Chapter 3
Japan's Economic Diplomacy to Promote National and Global Interests
Section 1 Promotion of Rule-Making to Bolster Free and Open Global Economic Systems
1 Overview of Economic Diplomacy
In the international community, as inter-state competition arises in the fields of politics, economy, and the military, the balance of power in the international arena is changing in an increasingly rapid and complex manner, while uncertainty over the existing international order is growing. Particularly along with economic challenges such as the rise of economic protectionism and trade conflicts, the novel coronavirus disease (COVID-19) has had a profound impact on the global economy, causing stagnant economic activity, a rapid decline in demand, and restrictions on the movement of people. Supply chain problems wherein the world has become reliant on certain countries for the production of certain products have also become clear.
Amid these circumstances, Japan has continued its efforts for rule-making and further trade liberalization through economic partnerships. These efforts led to the signing of the Japan-UK Comprehensive Economic Partnership Agreement (CEPA) (see the Special Feature on page 180) and the Regional Comprehensive Economic Partnership (RCEP) Agreement in 2020. These, combined with the Japan-U.S. Trade Agreement, Comprehensive and Progressive Agreement for Trans-Pacific Partnership (TPP11), and EU-Japan Economic Partnership Agreement that are already in force, will create a free economic zone covering 80% of the global GDP. With regard to the World Trade Organization (WTO), while the organization continues to be central to the Multilateral Trading System, there is an urgent need for reform in the face of rising emerging countries, an inadequate response to the advance of digitalization, and a contraction of global trade due to COVID-19 (see the Special Feature on page 186). With a view to the 12th Ministerial Conference, which was postponed until 2021, Japan must coordinate with concerned countries and provide leadership to the reform.
Japan has advanced initiatives with the aim of accelerating the promotion of economic diplomacy as one of the priority areas of its diplomacy, centered around the following three areas: (1) rule-making and initiatives through international organizations to bolster free and open global economic systems by promoting economic partnership agreements, while maintaining and strengthening the multilateral trading system; (2) supporting the overseas business expansion of Japanese companies through promotion of public-private partnerships; and (3) promoting resource diplomacy along with inbound tourism toward Japan.