Section 3 Economic Diplomacy

1 Overview of Economic Diplomacy

In the international community, as competition among nations 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. The novel coronavirus disease (COVID-19) pandemic caused a rapid worldwide economic downturn through the suppression of economic activity. Since then, although the global economy as a whole has shown signs of a gradual recovery as the impact of COVID-19 has waned, prices are now soaring due to a combination of a recovery in demand and the impact of the situation in Ukraine. The outlook remains uncertain due to volatility in financial and capital markets, ballooning governmental debt arising from COVID-19 countermeasures, rising maritime transport and other logistics costs, and rising energy and commodity costs.

Amid these circumstances, Japan has continued its efforts for rule-making and further trade liberalization through economic partnerships. In January 2022 the Regional Comprehensive Economic Partnership (RCEP) Agreement entered into force. With regard to the World Trade Organization (WTO), which is central to the multilateral trading system, the Twelfth Ministerial Conference, which had been postponed three times so far, was held in June. During the Conference, there was an agreement for the first time in approximately six and a half years to adopt a Ministerial Declaration, and the Conference succeeded in achieving results on important themes such as the COVID-19 response and negotiations on fisheries subsidies. Additionally, with regard to e-commerce negotiations, which were initiated by like-minded countries, Japan, along with Australia and Singapore, the co-conveners of e-commerce negotiations, issued the Ministers' Statement on the WTO Joint Statement Initiative on E-Commerce to express their willingness to remain committed to reaching an agreement on a global set of digital trade rules.

Based on the above assessment, 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.