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 the growing market overseas 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 on 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. One of the outcomes of these efforts was the signing of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (TPP11 Agreement) by 11 countries in March 2018. In addition, active and tireless negotiations spanning many long years have also borne fruit, as exemplified by the finalization of negotiations of the Japan-EU EPA in December 2017.

Japan, as a champion of free trade, will work towards the early entry into force of the Japan-EU EPA and TPP11, and will continue to promote other negotiations on economic cooperation in the future.

A Multilateral Agreements (Mega FTAs)

(A) Trans-Pacific Partnership (TPP) Agreement

The TPP Agreement is an effort to establish new trade and investment rules in the rapidly-growing Asia-Pacific Region. The 12 countries, namely Japan, Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, the U.S., and Viet Nam, participated in negotiations, and the TPP Agreement was signed in February 2016. If the TPP Agreement enters into force, it will form a free and fair “single economic zone” while creating a huge value chain.

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, domestic procedures for the TPP Agreement were completed in January 2017. Domestic procedures were also completed in New Zealand, which is designated as the Depositary of the Agreement, in May 2017. However, in January 2017, President Trump's new administration in the U.S. announced its withdrawal from the TPP Agreement. While the Agreement cannot enter into force without the U.S. based on the provisions for the entering into force of the Agreement, the TPP Agreement still has great economic and strategic significance as described above.

As such, in order to bring about the early realization of the TPP as soon as possible among the 11 countries, Japan took the lead in dynamic discussions. At the TPP Ministerial Meeting held in Da Nang (Viet Nam) in November 2017, ministers agreed to move forward on the TPP among 11 countries by incorporating the articles of the original TPP Agreement drawn up by the 12 countries into a new agreement entitled “Comprehensive and Progressive Agreement for Trans-Pacific Partnership (TPP11 Agreement),” and through the exceptional suspension of the application of some of the articles (agreement in principle). Subsequently, the TPP11 was signed in Santiago, Chile, in March 2018. Amidst the spreading wave of protectionism around the world, this served as a powerful message from Japan, a standard-bearer of free trade, to the world. Japan will continue to aim for the early entry into force of the Agreement.

(B) Japan-EU EPA

After Japan decided to launch negotiations on EPA in March 2013 with the EU, which shares fundamental values and is a major trade and investment partner for Japan, the agreement in principle was reached in July 2017 after four years and three months of negotiations. Negotiations were finalized in December.

Since negotiations on the Japan-EU EPA commenced, the Government has been working as one and engaging actively in negotiations. In particular, at the meeting between Foreign Minister Kishida and European Commissioner for Trade Malmström held in Bonn (Germany) in February 2017, the Japan-EU EPA was positioned as an issue of top priority between Japan and the EU, and the two parties reaffirmed the great importance of reaching an agreement in principle of the EPA as soon as possible in order to counter protectionism movements. Thereafter, negotiations were accelerated; after the Summit Meeting held in May (Taormina, Italy) and a telephone conversation between Foreign Minister Kishida and European Commissioner for Trade Malmström in June, intensive negotiations took place between them from the end of June to July. To align with the progress and pace of the negotiations, Meetings amongst Main Ministers¹ (Second and Third Meetings) were held in Japan in June and July to make the final adjustments towards the realization of an agreement in principle. After various negotiations and coordination, Foreign Minister Kishida and European Commissioner for Trade Malmström confirmed the agreement in principle in Brussels (Belgium) on July 5. On the next day, at the 24th EU-Japan Summit held in Brussels as well, Prime Minister Abe, President Tusk of the European Council, and President Juncker of the European Commission confirmed the agreement in principle at the leaders' level.

After the agreement in principle, intensive consultations were carried out in order to finalize negotiations as soon as possible. After telephone talks between Foreign Minister Kono and European Commissioner for Trade Malmström on November 15 and December 8, Prime Minister Abe and President Juncker of the European Commission confirmed the finalization of negotiations over the telephone talk held on the same day.

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• 1 Members include Deputy Chief Cabinet Secretary, Minister in Charge of Economic Revitalization, Minister of State in charge of general coordination on the 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 is the pillar of East Asian economic integration, aimed at realizing the establishment of a broad and integrated economic zone that covers approximately half of the world population, and about 30% of the world's GDP and total trade amount. Since the launch of negotiations in May 2013, the ASEAN member states and their FTA partner states (six countries, namely Japan, China, the ROK, Australia, New Zealand and India) have been working together to achieve a comprehensive and high-level agreement in areas that include trade in goods, trade in services, investment, competition, rules of origin, intellectual property, and electronic commerce. As of December 2017, nine Ministerial Meetings and 20 rounds of negotiations have been held. At the RCEP Leaders' Summit held in November 2017, coinciding with the ASEAN Summit, the leaders issued a joint statement on the RCEP negotiations. This joint statement reaffirmed their commitment towards achieving a modern, comprehensive, high-quality, and mutually-beneficial economic partnership agreement, and instructed to intensify efforts in 2018 to bring the RCEP negotiations to conclusion.

(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 12 rounds of negotiations were held by April 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, and capacity building programs mainly for developing economies are implemented to realize greater inclusiveness. At the APEC Economic Leaders' Meeting held in Da Nang, Viet Nam, in 2017, the leaders reaffirmed their commitment to these efforts, and encouraged to develop work programs which enhance APEC economies' ability to participate in the negotiations for a high-quality and comprehensive free trade agreement in the future.

B Bilateral Agreements and Other Agreements (Arranged in Chronological Order According to the Time at Which Negotiations Started)

(A) Republic of Korea (ROK)

Japan has a mutually dependent and strong economic relationship including trade and investment with the ROK. 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 exporting 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 not being 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 Agreement 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. By December 2017, 13 rounds of negotiations had been held. The EPA is also important for the new nation-building in Columbia after the consolidation of peace in the country, 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 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 2017, seven rounds of negotiations had been held.

C Existing EPAs

The existing EPAs contain provisions concerning the Joint Committee, which is a body that discusses the implementation of the Agreements, and a process to review the Agreements after a certain period of time since the entry into force. In addition, a variety of consultations are held in order to smoothly implement the existing EPAs.

D Movement of Persons

In accordance with the EPAs, Japan has been accepting candidates for nurses and certified care workers from Indonesia, the Philippines and Viet Nam. In 2017, 324 Indonesians (29 nurses and 295 care workers), 310 Filipinos (34 nurses and 276 care workers) and 203 Vietnamese (22 nurses and 181 care workers) were accepted into Japan. In 2017, 65 nurses (21 Indonesians, 29 Filipinos, and 15 Vietnamese) and 104 care workers (68 Indonesians and 36 Filipinos) passed the national examination. As for nurses and certified care worker candidates from Viet Nam, Japan began accepting the first group in 2014, and has since accepted a cumulative total of 673 candidates by 2017.

E Investment Treaties/Tax Conventions/ Agreements on Social Security

(A) Investment Treaties

Investment treaties are important pieces of legal infrastructure to promote investments by stipulating the protection of investors and their investment, enhancement of transparency in laws and regulations, 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 concluding the investment treaties.

In 2017, investment treaties entered into force with Saudi Arabia, Uruguay, and Iran in April, with Oman in July, with Kenya in September, and with Israel in October respectively. There are currently 41 investment-related treaties that have entered into force (29 investment treaties and 12 EPAs), and one (null investment treaties and one EPA) that has been signed but not yet entered into force, bringing the total to 42, covering 44 countries and regions. Including investment-related treaties that are currently being negotiated, they will cover 90 countries and regions, and around 93% of Japan's direct investments overseas (as of the end of December 2017)².

The “Action plan aiming to facilitate an investment environment through promoting the conclusion of investment-related treaties” was formulated in May 2016. 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 Investments for the Future Strategy 2017. In this context, the Investment Policy Division was established in May 2017, under the Economic Affairs Bureau of MOFA, to fulfill the role of enacting and implementing investment-related policies in an integrated manner.

In an effort to achieve the goals outlined in the Action Plan, 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 actively engage in the conclusion of investment-related treaties from the perspective of incorporating the economic growth of emerging countries through foreign investment, and attracting foreign investment to the Japanese market.

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• 2 Regional balance of Direct Investment (Assets), Ministry of Finance (All regions) (End 2016)

(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 2017, the Information Exchange Agreement with Panama (March), Tax Convention with Latvia (July), and Tax Convention with Slovenia (August) entered into force, while the New Tax Agreement with Austria (January), Protocol Amending the Tax Information Exchange Agreement with the Bahamas (February), the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (“MLI”) (June), Tax Convention with Lithuania (July), Tax Convention with Estonia (August), New Tax Convention with Russia (September), and New Tax Convention with Denmark (October) were signed. Moreover, negotiations for tax conventions with Iceland (May) and Colombia (December) were agreed to in principle. As of the end of 2017, Japan has concluded a total of 69 tax-related conventions, and these conventions, combined with the private-sector arrangement with Taiwan, are applicable to 123 jurisdictions.

(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 reducing the burden on Japanese companies and citizens working overseas. The total number of countries that have concluded or signed such agreements with Japan now stands at 20 as of the end of 2017. In addition, in 2017, Japan held negotiations for new agreements with Finland, China, and Sweden.

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

A World Trade Organization (WTO)

(A) History of WTO Negotiations

The development of the Japanese economy has largely benefited from the multilateral trading system with the General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO) at its center, and maintaining and enhancing the system is a central pillar of Japan's trade policy. On the other hand, negotiations in the WTO have not necessarily made smooth progress. The WTO Doha Development Agenda (DDA) negotiations launched in 2001 aimed to achieve the single undertaking of eight areas³. However, since 2008, negotiations have remained in a stalemate. Nevertheless, a certain degree of success was achieved later, boosted by allowing Members to reach agreements based on consensus earlier than the full conclusion of the single undertaking at the 8th WTO Ministerial Conference (MC8) held in 2011. For example, the Trade Facilitation Agreement (TFA), which is the first binding agreement for all WTO Members since the establishment of the WTO, was agreed upon at the 9th WTO Ministerial Conference (MC9) in 2013, and entered into force in February 2017. At the 10th WTO Ministerial Conference (MC10) held in 2015, Members concluded the ITA expansion negotiations led by Japan as the chair, and Japan eliminated tariffs on the targeted items based on this agreement in May 2017.

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• 3 Agriculture, non-agricultural market access, services, rules, trade facilitation, development, environment and intellectual property rights

(B) Plurilateral Negotiations

Against this backdrop, since the 8th WTO Ministerial Conference (MC8) in 2011, the following plurilateral negotiations have been carried out.

a The Information Technology Agreement (ITA) Expansion Negotiations

While implementing the Information Technology Agreement (ITA)⁴ since 1997, the ITA expansion negotiations were launched in 2012 with the aim of including newly-developed IT products⁵ reflecting technological innovations to the coverage, and the negotiations were concluded in December 2015. In May 2017, Japan eliminated tariffs on the targeted items.

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• 4 Plurilateral framework to eliminate tariffs on IT products (such as semiconductors, computers, cellular phones, printers, fax, and digital still image cameras) (“Ministerial Declaration on Trade in Information Technology Products”). Agreed in 1996 and implemented from 1997. Currently, 82 WTO Members (including 28 EU member states) such as Japan, the U.S., the EU, China and Russia are participating.
• 5 Digital audiovisual equipment (camcorders, DVD/HD/BD players etc), digital multifunction machines and printers, medical equipment (electronic endoscopes, etc.), semiconductor manufacturing equipment, etc.

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 regions since the summer of 2013, and Japan has participated actively in the negotiations. The parties did not achieve the goal of reaching a substantive agreement by 2016, and since then no negotiation rounds were held to date (as of December 2017). Japan has nevertheless taken advantage of various opportunities to appeal for the early resumption of negotiations.

c Environmental Goods Agreement (EGA) Negotiations

Environmental Goods Agreement (EGA) negotiations, launched in July 2014, are aimed at eliminating tariffs on environmental goods. Japan has been actively taking part since the beginning of the negotiations, and these negotiations are expected to expand the trading of environmental goods, and contribute to the achievement of sustainable development. To date, 46 countries and regions have participated in the negotiations with the aim of reaching an agreement during 2016. However, negotiations could not be concluded, and no negotiation rounds were held to date (as of December 2017). Japan has nevertheless taken advantage of various opportunities to appeal for the early resumption of negotiations.

(C) Visit by WTO Director-General Azevêdo to Japan

Amidst concerns for the rise of anti-globalism and an inward-looking trend around the world, the Government of Japan invited WTO Director-General Azevêdo to Japan in May, in anticipation of a series of economic diplomacy events including the G7 Summit, the Organization for Economic Co-operation and Development (OECD) Ministerial Council Meeting, the G20 Summit, Asia-Pacific Economic Cooperation (APEC) meetings, and the 11th WTO Ministerial Conference (MC11). During his visit to Japan, Director-General Azevêdo paid a courtesy call to Prime Minister Abe and held talks with Foreign Minister Kishida and Parliamentary Vice-Minister for Foreign Affairs Takisawa, engaging in fulfilling exchanges of opinions. In particular, during his courtesy call to Prime Minister Abe, a Joint Statement between Japan and the World Trade Organization entitled “Three Cornerstones for the Promotion of Free Trade” was issued by Japan and the WTO. They shared the recognition of the three cornerstones for the promotion of free trade: (1) Free Trade as a Key Driver of Growth; (2) Achievement of an Inclusive Economy; and (3) Further Reinforcement of the Multilateral Trading System. They also concurred on strengthening cooperation in delivering this message across the world. Furthermore, they also affirmed that Japan and the WTO will work even more closely towards the 11th WTO Ministerial Conference (MC11), as well as towards the further increasing of confidence in the multilateral trading system through revitalization of negotiations function, enhancement of the monitoring function, and ensuring the enforcement through the dispute settlement mechanism.

(D) 11th WTO Ministerial Conference (MC11)

MC11 was held in Buenos Aires, Argentina, in December 2017. Although intensive discussions were held at the ministerial level on this occasion, they did not lead to the issuance of a ministerial declaration based on consensus among the WTO Members. The differences in positions between the developed and developing country Members once again highlighted the difficulty of reaching a consensus among all Members. On the other hand, decisions were made at the Ministerial Conference pertaining to the work programme in the area of e-commerce, work programme in the area of fisheries subsidies, and the extension of the moratorium on non-violation complaints related to the Trade-Related Aspects of Intellectual Property (TRIPS) Agreement. They presented some guidelines for future WTO negotiations. Furthermore, with regard to today's challenges in trade such as e-commerce, micro, small and medium-sized enterprises (MSMEs), and investment facilitation, a large number of Members demonstrated their willingness, in the form of ministerial statements by like-minded Members, that discussions should be pursued in the WTO on these matters. Particularly with regard to e-commerce, prior to MC11, Japan had announced that it is prepared to provide support of 33 billion yen over the next three years in the field of information and communications technology (ICT), including e-commerce. During MC11, Japan also explained the importance of promoting discussions to ministers from each country, and asked for their cooperation. Japan took an active lead in discussions, including organizing a ministerial meeting of like-minded Members. As a result, 71 WTO Members including the U.S., EU and developing countries participated in the joint statement. This demonstrates Japan's ability to exert its leadership in WTO discussions and serve as a bridge connecting a wide range of WTO Members of differing positions.

(E) Dispute Settlement in International Trade

The WTO dispute settlement system⁶ is a quasi-judicial system among WTO Members for resolving trade disputes regarding the WTO Agreements in accordance with the dispute settlement procedures. It serves as a pillar in providing security and predictability to the WTO system. In recent years, the increase in the number of dispute cases and the growing complexity of cases has led to the increase of the burden on the dispute settlement system. Other problems have also arisen in 2017, such as the lack of consensus on launching the selection process for the appointment of the new Appellate Body Members to fill vacancies. These are now posing a major challenge to the system. Japan has been involved as a party in the following cases:

● The Republic of Korea (ROK)'s import bans on Japanese fishery products⁷: A panel was established in September 2015. In February 2018, a panel report finding the ROK's measures are inconsistent with the WTO Agreement was circulated.

● Brazil's measures concerning taxation⁸: A panel was established in September 2015. In August 2017, a panel report that found inconsistencies between Brazil's measure and the WTO Agreement was circulated. In September 2017, Brazil, dissatisfied with the panel report, appealed to the Appellate Body. The Appellate Body proceedings are currently under way.

● The Republic of Korea (ROK)'s measures imposing anti-dumping duties on pneumatic transmission valves produced in Japan: A panel was established in July 2016. As of December 2017, the panel proceedings are currently under way.

● India's safeguard measures on imports of certain steel products⁹: A panel was established in April 2017. As of December 2017, the panel proceedings are currently under way.

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• 6 If a dispute is not resolved through the consultations process the dispute settlement procedures provide for, the disputing member may refer the disputed measure at issue to a panel for addressing, inter alia, the consistency of the measures concerned with the WTO Agreements. A party dissatisfied with a finding by the panel may appeal to the Appellate Body to contest the panel's findings. Since the establishment of WTO in 1995 through to December 4, 2017, Japan was involved as a party in 38 out of 534 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). To date, three Japanese nationals have served as Appellate Body Members.
• 7 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.
• 8 The case of the tax advantage scheme put in place by the Government of Brazil, which treats domestic products and exporting companies of Brazil favorably in the automotive and information and communication technology sectors.
• 9 The Government of India applied provisional safeguard measures on hot-rolled coils in September 2015. In 2016, it moved to impose definitive safeguard measures.

B Organization 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 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) Visit by OECD Secretary-General Gurria to Japan

During the visit by OECD Secretary-General Gurria to Japan in April 2017, he engaged in talks with Prime Minister Abe, Foreign Minister Kishida, and other officials. Both sides reaffirmed the importance of resisting protectionism and maintaining and strengthening the multilateral trade system, as well as the importance of the future membership of Southeast Asia. The first International Economic Forum on Asia was also held during his visit, which highlighted the importance of the development of quality infrastructure, and the provision of funds for that purpose.

(C) The 2017 OECD Ministerial Council Meeting

The OECD Ministerial Council Meeting (MCM) was held in June, chaired by Denmark and under the theme of “Globalization.” Japan emphasized the importance of maintaining and strengthening the multilateral trade system, ensuring level playing field, and developing quality infrastructure with open and fair access. Japan contributed to discussions in the OECD, as exemplified by the incorporation of its views into the outcome documents. Furthermore, MCM adopted a “framework” that sets out the standards for considering whether to open accession discussion with a prospective member, and had a discussion aimed at its application to prospective members. In addition, it was also reaffirmed that Southeast Asia is a strategic priority region for outreach efforts by the OECD.

(D) Initiatives in Various Sectors

The global steel market faces the problem of excess capacity for crude steel and other products, which far exceeds actual demand (looking at the global market situation in 2016, the gap between crude steel production capacity and actual production volume was approximately 740 million tons (according to OECD)). In view of this problem, following the G20 Summit held in Hangzhou (China) in 2016, the Global Forum on Steel Excess Capacity (GFSEC) was established with the participation of China, which makes up approximately half (about 810 million tons) of the global production volume of crude steel (about 1.63 billion tons). After discussions in six working level meetings, the Forum adopted a report identifying the concrete policy solutions at the Ministerial Meeting held at the end of November 2017.

Furthermore, regarding excessive tax avoidance strategies by multinational enterprises, the “Base Erosion and Profit Shifting (BEPS) Project” was launched in 2012, and the BEPS Action Plan presented in 2013. After discussions spanning two years, the BEPS 2015 Final Reports were released in 2015. In order to ensure the faithful and consistent implementation of the measures incorporated in the Final Reports, the first meeting of the Inclusive Framework on BEPS was held in Kyoto in 2016. Taking the opportunity of the Ministerial Council Meeting held in June 2017, a signing ceremony was held for the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (“MLI”). 67 countries and regions, including Japan, signed the Convention (State Minister for Foreign Affairs Sonoura attended as Japan's representative).

(E) Strengthening Relations with Asia

In view of the growing importance of Southeast Asia as a center for the growth of the global economy, OECD places importance on strengthening relations with the region. At the Southeast Asia Regional Forum held in Thailand in August, discussions were held, based on OECD's knowledge and analysis, on the opportunities and policy challenges brought about by digitalization. State Minister for Foreign Affairs Nakane attended the Forum as Japan's representative. In addition to emphasizing the importance of utilizing digitalization in Southeast Asia, he also expressed his anticipation of the further development of OECD's Southeast Asia regional program.

(F) Contributions in Terms of Financial and Human Resources

Japan was the second biggest financial contributor to the OECD after the U.S. in 2017, covering 9.43% 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 2017) to the OECD Development Centre, and a Japanese national has been serving as a Deputy Director of the center. 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.

(A) G7 Taormina Summit (Italy)

At the G7 Taormina Summit (Italy) held in May 2017, Prime Minister Abe, as the first speaker, and based on his experiences as the former chair, appealed strongly for the significance of unity amongst the G7 members. He also took the lead in discussions on the following topics in particular: (1) North Korea, (2) Maritime security, (3) The global economy, and (4) Trade.

Prime Minister Abe expressed that the G7 has, until now, worked in unity to lead the international community in addressing various issues, and pointed out that the international order underpinned by the fundamental values that the G7 has consistently promoted is now being exposed to serious challenges. It is precisely at times like this when it is important for G7 leaders, including the new members in their midst, to build a new foundation for trust, and for G7, which shares fundamental values, to stand united and promote an international order that is based on rules. The leaders of the G7 concurred with his remarks.

Concerning (1) North Korea, members concurred on the recognition that it is a matter of the highest priority among issues confronting the international community, and that it poses a new level of threat of a serious nature. At the same time, they affirmed that the G7 is prepared to strengthen its measures towards ensuring North Korea's immediate and complete compliance with the UN Security Council Resolution, and its abolition of its nuclear and missile programs.

In regard to (2) Maritime security, the members concurred on the importance of order based on rules in the maritime sector, and reaffirmed their commitment towards the peaceful resolution of disputes over the seas, including the use of arbitration. At the same time, they expressed their concern over the situation in the East and South China Sea, and concurred on requesting all the parties involved to pursue demilitarization in the disputed territories.

As for (3) Global economy, with growth remaining at a moderate level and the continued presence of downside risks, discussions were held concerning the G7's efforts to realize higher living standards and quality job. Continuing from the Ise-Shima Summit, the leaders also reaffirmed their commitment towards the use of all policy tools, including monetary, fiscal, and structural policies.

With regard to (4) Trade, the G7 stands firm against unfair trade practices, including the problem of excess capacity, based on the recognition that free, fair, and mutually-beneficial trade and investment are the key driving forces for growth and job creation. At the same time, the leaders reaffirmed their commitment to keep their markets open and to fight protectionism, recognized the importance of the rules based an international trading system, and committed to working together to improve the functioning of the WTO and to achieve a successful 11th WTO Ministerial Conference. In addition, an independent statement summarizing the discussions on terrorism and violent extremism was adopted and signed by the leaders of the G7 member states.

(B) G20 Hamburg Summit (Germany)

At the G20 Hamburg Summit (Germany) held in July, Prime Minister Abe took the lead in discussions among the leaders as the lead speaker for the first session on economic growth and trade of the Premier Forum for International Economic Cooperation, which addresses the most important issues for G20. With regard to the themes of counter-terrorism measures and promoting female empowerment, he also contributed to discussions at the Retreat Session based on the theme of counter-terrorism measures, and played an active role by participating in the events for the launch of the Women Entrepreneurs Finance Initiative (We-Fi). At Japan's strong urging and encouragement, the G20 reached an agreement mainly on the following areas, which were also areas of focus at the G7 Taormina Summit (Italy) held in May.

(1) The use of all policy tools─monetary and fiscal policies, as well as structural reform─either individually or collectively, to respond to downside risks and strengthen the growth of the global economy. Furthermore, in pursuing economic growth and the job creation, to promote greater inclusiveness and fairness, and to reduce inequality.

(2) To　keep markets open, and continue to fight protectionism including all unfair trade practices.

(3) To further strengthen cooperation in order to tackle the problem of excess capacity in industrial sector, including steel.

(4) For the U.S. to commit strongly to an approach to reduce greenhouse gas emissions, and for other G20 member states to promptly implement strong commitments to the Paris Agreement.

(5) In addition to promoting female empowerment, and from that perspective, to launch the Women Entrepreneurs Finance Initiative (We-Fi) aimed at expanding support for female entrepreneurs in developing countries.

At the closing session, Japan was elected to the G20 presidency for 2019 with the support of the G20 leaders. Based on Japan's efforts and contributions to the G20 Summit until now, Japan will further demonstrate its leadership towards its assumption of Presidency in 2019.

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 countries and regions in order to promote regional economic integration and cooperation. APEC consists of 21 countries and regions in the Asia-Pacific region. This region is the “world's 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 the APEC 2017 hosted by Viet Nam, under the overall theme of “Creating New Dynamism, Fostering A Shared Future,” the four priorities were identified as (1) deepening regional economic integration, (2) strengthening MSMEs' competitiveness and innovation in the digital age, (3) promoting sustainable, innovative and inclusive growth, and (4) enhancing food security and sustainable agriculture in response to climate change.

At the APEC Economic Leaders' Meeting held in Da Nang, Viet Nam, in November 2017, Prime Minister Abe spoke about the need to remain committed to the “three arrows” of monetary and fiscal policies, and structural reform, in order to consolidate the foundations of the economy. He declared that Japan will put its fullest effort into tackling the issue of population decline through the “productivity revolution” and the “human resource development revolution.” Furthermore, Prime Minister Abe stated that Japan will proactively contribute to digital trade, the “Asia Health and Human Well-Being Initiative” for realizing UHC¹⁰ and responding to aging societies, promoting sustainable agriculture and energy cooperation, with the aim of creating positive cycles of growth for the Asia-Pacific region. With regard to trade, Prime Minister Abe stated that free trade is the foundation of peace and prosperity and also stressed the importance of eliminating unfair trade practices, alongside with correcting market distorting measures and expanding the “level playing field” across the world. Prime Minister Abe also emphasized the importance of enhancing the rules-based multilateral trading system centered on the WTO, and declared that Japan, as a standard-bearer of free trade, will continue to actively promote economic cooperation treaties and investment treaties, such as the TPP Agreement and high-quality RCEP. Furthermore, Prime Minister Abe explained that quality infrastructure is indispensable towards appropriately fulfilling the growing demand for infrastructure in the Asia-Pacific region, as well as strengthening connectivity.

The Leaders' Declaration was adopted at the end of the Meeting. It encompassed the issues, such as ensuring a “level playing field,” supporting a multilateral trading system, quality infrastructure investment, growth through monetary and fiscal policies and structural reform, enhancing women's economic empowerment, and disaster risk reduction.

In 2018, Papua New Guinea will host APEC for the first time.

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• 10 Universal Health Coverage (UHC): Where all people are able to receive the appropriate healthcare services, including prevention, treatment, and rehabilitation, when they need them, and at affordable costs.

(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), and is working to develop an environment to ensure that Japanese intellectual property is appropriately protected and utilized overseas. In the area of EPAs as well, Japan strives to establish regulations on intellectual property right and thereby to ensure the adequate and effective protection of intellectual property. TPP11, for which an agreement in principle was reached in November, and the Japan-EU EPA, for which the finalization of negotiations was reached in December, both incorporate contents on further promotion of the protection and use of intellectual property. 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 have suffered from counterfeit and pirated goods overseas, 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 requests to their counterpart governments. Japan is also engaged in efforts to improve the capacity of government employees in developing countries to counter the spread of counterfeit and pirated goods, and to strengthen the protection of intellectual property, such as by dispatching experts through the Japan International Cooperation Agency (JICA).