizing the establishment of a broad economic integration, which covers a population of about 3.4 billion (approximately half of the world population), GDP of about 20 trillion US dollars (approximately 30% of the world GDP), and a total trade amount of about 10 trillion US dollars (approximately 30% of the total value of world trade). Since the launch of negotiations in May 2013, the leaders of the ten ASEAN member states and their FTA partner states (six countries, namely Japan, China, the ROK, Australia, New Zealand and India), have been working together toward the early conclusion of negotiations to achieve a comprehensive and balanced, high-quality agreement in areas such as trade in goods, trade in services, investment, intellectual property and electronic commerce. As of December 2016, six Ministerial Meetings (including Intersessional Ministerial Meetings) and 16 rounds of negotiations were held. At an ASEAN-related summit meeting in September, the ministers reconfirmed the importance of advancing RCEP negotiations, and issued a joint statement announcing their intention to further intensify negotiations for a swift conclusion of the negotiations.

The progress of the broad regional economic partnership in the Asia-Pacific region
(D) Japan-China-ROK FTA

The Japan-China-ROK FTA is a negotiation with Japan's major trading partners: China (1st, about 21%) and the ROK (3rd, about 6%). The negotiations were launched in March 2013, and eleven rounds of negotiations were held by January 2017. At the Japan-China-ROK Trilateral Summit held in November 2015, the leaders confirmed to accelerate the negotiations, and the three countries have been engaged in vigorous discussions over a wide range of fields including trade in goods, investment, trade in services, competition, intellectual property and electronic commerce, with the shared objective of pursuing a comprehensive and high-level FTA.

(E) Free Trade Area of the Asia-Pacific (FTAAP) Concept

For the eventual realization of the FTAAP, discussions are being held in APEC on next-generation trade and investment issues that need to be addressed in future FTAAP, and capacity building program toward developing economies to realize greater inclusiveness. The “Collective Strategic Study on Issues Related to the Realization of the FTAAP,” launched in 2015, was concluded in 2016. Based on the results of this study, the “Lima Declaration on FTAAP” stressing the need for greater capacity building in developing economies, was adopted at the APEC Economic Leaders' Meeting in Peru held in 2016.

Japan’s Efforts for Economic Partnership Agreement (EPAs)
B Bilateral Agreements and Other Agreements (Arranged in Chronological Order According to the Time at Which They Start)
(A) Republic of Korea (ROK)

Japan has a mutually dependent and strong economic relationship including trade and investment with the ROK, which is the most important neighboring country that shares strategic interests. Based on the recognition that an EPA with the ROK will provide both countries with a stable economic framework and bring about mutual benefits for the future, the two countries launched negotiations in 2003. The negotiations were suspended in 2004, and after that both countries continued working level discussions.

(B) Gulf Cooperation Council (GCC)

GCC member states constitute one of the most important regions for Japan as an oil and gas supplier, a market for infrastructure and others. The Japan-GCC FTA negotiations were launched in 2006 to reinforce economic ties with GCC member states, but have been suspended since 2009 on the grounds of the GCC side being not fully ready. Japan has been calling for an early resumption of the negotiations with the aim of further strengthening the economic ties with the GCC.

(C) Canada

In 2012, Japan launched EPA negotiations with Canada, with which Japan shares fundamental values and has a complementary economic relationship. The seventh round of negotiation meetings was held in November 2014 in order to achieve an EPA that can contribute to stable supply of energy, minerals and food from Canada to Japan. Since then, no bilateral negotiations have been held since both countries have focused on TPP negotiations.

(D) Colombia

In 2012, Japan started EPA negotiations with Colombia, a country which is rich in resources and maintains a high economic growth rate, and by December 2016, thirteen rounds of negotiations had been held. The EPA is also important for the consolidation of peace and nation-building in Columbia, and negotiations are at the final stage.

(E) Turkey

With Turkey, which has high economic potential and promotes an open economy, Japan agreed to launch EPA negotiations at a bilateral Summit Meeting between Prime Minister Erdogan of the Republic of Turkey, and Prime Minister Abe during Prime Minister Erdogan's visit to Japan in January 2014. Japan and Turkey started EPA negotiations in December 2014. By December 2016, five rounds of negotiations had been held.

C Existing Bilateral Agreements
(A) Mongolia

Japan launched EPA negotiations in 2012 with Mongolia, where high mid-and-long-term economic growth is expected, aiming at the improvement of the investment environment, including the energy and mineral resource sectors, as well as further expansion of trade and investment. After seven rounds of negotiations, the two countries reached an agreement in principle in July 2014. At the Japan-Mongolia Summit Meeting, Prime Minister Saikhanbileg of Mongolia and Prime Minister Abe signed the agreement when the Prime Minister of Mongolia visited Japan in February 2015. Then on June 7, 2016, the EPA entered into force following the completion of respective necessary legal procedures in both countries.

(B) Existing EPAs

The existing EPAs contain provisions concerning the Joint Committee, which is a body to discuss implementation of the Agreements, and a process to review the agreements after a certain period of time since the entry into force of each Agreement. In addition, a variety of consultations are held in order to utilize the existing EPAs effectively.

D Movement of Persons

In accordance with the EPAs, Japan has started to accept candidates for nurses and certified care workers from Indonesia, the Philippines and Viet Nam. In 2016, 279 Indonesians (46 nurses and 233 care workers), 336 Filipinos (60 nurses and 276 care workers) and 180 Vietnamese (18 nurses and 162 care workers) entered Japan. In 2016, 47 nurses (11 Indonesians, 22 Filipinos, and 14 Vietnamese) and 82 care workers (48 Indonesians and 34 Filipinos) passed the national examination. As for nurses and certified care worker candidates from Viet Nam, Japan accepted the first group in June 2014, the second group in May 2015, and the third group in May 2016, totaling 470 candidates.

E Investment Treaties/Tax Conventions/ Agreements on Social Security
(A) Investment Treaties

An investment treaty is an important piece of legal infrastructure to promote investments by stipulating the protection of investors and investment, enhancement of transparency in rules, expansion of investment opportunities, procedures for investment dispute settlement, etc. In order to promote the improvement of the investment environment overseas and attract foreign investment to the Japanese market, Japan has actively engaged in negotiating the investment treaties.

In 2016, an investment treaty with Iran was approved by the Diet, and an investment treaty was signed with Kenya. Moreover, as for EPAs that include an investment chapter, the Japan-Mongolia EPA entered into force, and the TPP Agreement was approved by the Diet. There are currently 35 investment-related treaties that have been entered into force (23 investment treaties and 12 EPAs), and six (five investment treaties and one EPA) that have been signed but not yet entered into force, bringing the total to 41, covering 43 countries and regions. Including investment-related treaties that are currently being negotiated, they will cover 80 countries and regions, and around 93% of Japan's direct investments overseas (as of the end of December 2016).

Seven ministries and agencies including the Ministry of Foreign Affairs (Ministry of Internal Affairs and Communications, Ministry of Justice, Ministry of Foreign Affairs, Ministry of Finance, Ministry of Agriculture, Forestry and Fisheries, Ministry of Economy, Trade and Industry, and Ministry of Land, Infrastructure, Transport and Tourism), adopted the “Action plan aiming to facilitate an investment environment through promoting the conclusion of investment-related treaties” to lay down policies on concluding investment-related treaties in the future. It stipulated the goal to sign and enact investment-related treaties with 100 countries and regions by 2020. This goal is also mentioned in the Growth Strategy.

In an effort to achieve this goal, Japan intends to engage actively in negotiations to conclude investment-related treaties with the Middle East, Africa, Central and South America, and other resource-producing countries. Japan will continue to incorporate the economic growth of emerging countries through overseas investments, while actively engaging in the conclusion of investment-related treaties with the aim of attracting foreign investment to the Japanese market.

(B) Tax Conventions

Tax conventions are intended to eliminate international double taxation in cross-border economic activities (e.g., to reduce or exempt withholding taxes imposed on investment income such as dividends etc.), or to prevent tax evasion or avoidance, and provides an important legal basis for promoting sound investment and economic exchanges between two countries. Initiatives are being implemented proactively in accordance with the policy (“Growth Strategy”) of the Government of Japan to expand the tax convention network. In 2016, the Protocol Amending Tax Convention with India (October), the New Tax Agreement with Germany (October), and the Tax Convention with Chile (December) entered into force, and the Tax Information Exchange Agreement with Panama (August), the Tax Convention with Slovenia (September) and the New Tax Convention with Belgium (October) were signed. Moreover, negotiations for new tax conventions with Latvia (June) and Lithuania (December), and amendment with Austria (October) were agreed in principle. As of the end of 2016, Japan has concluded a total of 66 tax-related conventions, and these conventions and Private-sector arrangement with Taiwan are applicable to 107 jurisdictions.

Current Status of Investment Related Treaties
Japan’s Tax-Related Convention Networks
(C) Agreements on Social Security

The purpose of agreements on social security is to resolve the issues of double payment of social security insurance premiums and no refund of annuity insurance. It is expected to facilitate people-to-people exchange and strengthen further bilateral relations including economic exchanges, by unloading the burden of Japanese companies and citizens working overseas. The total number of countries, which concluded or signed such agreements with Japan, now stands at 19 as of the end of 2016. In addition, in 2016, Japan held negotiations for new agreements with Turkey, China, Sweden and Slovakia.

(2) Initiatives with International Organizations (WTO, OECD, etc.)

(A) History of WTO and Doha Development Agenda Negotiations

The development of the Japanese economy has largely benefited from the multilateral trading system led by the General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO). While EPA/ FTA negotiations are vigorously conducted, maintaining and enhancing the system is a central pillar of Japanese trade policy toward the revitalization of the Japanese economy, and trade liberalization through WTO negotiations and rule making remain important. However, for more than several decades, not all negotiations have made smooth progress. In the WTO Doha Development Agenda (DDA) negotiations launched in 2001, the single undertaking of the eight areas (agriculture, non-agricultural market access, services, rules, trade facilitation, development, environment and intellectual property rights) had been pursued. However, since 2008, negotiations have remained deadlocked due to such factors as confrontation between emerging and developed countries. At the WTO's 9th Ministerial Conference (MC9) in December 2013, the “Bali Package,” consisting of the three areas of (1) trade facilitation, (2) agriculture, and (3) development, was concluded as a partial agreement of the DDA. While there was some progress, the disagreements between emerging and developed countries remained deep-seated, indicating that the conclusion of DDA negotiations is still a long way off.

(B) The 10th and 11th WTO Ministerial Conference(MC10 and MC11)

At the 10th WTO Ministerial Conference (MC10) held in 2015, members concluded the ITA expansion negotiations led by Japan as the chair. Though it was a plurilateral agreement, eliminating tariffs on 201 items by 53 countries and regions was expected to bring benefits to all WTO members. With regard to DDA, after 15 years of negotiations, WTO members agreed on export competition in agriculture including export subsidies, which had not been agreed for a long time. These agreements show the WTO's negotiation function is indeed still working and effective.

Considering the future WTO negotiation function, including whether to continue DDA, was the biggest issues concerned before the conference, however, no concreate decision has been made due to the confrontation among members. Although each of the eight areas including development covered by DDA remain important, it is necessary to explore new approaches including up-to-date issues, in order to revitalize and reinforce the WTO's negotiation function. At MC11 to be held in Argentina in December 2017, it will be necessary to carry out negotiations to achieve outcomes incrementally in doable areas, as was confirmed at WTO's Informal Ministerial Meeting held in October 2016.

(C) Plurilateral Negotiations

Since the 8th WTO Ministerial Conference in 2011, while the DDA negotiations encountered difficulties, the following negotiations have been made by plurilaterally.

a The Information Technology Agreement (ITA) Expansion Negotiations

While implementing the Information Technology Agreement (ITA)2 since 1997, the ITA expansion negotiations were conducted since 2012 with the aim of including newly-developed products3 reflecting technological innovations to the coverage. In July 2015, 201 IT-related products were newly agreed, and the ITA expansion negotiations were concluded in December 2015 through the negotiations of the tariff elimination period. (As of the end of December 2016, 54 countries and regions4 joined the ITA expansion). It is expected that the expansion of product coverage will promote IT trade, enforce economic growth and boost productivity through IT.

  • 2 Plurilateral framework to eliminate tariffs on IT products (semiconductors, computers, cellular phones, printers, fax, digital still image cameras) (“Ministerial Declaration on Trade in Information Technology Products”). Agreed in 1996 and executed from 1997. Currently, 82 members (including 28 EU member states) such as Japan, the U.S., the EU, China and Russia are participating.
  • 3 Digital audiovisual equipment (camcorders, DVD/HD/BD players), digital multifunction machines and printers, medical equipment (electronic endoscopes, etc.), semiconductor manufacturing equipment, etc.
  • 4 Japan, the U.S., the EU, Australia, Canada, China, the ROK, Hong Kong, Taiwan, Singapore, Israel, Colombia, Costa Rica, Malaysia, Thailand, the Philippines, New Zealand, Norway, Switzerland, Liechtenstein, Mauritius, Montenegro, Guatemala, Iceland, Albania and Macao (54 members including 28 EU member states).
b Trade in Services Agreement (TiSA) Negotiations

In order to contribute to further liberalization of trade in services, intensified negotiations on the Trade in Services Agreement (TiSA) have been underway among 50 countries and regions5 including the U.S., the EU (28 nations), and Australia (as of the end of 2016) since the summer of 2013. Participants agree not to have a priori exclusion of any specific sector from the subject of negotiations, and aim to build on the General Agreement on Trade in Services (GATS), by establishing reinforced rules that are suitable for the trade in services of today. Japan actively participates in the negotiations.

  • 5 Japan, the U.S., the EU, Australia, Canada, the ROK, Hong Kong, Taiwan, Pakistan, Israel, Turkey, Mexico, Chile, Colombia, Peru, Costa Rica, Panama, Mauritius, New Zealand, Norway, Switzerland, Iceland, and Liechtenstein (50 members including EU member states).
c Environmental Goods Agreement (EGA) Negotiations

Environmental Goods Agreement (EGA) negotiations began in July 2014. These negotiations are aimed at eliminating tariffs on environmental goods in accordance with the list of environmental goods endorsed by APEC Leaders in 2012 as well as the commitment made in the APEC Leaders' Declaration in 2013. So far, 46 members6 have participated and conducted 18 negotiations. Japan has been actively taking part since the start of the negotiations, and these negotiations are expected to expand the trading of environmental goods, and contribute to the achievement of sustainable development. At the G20 Hangzhou Summit (in China) held in September 2016, the leaders confirmed efforts to bridge the remaining gaps and to conclude a future-oriented EGA that seeks to eliminate tariffs on a broad range of environmental goods by the end of 2016. This led to the acceleration of negotiations. However, in the EGA Ministerial Meetings held on December 3 and 4, negotiations could not be concluded due to differences in the demands of participating members. It is important for Japan to continue working toward an early conclusion of the negotiations.

  • 6 Japan, the U.S., the EU, Australia, Canada, the ROK, China, Hong Kong, Taiwan, Singapore, Costa Rica, New Zealand, Norway, Switzerland, Liechtenstein, Israel, Turkey, and Iceland (46 members including 28 EU member states).
d Dispute Settlement in International Trade

The WTO dispute settlement system7 is a quasi-judicial system among the WTO members to resolve trade disputes regarding the WTO Agreements in accordance with the dispute settlement procedures. As a pillar to stabilize and secure predictability in the WTO system, it is functioning effectively. The number of dispute cases since the inauguration of WTO in 1995 through the end of 2016 (the number of requests for consultation) stands at 518. In recent years, the increase in the number of dispute cases and the increase in the complexity of cases heightened the burden on the dispute settlement system. This is now posing a major challenge to the system. Japan has been involved, in the following cases:

○ China's measures imposing anti-dumping duties on high-performance stainless steel seamless tubes from Japan8: The WTO Dispute Settlement Body recognized anti-dumping duties as being inconsistent with the WTO Agreements, and recommended China abide by the agreement, leading to the abolition of the anti-dumping duties by China in August 2016.

○ The ROK's import bans on Japanese fishery products, and testing and certification requirements for radionuclides9: A panel was established in September 2015. The panel procedures are currently in progress.

○ Brazil's measures concerning taxation10: A panel was established in September 2015. The panel procedures are currently in progress.

○ The ROK's measures imposing anti-dumping duties on pneumatic transmission valves produced in Japan: A panel was established in July 2016. The panel procedures are currently in progress.

○ India's safeguard measures on imports of certain steel products11: Japan requested consultations with India in December 2016, in accordance with the WTO dispute settlement procedures.

Japan has contributed significantly to further improvements to the dispute settlement system, including the clarification of the procedures through the DSU12 review negotiations.

  • 7 If a dispute is not resolved through the consultations process the dispute settlement procedures provide for, the disputing member may refer the issue to a panel and contest, e.g., the consistency of the measures concerned with the WTO Agreements. A party dissatisfied with a legal finding by the panel may appeal to the Appellate Body, the final adjudicator, to contest the Panel's findings. Since the establishment of WTO in 1995 through the end of 2016, Japan was involved as a party (either as complainant or respondent) in 38 out of 518 disputes (the number of cases for which requests for consultation were made). The Appellate Body is composed of seven members and the term of members is four years (members may be reappointed once). Three Japanese nationals have served as Appellate Body members since the establishment of the WTO in 1995.
  • 8 Japan requested the establishment of a panel in May 2013. The case related to anti-dumping duties, which China imposed on high-performance stainless steel seamless tubes used in the boilers in coal-fired thermal power plants. Anti-dumping duty is the duty imposed up to the dumping margin which is the difference between “the normal price” and the export price causing dumping.
  • 9 The case involving import bans on Japanese fishery products, as well as testing and certification requirements for radionuclides the ROK introduced after the accident at TEPCO's Fukushima Daiichi Nuclear Power Plant in March 2011 and reinforced in September 2013.
  • 10 The case of Brazil's tax advantage scheme that treats domestic products and exporting companies of Brazil favorably in the automotive and information and communication technology sectors.
  • 11 The Indian government applied provisional safeguard measures on hot-rolled coils in September 2015. In 2016, definitive safeguard measures were imposed by India. Moreover, the Indian government imposed the Minimum Import Price System on zinc plating, iron rods, etc., in February 2016, and prohibited or restricted the import of these products.
  • 12 Understanding on Rules and Procedures Governing the Settlement of Disputes
(D) Efforts toward the Elimination and Correction of Protectionism

Since 2008, against the backdrop of such occurrences as the failure of Lehman Brothers and the European debt crisis, an increasing number of countries throughout the world have introduced protectionist measures. In G7, G20 and APEC, leaders of the participating countries and regions have agreed to continue their efforts to restrain protectionism, and express political commitments accordingly. The WTO has also committed to rolling back protectionist measures through the Trade Policy Review Mechanism (TPRM) and dispute settlement procedures. Japan actively engages in resisting and fighting protectionism.

B Organisation for Economic Cooperation and Development (OECD)
(A) Features

The OECD is the “world's largest think tank” covering a wide range of economic and social fields such as macro economy, agriculture, industry, environment, science and technology. The OECD makes policy recommendations and forms international norms through discussions among members at committees and working groups. Japan acceded to the OECD as the first non-European and non-American country, in 1964 when it hosted the summer Olympic Games in Tokyo. Since then Japan has been actively engaged in the OECD through discussions at committees and working groups as well as through contributions in terms of financial and human resources.

(B) Strengthening the Relationship with Asia

In view of the increasing importance of Southeast Asia as a world economic growth center, the OECD is focusing on strengthening the relationship with the region. In April, parliamentarians from Southeast Asian countries visited Japan to coincide with OECD Secretary General Gurría's visit to Japan. The OECD is promoting policy dialogues between OECD member countries and Southeast Asia through the Southeast Asia Regional Programme, of which Japan is the co-chair of the steering group. The parliamentarians from Southeast Asia exchanged opinions with the members of the OECD Parliamentary Association in Japan, and an OECD Global Parliamentary Network Meeting, a framework of the OECD for exchanges at the parliamentary level, was held in Tokyo. Moreover, at the Southeast Asia Regional Forum held in Viet Nam in June, Japan shared the discussions of the G7 Ise-Shima Summit and OECD Ministerial Council Meeting for the benefit of participants from Southeast Asia. At the same time, Japan reaffirmed its role as a bridge between the OECD and Southeast Asia providing full support to their cooperation.

(C) The 2016 OECD Ministerial Council Meeting

The OECD Ministerial Council Meeting chaired by Chile was held in June under the theme of “Enhancing Productivity for Inclusive Growth.” Japan contributed to discussions at the OECD as Vice-Chair along with Finland and Hungary, while exercising maximum leadership as Chair of the G7 Ise-Shima Summit. The Ministerial Council Statement issued as the result of the OECD Ministerial Council Meeting confirmed the need for a “positive cycle of economic growth and enhanced opportunities and income,” which is also a key element of Abenomics. Furthermore, member countries gave strategic reflection on the future size and membership of the Organization, and agreed to present a report on the results at the 2017 OECD Ministerial Council Meeting. They also welcomed further progress of initiatives, including the enhancing cooperation with the Economic Research Institute for ASEAN and East Asia (ERIA).

(D) Initiatives in Various Sectors

Regarding excessive tax avoidance strategies by multinational enterprises, which attracted international attention through the release of the Panama papers in 2016, the “Base Erosion and Profit Shifting (BEPS) Project” was launched in June 2012 by the OECD Committee on Fiscal Affairs13, and countermeasures have been discussed. In this project, discussions were held upon the request of the G20 Finance Ministers in accordance with the “BEPS Action Plan,” which identified 15 actions to address BEPS. The final report was published in October 2015, and, was also reported in November at the G20 Antalya Summit. The measures agreed upon in the project have now entered their implementation phase (“BEPS Implementation Phase”), and to ensure their effective and consistent implementation, the “Inclusive Framework on BEPS” was established at the end of June 2016 in Kyoto. This framework was expanded to include 94 countries and jurisdictions (as of January 5, 2017). Moreover, negotiations were held to develop the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS, and the Convention was opened for signature at the end of 2016. Japan actively takes part in discussions in the international arena, including the OECD and G20, and is spearheading global initiatives related to taxes.

  • 13 Chairman at the time of the launch of the BEPS Project was Masatsugu Asakawa, Vice Minister of Finance for International Affairs, Ministry of Finance (served from June 2011 to December 2016)
(E) Contributions in Terms of Financial and Human Resources

Japan was the second biggest financial contributor to the OECD after the U.S. in 2016, covering 10.79 % of the OECD's mandatory contributions (Part I Budget). Moreover, Japanese nationals have successively served as the Deputy Secretary General, the number two post of the OECD Secretariat. Japan is also the greatest contributor (contributing the same amount as Germany in 2016) to the OECD Development Centre, and a Japanese national has been serving as a Deputy Director of the center since July. Japan has supported the OECD through such contributions in terms of financial and human resources.

(3) Initiatives in International Meetings (G7 and G20 Summits, APEC, etc.)

A G7 and G20 Summits

G7 and G20 Summits continue to play an essential role in providing an opportunity to show Japan's own efforts to the international community and to form a global economic order desirable for Japan.

At the Ise-Shima Summit held on May 26 and 27, hosted by Japan as the G7 presidency, the G7 leaders agreed to jointly take a leading role in international efforts to address pressing issues, such as downside risks for the global economy and challenges to the international order through unilateral actions, as a group guided by common values and principles, including freedom, democracy, the rule of law and respect for human rights. In doing so, they adopted the G7 Ise-Shima Leaders' Declaration.

Regarding the global economy, discussions were held on the current situation, and the G7 leaders committed to reinforce their efforts to address the current economic situation in order to avoid falling into another crisis. While reaffirming the important role of fiscal, monetary and structural policies, the three-pronged approach, G7 leaders concurred on (1) strengthening economic policy responses in a cooperative manner, (2) using all policy tools – monetary, fiscal and structural – individually and collectively to strengthen global demand and address supply constraints, especially on the importance of strengthening efforts in a cooperative manner to implement fiscal strategies flexibly as well as to advance structural reforms decisively. Moreover, as Presidency, Japan prioritized the issues of “quality infrastructure investment,” “health” and “women” to lead the international community as G7, and agree to take specific actions.

In the field of politics and diplomacy, discussions centered on topics concerning Asia, such as maritime security and North Korean issues, due to the summit being held in Asia for the first time in eight years. Regarding maritime security, the leaders reaffirmed the importance of the “Three Principles of the Rule of Law at Sea,” and confirmed their intent to closely cooperate in finding comprehensive solutions to the various pending problems related to North Korea, including the nuclear problem, missile problem and abduction issue. Moreover, discussions were held on issues faced by the international community, such as terrorism, violent extremism and the refugee crisis, and the leaders agreed on the need to spearhead international initiatives.

For Japan it was the first summit to be held in the country in eight years, since the Hokkaido Toyako Summit, and Japan succeeded in making an impact in the global arena by leading discussions and achieving specific results in not only addressing the issue of the global economy, which was the summit's biggest theme, but also the priority issues of Japan of “quality infrastructure investment,” “health” and “women,” as well as maritime security.

At the G20 Hangzhou Summit (in China), in light of the various downside risks the global economy is currently facing, the leaders exchanged views on how the G20 can strengthen policy coordination to foster an innovative, invigorated, interconnected and inclusive world economy, and the G20 Leaders' Communique was adopted at the closing of the summit.

The G20 expressed its determination to use all policy tools – monetary, fiscal and structural – individually and collectively and formulated the Hangzhou Action Plan incorporating the latest macroeconomic and structural policy measures, as well as the G20 Blueprint on Innovative Growth, which along with structural reforms covers the areas of innovation, the new industrial revolution and the digital economy. Moreover, the leaders reiterated their opposition to protectionism, as well as reaffirming cooperation in areas such as international tax, including the BEPS (Base Erosion and Profit Shifting) Project and measures to fight corruption, and confirming efforts to further liberalize trade and investment. The leaders also agreed to conclude negotiations on the Environmental Goods Agreement (EGA) by the end of 2016, and agreed on further initiatives to tackle the excess capacity in the steel industry and other industries

At the G20 Hangzhou Summit, the world economy was the biggest theme as it was at the G7 Ise-Shima Summit. On the basis of the discussions at the Ise-Shima Summit, Japan, as the G7 presidency, stressed that, with the world economy facing various risks, it is important that we strengthen international cooperation. The leaders of the G20 concurred on the need to take all appropriate policy responses including monetary and fiscal policies, as well as restructuring. The leaders, including emerging economics such as China, were able to reach the agreement on steadily addressing structural problems, such as excess capacity in some industries.

Outcome of the APEC Economic Leaders’ Meeting in Peru in 2016
B Asia-Pacific Economic Cooperation (APEC)

APEC is a forum that aims at sustainable development in the Asia Pacific region on a voluntary basis by each of the 21 economies14 in order to promote regional economic integration and cooperation. APEC consists of 21 countries and regions (economies) in the Asia-Pacific region, and it is a “world growth center” with about 40% of the world population, around 50% of the trade volume, and about 60% of the world GDP. Regional trade accounts for about two-thirds of the total trade, being comparable with the EU in terms of establishing a close regional economy. Strengthening economic cooperation and trust relationships in the APEC region is extremely important in pursuing Japan's further development. APEC Economic Leaders' Meetings and Ministerial Meetings provide the member economies with significant opportunities to exchange frank views among leaders and ministers regarding major interests in the international community, specifically focused on various economic issues.

At APEC 2016 chaired by Peru, under the overall theme of “Quality Growth and Human Development,” the four priority issues were identified as (1) the promotion of regional economic integration and quality growth, (2) the enhancement of the regional food market, and (3) the modernization of micro, small and medium-enterprises, and (4) the development of human capital. At the APEC Economic Leaders' Meeting held in November, active discussions were held on the overall theme and priorities described above. As a result, the meeting adopted the APEC 2016 Leaders' Declaration, and as its annexes, the “Lima Declaration on the Free Trade Area of the Asia-Pacific (FTAAP)” and the “APEC Services Competitiveness Roadmap (2016 – 2025).

Prime Minister Abe expressed the need for leaders to use all policy measures – monetary, fiscal, and structural – individually and collectively, to respond to the growing downside risks to the global economy. Prime Minister Abe also stated that free trade is the foundation of global economic growth, and expressed Japan's intention to continue to promote free trade by progressing policies to bring about “Inclusive Growth” in response to the protectionism brought about by growing disparity. He further expressed that the TPP Agreement would create a free and fair international economic zone which would serve as a foundation of the “Inclusive Growth,” and that aiming to achieve a comprehensive and high quality agreement in the Free Trade Area of the Asia-Pacific (FTAAP) would work as another basis of “Inclusive Growth.”. He also stated that realizing the Inclusive Economy is indispensable to cultivating sustained public support for free trade, and introduced Japan's activities to realize its initiative of “The Japan's Plan for Dynamic Engagement of All Citizens,” emphasizing it as a strong example of a growth strategy based on a “virtuous cycle of growth and distribution. Moreover, Prime Minister Abe asserted the need to establish a free and fair business environment in response to new businesses such as in the service sector and digital trade.

Viet Nam will host APEC in 2017.

APEC Economic Leaders' Meeting in Peru, 2016 (November 20, Lima, Peru (Photograph of representatives) Photo: Cabinet Public Relations Office)APEC Economic Leaders' Meeting in Peru, 2016 (November 20, Lima, Peru (Photograph of representatives) Photo: Cabinet Public Relations Office)

  • 14 APEC participating units including Hong Kong, China and Chinese Taipei

(4) Intellectual Property

Strengthening the protections of intellectual property is extremely important for the promotion of technological innovation, and eventually for the development of the economy. Japan has actively participated in multilateral consultations, such as APEC, the WTO (TRIPS Council) and the World Intellectual Property Organization (WIPO). In March, Japan deposited instruments of accession to the Patent Law Treaty (PLT) and the Singapore Treaty on the Law of Trademarks (STLT) to the WIPO, and the treaties came into force for Japan in June. Japan has been stipulating rules on intellectual property rights in all possible EPAs: While making effective use of provisions providing a high level of protection set forth in international agreements, such as Anti-Counterfeiting Trade Agreement (ACTA) and the TPP Agreement, as the basis for calling for stronger protection, Japan has been negotiating EPAs diligently to ensure the adoption or maintenance of an internationally harmonized intellectual property system and the effective enforcement of relevant laws. Furthermore, in order to contribute to strengthening the protections of intellectual property and enhancing the abilities of government officials in developing countries in such fields as countermeasures against counterfeited or pirated goods, Japan has dispatched experts to those countries through JICA.

Moreover, MOFA has been taking measures to reinforce the protection of intellectual property rights overseas, and countermeasures against counterfeited or pirated goods. For example, for the purpose of rapidly and efficiently providing assistance for Japanese companies that are suffering from counterfeit and pirated goods, Intellectual Property Officers are assigned at almost all of the diplomatic missions overseas, so that they can advise Japanese companies and make inquiries with or suggestions to their counterpart governments.