 Well, welcome everyone to this session on the role of Japan. I think it's a subject that needs more attention than it gets. There's a tendency, I think sometimes, because Japan is as quiet and as effective as it is in regional cooperation and development and politics and trade leadership that there's a tendency, you know, when we look at news, I'm speaking and wearing my journalistic hat. We look for trouble and then we go there. Very often Japan moves unnoticed in that environment so I would congratulate all our participants on having the wisdom to come to this important session. I believe the organizers would like me to remind you all that if you are using social media to communicate about this session, please use hashtag WEF24. You can mention my name, too, if you would like. And as we think about this topic, it seems to me that we can think about Japan's role in a geopolitical aspect where Japan I think is much more willing to engage and discuss geopolitical issues than even in the fairly recent past. We can talk about its trade role where Japan has taken a leadership role in the CPTPP even after the US withdrew working with Australia to make that a reality. The political aspect of technology, French shoring, digital aspect where Japan is really trying to work and one of our guests here today has taken a major role in trying to improve the flow of information which is clearly key to the future of trade. So if I can introduce our panelists briefly, I won't trouble you with their biographies which you can all find very easily. I'd like to begin by introducing Masayuki Hiodo who is the CEO of Sumitomo Corporation, employs I think 80,000 people at 160 locations around the world. The Minister for Digital Transformation of Japan Konotaro is with us. Isabel Deschants who is the Chief Legal Officer at Rio Tento and Michael Froman who is the President of the Council on Foreign Relations, an organization chiefly distinguished for having employed me for a number of years. That makes me your boss, isn't it? I think my former boss made a very important distinction there which I'll explain to you later. So I guess what I'd like to do to begin with is to ask Minister Konotaro, how do you see the state of the world and Japan's place in it? All right, the world is increasingly fragmented. There are a lot of uncertainty over what's going to happen over Taiwan Strait. What's going to happen to Ukraine? What's happening in Middle East? And the role of Japan is to bridge the different groups. Like Japan is in a very unique position vis-a-vis Middle East. We don't have the history of colonialism in the Middle East. We are very different religion-wise. We don't have much of the Jewish-Muslim community in Japan and we are very neutral. And when we say we can be honest broker, I think people in the Arab world believe that. So Japan is in unique position to make bridge among those states or we have been working on like DFFT data free flow with trust to connect GDPR of Europe which is very tough on privacy and the wild west of the United States. They're not going to have a convergence but DFFT could increase the interoperability of the world. So I think the Japan's role for the future is to make bridge in the different places. Yeah, with the economy accelerating movements toward French showering and supply chain resilience, that I think has big implications for Japan and its role. How do you see Japan being involved in these trends? Well, some years ago when we invited China to WTO, we thought China has a different political system. But if they become a good team player, everyone will get benefit. Unfortunately, it didn't work it out that way. So President Obama talked to Prime Minister Abe, let's make a new decision making body for Indo-Pacific and that was supposed to be TPP. So we pay some political cost in Japan but we decided the Prime Minister Abe took initiative to join TPP. And as we signed the TPP, unfortunately President Trump left. So we want US to come back and create TPP what is supposed to be. And so that'll be our first step and I guess Mr. Froman could work on it in Washington. So hopefully after COVID, the Japan's economy is changing. Now we say goodbye to zero interest rate, it's ticking up, wage is going up. So if Japan could regain the economic power, I think we have role to play. Okay. Mr. Yodo. Yes, sir. We've had the government view or a government's view. How do you see the state of the world from Sumitomo perspective? Well, yes. Let me try to put my answer to your question this way. Looking at the longer period of time, I'll admit, I think definitely this time now, world itself is a turning point. Then my career in the company for 40 years in the past has created a long-term relationship in the region. Of course, under the foreign policy set by our government and also partner countries. Then during this period, Asia achieved tremendous fantastic growth and our relationship has changed from donor country to recipient country, but now the partnerships among those Asian community. Then during this period, private sector in Japan have extended our efforts to create the trust and the long-term relationship, having a value chain scattered into this whole region and to create the growing together concept. I think we are in good shape having this long-term relationship at this moment. Then now it is our task further to enhance this relationship so as to meet the global demand and consensus reached in the previous COP28. I think there are many things we can do together. So that's what I look at the situation now. When I think of the consequences of friend-shoring and other changes that we're seeing, it would seem to suggest an intensification of the relationship of Japanese business with many of your partner countries in the region. Is that... Yeah, in the sense, yes. But on the other hand, I think we have to be creative enough to redesign the whole value chain of the industry in the region so as to make each value chain competitive enough and suitable for the new era where we have carbon neutral issue needs to be solved. So we need to be very creative for this. Collaboration is the key. I think we have the foundation built up during the last history of the relationship. I think this is a very, very fundamentally important and strong basis platform we have. Yes, so it's the long-term business to business and people-to-people relationships that you see as the key. Thank you. That's very helpful. Ms. Deschamps, how do you see the world? You don't represent a Japanese company or the Japanese government, but you're very active, Ryo Tento, in the region where Japan is a major player. How do you see the state of the world? Absolutely, and I think the view is for Ryo Tento. We've been working in partnership with Japan and Japanese companies for 100 years. So initially, a European company, then we globalized and went much more global. But actually, the partnerships with Japan and Japanese companies have been in all the supply chains. So from selling, from investing, having investors and Japanese investors, for having now a lot of partnerships and decarbonization with customers. So there's a long history. So the view of the world is formed through that lens of this long history, long-term view. On our side, the view of the world is very much that we're living in a very fragmented world and in the world of metals and minerals. And this fragmented world is actually, we're very sensitive to it in all the countries where we operate. We see the demand for materials and minerals increasing dramatically because of the energy transitions and what we need to do for the energy transition. And at the same time, when you look at it, the markets are very fragmented. So where the commodities are, where the mining is in different countries from where the processing is today, very different from what the manufacturing is today and where the consumers are and customers are. So we're having to adapt to this new reality of that fragmentation in that chain. And we see that this is the way and the place where the partnerships and the corporations with governments private to public is essential as well to navigate this new reality. So we see that based on this long history of 100 years of working with Japan and Japanese companies, we can actually build on that trust, work on the long-term resilience of a supply chain and looking at the world through that lens. I suppose some people would look at Rio Tento and say, information is less important to a metals and raw materials company, but I would imagine that the fragmentation of the global digital landscape and information landscape is a problem. Do you find the work that Japan is doing to try to free up the flow of information? Is that an important thing for your business? That's absolutely critical for our business as well. So if we look at it from the lens of what we're trying to do from an ESG and the climate change, the decarbonisation of world, the data and the digitisation is playing a key role in that space, all the way through working with governments and creating these strong relationship with the government. So that work is essential and where data builds also transparency and goes into the trust as well. So I think we can really see the links there and the work that is being done in Japan and that space is very strong. Well, Michael, you said at a very interesting spot because the council on foreign relations is a kind of an interface between the American civil society and the world and the many forces in American civil society are represented in the council one way or another. That's a very interesting spot to sit and maybe particularly this year. How do you see the world? Well, first, I think as many have said, it seems to be particularly heading towards greater fragmentation. I think the good news is we seem to be heading towards an economic soft landing, but the risk is we may be heading towards a geopolitical hard landing and how that plays out will depend a lot on what happens in Asia, where half the world's GDP growth, half the world's innovation patents, half the world's growth in trade all comes from the Indo-Pacific region and how that plays out will depend a lot on Japanese leadership. But I think it's important to take a step back and think about how remarkable it is we're having this conversation because if we turn the clock back to the late 80s when I first started getting involved in trade when I first went to Japan, at that point, the concern was that Japan was a rule breaker. Then it became a rule taker and now it's a rule maker and to see the transformation of Japan to that role, not just in trade where it's absolutely evident as you noted as the US pulled out of TPP, Japan really stepped forward with the other partners but particularly Japan to help keep CPTPP very much alive and expanding on the digital side as Minister Kono is leading and the new work on data and data flows with trust Japan is clearly a thought leader on AI and the Hiroshima principles on AI very much a leader. Japan in some ways was ahead of the curve in being the first victim of economic coercion from China when they cut off the rare earth minerals in 2010 and led an effort again that culminated in Hiroshima at the G7 on economic coercion and having cooperation among the G7 to prepare and deal with incidents of that. So throughout this process and really since Prime Minister Abe and beyond Japan has really stepped up in a very significant way regionally and globally and I think we very much as from the United States perspective welcome that partnership and find that we are increasingly aligned whether it's on the trilateral work with Korea or the quad work with Australia and India or IPAP or any of these other initiatives where we can work together. I do think it's extraordinary how Japan's presence in all of these organizations has become so critical to their success even to their existence. What do you think are the chances that the United States will again get involved or join CPTPP or in some other way play a leadership role in trade in the Pacific? I'm not holding my breath on CPTPP but I watch with great interest as the UK recently joined as a number of other countries are in the queue to join and how the countries involved or continue to evolve that as a high standard agreement in the broader region. I do think the US is trying to figure out within the constraints of its politics and the politics of trade have shifted significantly of how to maintain its engagement and its leadership in the region. The US is a Pacific nation and in many respects the future of the US depends on what happens in the Indo-Pacific region and so whether it's IPEF or AUKUS or the Quad or the trilateral work, I think we're all looking to find ways where the US can engage in an ongoing basis that works for our politics as well. The issue of the United States is it used to be the only policeman of the globe so they can do anything they want and we sort of let US do that. But now in this fragmented, multipolar world, I think US is still leading the West, US is probably the most powerful nation but the United States need to play according to the rules. US need to be part of the international system but if you look at the United States it's not a part of UNCLOS, it's not part of ICC, it's not signing up a lot of weapons conventions and it left TPP once gone out of Paris Treaty, now it's back. So we need to encourage the US administration to seriously talk to the Senate that they need to be part of all the treaties. They need to be part of the international system and be influential in the international system. When we talk to many countries about China breaking rules, China using rough power for economic coercion, we often hear, what about the United States? So US need to be part of the international system, play according to the rule and we are allies and we work with the United States but when we talk to the administration, they say, oh, our Senate, so it's time that administration really need to talk to the Senate and in order to lead the world, United States need to be a player. They cannot stay out of the field and say something. They need to come and play a leading role. I'm happy to make this about the United States but I think this is a panel about Japan. Well, all I would say is I think we need to, as democracies, understand where our publics are and bring them along so we have a sustainable policy going forward and unfortunately, that's not the way to do it. Well, Mr. More than may I say? Yes, please. From private sector viewpoint, I think this discussion is very interesting but that is a reason why we Japanese industries, together with governments, two governments, very important, United States, Japan, can play a similar role to establish and enhance in the region where very soon, more than 50% GDP on the globe will come out. So I think, of course, we would like to see as Mr. Kono described, the relationship in the United States and the globe, but due to many reasons, it's not so easy, I understand. So on the other hand, public-private partnership can go on based on all the discussions taking place now. There's no perfect solution or delivery but I think we should be, private sector should be creative enough to come up with a good business model working together in the region. And I would totally echo this and I think we have to leave the politics and the government issues to the governments but we can definitely, the private sector can work in partnerships together with the public sector. I think building in our case a lot, the resilience in the supply chain, focusing on what are the requirements of the countries and ensuring the critical minerals. We've been engaging a lot with Japan, also at the G7 to focus on critical minerals and the security and the supply chain which is a very welcome, so we've been very honored actually to be invited at the G7 to participate in those discussions because this is where the partnership start when with the public sector and the private sector. Yes, well, how critical to your business is the failure say of the US political institutions to get involved in CP, TPP, is it, is this mostly something that politicians think about or is it a real factor for business? You can be honest. It's much better for us to have a concrete consensus as among many countries as possible but that is not reality. So within the framework described by politicians or political public side, we have to play our role. That's the way we play our own business field, right? So we cannot get in our hand what we should have but I think we can keep on asking the regulators this is what we need to achieve the goal commonly shared by stakeholders in the region. Then through the discussion, understanding, creating the understanding, I think we should be able to overcome any difficulties. Now one thing that has struck me historically about Japan's role in the world is this role of a bridge that it was the first quote non-Western country to fully embrace and achieve the kind of industrial revolution and transition into that kind of modernity. And ever since then, Japan has had a unique role between Asia and the West but also I think between the global North and South. How does that historic rooting of Japan as a bridge, how does that play out in today's world where North, South and West versus the rest issues are coming to the fore? Well, as the economy of the world spread out, the role that our global South play is getting much, much bigger. And Japan is the only country in say G7 that don't represent the Western civilization. So when I was a foreign minister we had a big discussion of among the G7. How are we going to deal with Myanmar? And the rest of the G7 wants to bring United Nations into Myanmar to see what's going on. But for the people, the Buddhist people in Myanmar, the United Nations is a villain. They always side with other people. So Japan said, all right, let's not bring the UN into Myanmar, let's have an independent team to go in and see. And we got an agreement. Well, because of the coup, it's thrown out of the window. But Japan's role in G7 is to represent non-Western civilization, non-Western economy in the forum. And that's where we come in with DFFT. The Europe with privacy, GDPR, the Wild West in the United States. And if that goes to the different way, the data is not going to flow among the economies. And some people say data is an oil in the economy today. I think the data is more of a soil to build things upon. So Prime Minister Abe took initiative to propose DFFT. We don't talk about everyone's rule. We honor everyone's rule and regulation. But even with different system, we need to increase the interoperability. And that's what we are trying to do with DFFT. And finally, we got the G7 agreed. We got an OECD agreed to set up new international framework under the umbrella of OECD. Now we are reaching out to the global south. This is a new forum to discuss data governance. And a lot of countries are interested in. And I'm very hopeful many countries will participate in this forum to discuss data governance and actually try to implement a measure to increase interoperability. So that's the role we're going to play. We are joining G7, but our roots are here in Asia and in non-Western civilization. And our role is to represent us in G7 or even G20. Well, I think, Mr. Kudlow just laid out, it's a very articulate argument why Japanese leadership is so important and so valuable and how effective it can be in being a bridge, as you say, between East and West and between North and South. I think looking ahead, I think some of the good news is Japan's economy right now compared to much of the rest of the industrialized world is actually doing pretty well. To continue on that path, of course it needs to be continued reforms and there's a robust reform agenda that Japan is pursuing. Longer term, I think the demographics are the biggest challenge that Japan faces. And when you look to anticipating the year 2100 and Japan perhaps being half the size that it is now, it is all the more important that it gets its economic house in order and deals with some very difficult issues, issues that have been historically difficult about women in the workforce, about immigration and thinking through how is Japan going to retain that leadership position when it is a population of 50 or 60 million rather than what it is today? I think perhaps fortunately for Japan, we're seeing a number of other countries in the region embracing its demographic path and somewhat to the chagrin sometimes of their leadership. But this transformation of maybe the global population from population explosion to population implosion is hanging over us all. But one other thing in terms of the Japan's global South relationship, it strikes me that the Japan-India relationship is something that many observers of world politics don't pay enough attention to. And that the sort of when you go to Japan, you hear very warm feelings and you hear a lot of people who cooperate extensively economically in other ways with India. The same in India about Japan, how do you see this relationship and is it in the business world a reality? May I? Yes. In short, it's a great relationship created between two countries, especially the current leadership. And also I think atmosphere between two economics and industries relationship is so helpful for any business droppers from Japan can create further enhancement. Like there's a very prominent example of Japanese industry that became successful in the past decades. Suzuki, Mota, manufacturing. Even they are now planning to export EV manufactured in India to the world. So this type of actions or activities have not been imagined by anybody say 20 years ago or 30 years ago. But as I said at the beginning, due to this long-term efforts extended by Japanese industry, this new relationship and value chain is now scattered in the region. And as you pointed out, Japan demography is going to be a social issue of Japan. But from the viewpoint of global industry, Japan created. Many people say lost 30 years in the past. But I don't think so. From viewpoint of private sector, we have expanded the business operation on the global basis, not sticking to Japanese domestic market. So based on this framework, I think Japan together with the government and policymakers can play a very important role for that to enhance, creating joint growing together. This is very, very important. Does anyone in the audience want to ask our panelists either one panelist or the panel in general a question? Do we have one? Yes, back here. And please identify yourself. Thank you very much, Mohamed Al-Ardi from Invest Corp. So my question is about energy and really how Japan foresee the energy mix and in particular the role of nuclear in the energy security and carbon moving forward. Thank you. Any more? Well, anyone can guess that Japan has not much natural resources. We have to import oil and gas and coal and uranium. Our strategy is to go decarbonized anyway. So we will try to reduce the use of fossil fuel and try to maximize the use of existing nuclear power while we are trying to bring in renewable, especially. We have a lot of solar now and we are trying to bring in a lot of offshore wind and there are a lot of potential for geothermal. I think we are after Indonesia and the United States, there are world number three potential for geothermal. So we need to maximize the use of renewable. Plus, those who have lived in Japan have experienced how cold it is in our house in the winter. Installation is a major, major issue. So we need to increase the efficiency and we've got to do everything together to meet our target for the Paris Agreement. And I would say that's another area where actually the cooperation of private sector is really quite important and to build with the constraint in which Japan is living on the energy, work on innovation and really look at different solutions for the long term. So I think there's good partnership there as well on the energy side. I have more questions. Yes, sir. I'm Yoshi Hori of Glovis Japan. I have a question to Mike Froman. You mentioned about rule breaker to rule taker to rule maker. I like that note comments. And I wonder what the U.S. role will be in that. Is it gonna be rule breaker or rule maker? And what are the areas you think that Japan should take a leadership on? You mentioned about AI and trade. What else? And how can we collaborate with the U.S. in terms of rule making? Sure. First of all, I think I mentioned trade, digital, of course, the AI principles. I'd also add infrastructure. The work that Japan did, again, leading to the G7 on quality infrastructure principles as we're all working together through various initiatives to invest in infrastructure in the global south. I think that's another area where the U.S. and Japan can work very well together. Look, I think, I won't pick a fight with my friend, Minister Kono, here, but I think sometimes leadership also means taking a step back and saying these rules aren't working, right, the rules that we've agreed to. And the one I know best, of course, is the WTO. But as Minister Kono suggested, there was a certain expectation of what would happen. If the thought was over time, China would become more like us. I think instead, we have become more like China. So we used to criticize them for protectionism, for industrial policy, for restricting investment, having not seen them make progress towards a more open liberal economic system, market-oriented system. I think we and now others have responded by saying we have to protect our national economies as well. Japan knows as well, of course. It was one of the original investors in industrial policy, that tension that we had in the 1980s and the early 1990s, the bashing of Japanese cars, the conflict over export controls, the original concern about the hollowing out of American manufacturing by an exporter to the United States who was playing by a different set of rules, that was Japan. Japan evolved, China took its place. And I think what's happened is over the years, the U.S. has said, okay, we need to re-look at these rules, make sure that we're investing domestically to protect ourselves in critical areas of national security, including manufacturing. Semiconductors and the like, and we're cooperating very well with Japan, the Netherlands and others on export controls around semiconductors and semiconductor manufacturing equipment. We need to make sure that we are at the cutting edge of the latest technologies. Technologies that can have dual use, both for military and for civilian purposes. So again, AI being the most recent one, but I'm sure it'll be over quantum computing and synthetic biology and a number of other emerging technologies. And we need to define new rules with coalitions of like-minded countries. And that's where, again, I think the U.S. and Japan can work very well together to make sure that the new rules ensure that we are able to maintain that position going forward. Yes, sir. Jane Harmon. I think we should all salute Mike Froman for his heroic effort to draft TPP and defend TPP and sadly, to be here when TPP was buried. Huge loss for the United States. I think, looking at it now, the U.S. has a schizophrenic view of trade. There is an anti-trade wing in both political parties which is preventing things like IPEF from having any real teeth. But my question is, the defense relationship between Japan and the U.S. is growing and Japan has changed its outlook on defense. And this is a very big deal to the United States. Defense involves trade too, in case anyone missed it. There's a lot of defense stuff that has to be either positioned in Japan or built in Japan, plus bases, et cetera. And I'm asking whether the defense relationship could be a path to try to warm up the U.S.'s view of the importance of trade with Japan. I'm interested, minister. Yes, Russian invasion of Ukraine was a wake-up call for Asia. You know, things like that could happen. And the tension over Taiwan Strait is more real with newly elected Taiwan president. So Japan-U.S. alliance is very important, more than ever. But U.S. alone cannot police the world anymore. So we need to create an alliance of like-minded country in the Pacific as well. It's not only necessary for NATO, but we need some kind of international relationship in the Pacific. And yes, Jen is right. Defense involved in trade. You know, how much we are supporting Ukraine with weapon system ammunition, other issues. So we need to build robust industry for defense purpose. But it is very difficult for one nation to build everything. So relationship with other countries. We are now building fighter jets with U.K. and Italy. And we're doing a lot of things jointly with the United States. So hopefully U.S. would see this relationship and convince the Senate to go back to TPP. I certainly think it's easier to talk to the Senate about defense-related needs. And this may be an interesting approach to begin to re-engage on trade matters. Michael? Can I flag one more issue about U.S. leadership in the region and but also where the U.S. and Japan might cooperate with each other? And it spurred on by Jane's comment about IPEF. There's been a lot of conversation that how real is IPEF if it doesn't come with tariff reductions? You know, I think actually tariffs are much less of an issue in global trade than they used to be, thanks to generations of trade liberalization. And the average U.S. applied tariff is 3.5%. What the U.S. has, you know, just compare it to Europe, I often say U.S. innovates, Europe regulates. I think both are satisfied with that division of labor. But what the U.S. has almost uniquely, and I say almost because I think Japan is the one country that comes close, is this being a center of innovation of research and development of risk capital, of entrepreneurship, of investment. And those elements are so much more powerful. And we haven't figured out a way in the United States of how to include those things in our trade policy or our outward economic policy. Because those are what other countries really want, is to be involved in our innovation, our R&D, our risk capital. Nobody can just create Silicon Valley or Route 128 around Boston overnight. It's a whole ecosystem that exists there. And the one other country that I see that has many of those attributes is Japan. And I think the U.S. and Japan figuring out together how to offer that to the global south as a very powerful alternative to the magnetic force of China and others. I think that would be a very interesting next stage in the relationship. We have another question over here, yes. Thank you. Isabel Hartung, a wrestling commit. I have a question at the very beginning. You mentioned that the Japanese economy, as slight signs of going up was increased inflation with higher wages. And I was wondering, and you said this is like a prerequisite for being a strong partner to have a strong economy. On the other hand side, and we see basically the pyramid of a lot of old people, a stagnation for a long time, of course, groundbreaking technology. And I'm just wondering what are the pillars you see that help you to kind of come up like a phoenix and be strong in economy again to be a partner, to be even a stronger partner in this whole undertake? Well, we had a very good growing economy back in the 80s. Some people call it bubble and the bust. The business community or private sector in Japan got burned because of this bubble burst. And they've been very risk-aversive and not investing enough or when they invest, they invest outside of Japan. But now the confidence of the business community is coming back, I feel. So they will continue to invest in new technologies. Whereas the Japanese government has been increasing spending to push up the economy. But with the government deficit of this size, it's not going to continue. So the role of leading economy is changing from the government to the private sector. So now the private sector will invest in leading-edge technologies or many others to get the economy going. So it used to be when I was foreign minister, I'm the one who asked the countries of global south, is there anything we can do to help you? But since I became digital minister, I always hear, is there anything we can do to help Japan digitalize? Thank you very much. The table has turned 180 degrees. So now from now on, I think it's business community who are investing in the global south. And as Mr. Froman said, maybe you as Japan together try to create an ecosystem in the global south so that everyone can benefit. So now the role is the torch is changing the hand, I believe. We are now just about out of time. And to try to summarize this very complex discussion will be quite difficult. But I think two themes did emerge for me. One is the theme of depth, depth of relationship where Japan historically has these relationships, public and private, but also depth of reflection. How do we think more deeply about trade as a way to solve problems? The other is cooperation, that this really partnership, this is really a theme that all of our participants and all of the questioners came back to again and again. Thank you all so much for being here. Thank you to the distinguished panel.