 The interim president of the Japan America Society of Washington, D.C., Abigail Friedman. She's the founder and CEO of Wisteria Group, a consulting firm, and previously she was senior advisor to the Asia Foundation, where she led strategic engagement with Japan and advised on other conflict-afflicted regions in Asia. She also had a long career at the State Department, and Abigail's been a terrific leader at the society, and it's great to welcome her here at Carnegie. Thank you so much. It feels a little odd to introduce the introducer. But thank you all for coming here today, and we've got a great speaker who many of you already know because he's had such an illustrious career in the economic front, Masahiro Kawaii-san, who will be speaking today about international Asia trade dynamics in 2019. He's currently the representative director of ARENA, the Economic Research Institute for Northeast Asia, which is based in Niigata, which I find kind of interesting because so often we just see things happening in Tokyo or Washington, D.C., that having someone who's based in a perspective outside of the main city is great. Kawaii-san is, he's also a professor, he's the representative director of the Economic Research Institute of Northeast Asia, but also a professor at the Graduate School of Public Policy at the University of Tokyo. He also served previously as Deputy Vice Minister of Finance for International Affairs at Japan's Ministry of Finance. He's a Stanford University graduate, has his Master's and PhD in Economics from Stanford, and he began his career as a research fellow at Brookings. Am I allowed to say that word here? And then he was an assistant and associate professor in the Economics Department at Johns Hopkins. Afterwards, he was a full professor at the University of Tokyo and he also served during this time as a consultant at the Board of Governors of the Federal Reserve System and at the IMF in Washington, D.C. He's also worked as Chief Economist for the World Bank's East Asia and Pacific Region from 1998 to 2001. And then subsequent to that, he was with the Ministry of Finance, the Japanese Ministry of Finance. He also joined the Asian Development Bank and served as head of the ADB's Office of Regional Economic Integration and Special Advisor to the ADB President in Charge of Regional Economic Cooperation and Integration. He's published a number of books and numerous articles on economic globalization on regional financial integration and cooperation in East Asia, including lessons from the Asian Financial Crisis and on the international currency system. So I think you can see from this brief bio that he has really covered all the bases on the economic front and on international trade. So please join me in welcoming Mr. Kawaii. Good afternoon. It's a great honor and a pleasure for me to be here to talk about the Japan-U.S. economic relations and the future of TPP-11. I think I want to get a bit closer to the slide since I cannot, I don't have it just in front of me. Maybe the best way would be, I see. Okay. Okay. Thank you very much. Okay. So President Trump withdrew from TPP on day one or two after assuming his presidency and Japan started to lead negotiations on TPP-11. Japan was then the largest economy among the 11 countries. So Japan was a natural leader to do so. In the meantime, Mr. Trump started to focus on trade issues to reduce trade deficits and particularly he focused on China and he has been very tough on China or people around him were probably tougher towards China than Mr. Trump himself. But Mr. Trump also wants to forge FDA's or trade agreements with the EU and Japan which would be very favorable from the U.S. perspective and he has been using the threat of imposing additional tariffs on automobile imports. Japan now started to work with the other 10 countries within the TPP-11 context to expand membership. Japan also came up with an EPA economic partnership agreement with the EU and this EPA is going to be enforced on February the 1st this year. And Japan has also been working with other East Asian countries to forge RCEP, the regional comprehensive economic partnership agreement. So Japan and Mr. Abe has been working very intensively on mega FDA's and supporting the liberal trading system for not only Japan but for Asia and for the world. So the question is where do we go from here. Now we know that the U.S. has the largest trade deficit with China followed by the EU, Mexico and Japan according to the number for 2017. So Japan's trade surplus against the United States is not too gigantic in comparison to to China's but still Mr. Trump wants to reduce deficits. Now Japan has been pursuing its own FDA strategy and the abenomics as part of the growth strategy and the Japanese government has been making it clear that maintaining the rules based liberal and multilateral world trading system under the WTO would be the most important strategy for Japan. For that purpose Japan has been working with the EU, other G7 countries and like-minded countries to support the multilateral trading system and Japan has continued to try to convince the U.S. to return to this multilateral trading arrangement. The U.S. Mr. Trump has complaints of WTO practices and of course WTO has many problems and together with the U.S. it's very fortunate that Mr. Lighthizer does support WTO reform and Japan, the EU and the U.S. have been supporting WTO reform. Another important pillar of Japanese trade strategy is to convince China to return to reform and opening policy which was so successful but which was recently reversed towards more closed nature and to shift away from the so-called state capitalism model to a truly market oriented open economy development model and also implementing several mega FDAs has been very important that's why he wanted Mr. Abe wanted to revive TPP after Mr. Trump's withdrawal. And now the data in the table a bit old but even though Japan has been integrating with many other Asian countries in terms of people's movement, trade, foreign direct investment, the role of China for that matter has become very important and economic relationship with ROK continues to be very important but you realize that the U.S. is also a very important economic partner for outbound international tourism and trade and foreign direct investment. So the U.S. is there economically in Japan and Mr. Abe came up with a KPI key performance indicator with regards to its FDA strategy. Mr. Abe wanted to achieve the FDA trade coverage ratio of 70% by 2018 last year. This was not achieved but still this policy continues to be important so to achieve it Japan has to forge an FDA with TPP level member countries and the U.S. also and EU which will be realized very soon and then Korea and China. So working with many countries continues to be quite important. Now for this audience I don't think there's really need to re-emphasize the strategic importance of TPP but just I want to say that TPP was a high standard FDA including developing countries. So that was a very excellent attempt even by including developing countries a very high standard FDA could be achieved and actually TPP 11 has done so and also TPP was intended to put pressure on China to further open up and to pursue further reform. So in the future China could be invited to be a member of TPP. In the sense that TPP was a very important instrument to encourage China to go through important structural reforms but Mr. Trump decided not to use that path. But TPP 11 remains significant. TPP 11 was launched by six countries Australia Canada Japan Mexico New Zealand and Singapore and and also this month Vietnam joined TPP 11 and three other countries Brunei, Chile and Peru are now going through domestic procedures. Malaysia another country is a signatory member of TPP 11 is now considering what it should be doing hopefully hopefully Malaysia soon ratified but we don't know. TPP 11 member countries suspended 22 provisions and I have a list of suspended provisions and items under TPP 11 most of the provisions and items suspended are related to intellectual property right about half of the 20 more than half of 20 suspended the provisions are related to intellectual property so so basically those provisions which the US really insisted on putting in into TPP which many developing countries and even some developed countries like Australia and New Zealand did not quite appreciate were put in place but they they were now suspended they have been suspended and and so even though there are these suspended items still TPP 11 can be a model for the 21st century trade and investment rules and if the US accepts the entirety of TPP text and does not demand anything more and if the US wants to come back the US can come back and those suspended provisions would be restored. We may want to discuss later if the US wants to do it but if the US wants to come back to TPP does will the US accept the existing text of TPP more likely the US would like to add something more to the text then there would have to be a lot of negotiations between the US and existing members of TPP 11. There are still economic benefits to TPP 11 even though the US is not there so economic economic benefits smaller than TPP which includes the United States but but still there are economic benefits. Now membership expansion for TPP 11. Japan and other TPP 11 member countries believe that the membership expansion is going to send a strong message to the international community that these countries really care about the liberal trading arrangement and multilateral system but there are there are several issues. There are still countries which have not ratified TPP 11 those three countries plus Malaysia and so if a new discussion starts with new potential members then who should be more seriously negotiating with the new members. Those only those members those TPP 11 members which have become legitimate members or would that include other TPP members which have not ratified. Those countries which have not ratified may be concerned about new members coming into members of TPP 11 because that may create competitive pressure for the countries which have not ratified. Another question is should very high standard be required in terms of tariff reduction tariff elimination would lose agreement be possible. You may remember tariff discussions done on a bilateral basis so between any two countries there may be a lot of concessions given to particular countries. There is some unclearity about the direction towards tariff market access issues although trading investment rules of TPP 11 would have to be accepted by new members and also it may take some time to finalize TPP 11 expansion. There are several countries which have expressed interest to become TPP 11 members like Colombia, Thailand, Indonesia, the Philippines, Taiwan, the UK. China has not expressed the interest but China may be a future member even the EU. But these countries do have various domestic issues. Colombia after the new government doesn't seem to be too keen. There is some uncertainty about Colombia's direction. Thailand and Indonesia will go through elections so we have to wait after the election outcomes known. The Philippines may be concerned about its economic relationship, economic and political relationship with China under the current president. Taiwan has been expressing very strongly to join TPP and also TPP 11 but TPP 11 members may be concerned about possible conflict with China. You remember in the case of WTO entry China insisted that China should enter the WTO first and then Taiwan. Now China and EU may be good candidates but is it really a good idea to invite them in the absence of the United States? So there are many issues to think about. Now prospects for RCEP, the Regional Comprehensive Economic Partnership, this is an ASEAN centered FDA among 16 countries. The 10 ASEAN member states plus Japan, China, Korea, India, Australia and New Zealand. So RCEP is not as ambitious as TPP or TPP 11 but it's a very important mega FDA because it does include China and India, China, India and also a large country like Indonesia. Differences among the major countries are large initially between Japan and China on the level of tariff reduction and trade and investment rules but after the start of US-China trade war China has softened. China wants to strengthen economic friendship with the neighboring countries but India, India has been a reluctant member. RCEP also generates a lot of economic benefits mainly because China's level of protection is still high and India's level of protection very high. Now RCEP negotiations out of the total 19 chapters, seven chapters have been basically agreed on so some progress is going on but there are difficult chapters which are market access issues in particular India is very much afraid of the negative impact of trade liberalization on domestic industries because already Chinese cheap Chinese products are now flowing into India and India would be further exposed to Chinese products. Intellectual property, e-commerce, these are difficult issues and differences in views among countries relatively large but the negotiation will likely be concluded this year China's softening position and of course it depends on India's election outcome. Hopefully Modi continues to be supported, India can be more forthcoming because a lot of time, more time and leeways are provided to India under RCEP. After all India's per capita income, per capita GDP is about the same as CLMV countries so treat India just like Cambodia and Laos so India should be able to come. My paper contains RCEP chapters and some progress made highlighted part it's difficult, difficult part okay now so next likely steps so TPP 11 is now in place and a lot of progress would be made on RCEP which would include as I said China and India. Now just in a minute or so what are the prospects of TAG or USJTA negotiation? Japan calls this Japan-US trade negotiation TAG trade agreement on goods the US calls it US-Japan trade agreement so there's some different difference in approach. Major issues between the US and Japan are autos and agricultural sector problems. The US runs large trade deficits in automobiles accounting for about three quarters of total US bilateral deficits vis-à-vis Japan. I have some data so automotive vehicles parts and engines had a trade deficit for the US of 53 billion dollars total trade deficit on goods for the US was about 70 billion so the automotive part is the most important part so Mr. Trump wants to reduce this deficit but that's very difficult. Japan imports a very small amount of American automobiles and Japan exports a massive amount. How can this be adjusted? It's going to be very difficult. Agricultural trade is also an important part but the US runs a surplus on foods feeds and beverages and the US wants to increase this part of trade surplus on agricultural products and also the US is indicating a possible currency clause. Now looking at the new NAFTA arrangement and ongoing discussion about the nature of the US EU trade negotiation the US could demand a lot of things so there are several key issues for the US-Japan negotiation. From the Japanese perspective there are several things that should be avoided very restrictive trade policies against the Japanese auto imports. This is something that needs to be avoided like an increase in tariffs just Mr. Trump threatens or setting a numerical limit on imports of Japanese autos in a binding way. In the case of a new NAFTA it's not binding but in the future the limit may bind. We are very much concerned about the introduction of a binding limit or the US may want to set a very high rules of origin requirement for auto trade between the two countries. In the case of new NAFTA agreement the rules of origin requirement was increased and currency clauses which may have implications for monetary policy should be avoided because Japanese monetary policy continues to be expansionary and there is no possibility at this point to exit from this ultra easy monetary policy and it's very vital for Japan to maintain independent monetary policy. Japan will be ready to accept a comprehensive FDA deal not simply on goods, services, investment, other issues and Japan can import more shared gas and also earlier there was a discussion on the imports of military equipment which Japan is doing and Japan can further open the agricultural market to the extent of original TPP and Japan EU EPA deals. Maybe Japan could go a bit more if necessary. Japan can invest more in auto plants in the United States to expand automobile industry capacity in the United States. So my conclusion, Mr. Trump has been very tough against China but so far against Canada, Mexico, the EU and Japan the US has been less tough which is good. But the US, EU and Japan need to make concerted efforts to work on China to induce changes in China. So the US must work with the EU and Japan and other like-minded countries and also they have to work together to implement WTO reform in an effective way but of course this process would have to involve China and Japan and other TPP level member countries will start membership expansion and Japan, China and other members will likely reach an early conclusion of RCEP this year and Japan can contribute to the US economy by keeping to try to convince the US that the free and multilateral trading system is the best and by purchasing more goods from the US and investing more in the auto and other key manufacturing sectors in the US and of course Japan and the US share a lot of common interest going beyond bilateral trade. China's change, China's reform, North Korean issue and free and open Indo-Pacific initiative to give economic substance to this Indo-Pacific initiative would be very, very important. Thank you very much for your attention. Thank you so much Professor Kauai that was really quite excellent and I sort of wish we had a crystal ball and we could say okay so what does the future look like for this and for that. We will open up for questions but I will in the tradition here ask the first one one. It's been interesting to me to watch the US domestic approach to TPP as we all know was great resistance this wasn't just something that President Trump was against but there was a bipartisan grassroots opposition which eventually killed TPP for the US. Japan historically had a very powerful grassroots lobby that resisted international agreements and yet here we now see Japan taking the lead on TPP, signing the EU, Japan FTA, engaging with RCEP. What's the magic that's working that is making this possible in Japan? What's the Japanese public reaction to this? What is the business community reaction to this? Why is this working? Okay Professor Takeuchi also discussed this issue earlier but Japan had two decades of economic stagnation and everybody understands that Japan should get out of long-term economic stagnation. Otherwise the Japanese debt would continue to expand relative to GDP and social security system could be under stress. To avoid it economic growth is needed opening market opening and more proactively participating in the global economic management would be quite important and is necessary and I think that's been accepted by the majority of people and the only sector that has been complaining what I should say almost the only sector is the agricultural lobby but the Japanese government has been spending a lot of money for TPP itself and Japan EU EPA now preparing for TPP 11 and even preparing for the US Japan US trade negotiation in order to give comfort to the agricultural sector a lot of fiscal money has been spent and at the same time a lot of reform pressure has been applied to the agricultural sector. Junior Koizumi the son of former Prime Minister Koizumi has been very active on agricultural reform and so a combination of these has been working very well and the general population of Japan is supporting Japan's openness. Thank you I will won't be selfish so I will open it up now to questions from the audience please Jim. Jim Zumwalt Sasakawa Peace Foundation USA. Thank you very much Professor Kawai for that really good tour of Japan's trade policy. My question concerns your comment on TPP or CPTPP expansion where you mentioned that Taiwan's accession would be difficult because of China so my question is are you saying that China effectively has a veto power over who joins that organization that it is not in or do you think that Japan recognizing that CPTPP expansion without Taiwan would lead to marginalization of Taiwan and that's not in Japan's interest so Japan will stand up to this pressure. Well ideally we want the China to be in in TPP what we want the US both the US and China to be in in TPP or in the future sort of deformed TPP if the US wants to come in in the future the US may want to demand a bit more so but in principle TPP would be very useful for the US and China so we want China to be in so TPP 11 inviting Taiwan first may alienate China may give another reason for China to be hostile towards TPP or TPP 11 so that's the reality so it's it's not an easy easy decision but hopefully in the future when China joins Taiwan we'll also join but changing this order can upset China which we don't want to see. Thank you thank you Professor Rustemming at SICE thank you very much for your presentation you made a brief reference and one of your graphs to the Japan ROK China trilateral trade negotiations but no other elaboration is that alive is that going on and where does that fit into our RCEP and TPP 11. Okay thank you very much the so-called CJK FDA negotiation has been going on but negotiators are now putting a lot of efforts on RCEP the strategy for Japan is after RCEP CJK should be more intensively pursued and in a deeper way going very deep at RCEP would be very difficult because of India because of you know other countries like CL Cambodia Laos and a few other countries but on China Japan Korea they can go deep so for RCEP the agreement may be shallow and not so satisfactory from the perspective of economists like myself or for many people but I think first it would be useful to lock in China into a multilateral agreement and seek avenue for the next step for CJK so there China and Japan can talk about much deeper issues SOE reform issues E-commerce international cross-border transfer of data and so the CJK would be the role of CJK is clearly there thank you I have a question for the expansion of the TPP you wrote in a presentation that we have a question whether it is appropriate to call China or UK or EU to be a further membership of the TPP this is just a question but I'd like to know your answer and secondly can you say I'm curious how probable would be the case that the EU after the after the hard Brexit so to be a member of the TPP and EU as well thank you how much percentage okay I answered on Taiwan China Taiwan should come after China so so so that would be a very very long-term project China this is a difficult issue but we can openly invite China to start negotiation on TPP 11 I think that would give a good indication about China's willingness to change so so we should have many ways to induce China to change but through WTO reform through unilateral pressure from the US multilateral process through the lateral process I think many ways would be using many ways would be useful so inviting China to TPP 11 would be one of them but the US may not be happy and this new NAFTA's poison bill clause on non-market economy so the US may be concerned but but this is something I want to you know advocate EU EU I am more pro more positive towards inviting EU discussing connecting TPP 11 and EU and forging a very large FDA mega FDA and hopefully this would have some impact on US trade policy to induce the US to think about coming back to multilateral arrangement so I think TPP 11 has a lot of potential to change China to change the US and in a positive way we are not destroying the world we are trying to help reconstruct the liberal multilateral trading system for the world well I think current TPP 11 members have to start negotiations with several few potential member countries and then the Brexit what's going to happen to Brexit has to be observed and of course the UK can be a very strong member country strong candidate for membership expansion and the EU also so I cannot quite assign probability but I hope TPP 11 member countries would consider linking with the EU very very seriously Professor Kawai, Maryland Myers retired foreign service officer two rather brief questions the first one is about the trade deficit with Japan I find it really striking that 30 years on from when I was in Tokyo auto exports continue to be sort of the bugabare in the relationship and of course the answer then was many of the Japanese companies started to invest here Honda went into Ohio Toyota went into Kentucky etc I wonder if you could tell me at this point in time approximately what percentage of the Japanese cars sold in the US market are made in the US versus made in Japan and the second very short question is one of your charts showed the difference in projected economic growth if the US was in the TPP or without the US being a member and it seems the only country rather dramatically that had a much bigger economic growth forecast if the US was not in was New Zealand and I wonder if you could comment on why that is so thank you if I understand correctly the first question is what percentage of cars made in the US are Japanese cars are made in the US as opposed to made in Japan and put it into the US about I think about half half imported from Japan sorry about half imported from Japan and half imported from Canada Mexico and domestic produce I think that's roughly speaking many Manriquez from the Japan Automobile Manufacturers Association give you a few stats here it's 50% roughly that are sold in the US are built in the US another 25% or so built in Canada and Mexico and imported to the US and about it the the about a quarter 25% okay thank you thank you so you got the answer right you got an A on the exam important facts for this crowd to know here so okay thank you excellent excellent thank you yeah what was the second second question somebody yeah yeah yeah so so somebody wants to help okay okay great um you know some of the major concessions Japan made on agricultural products are products where the United States New Zealand and Australia are all competitive so by removing the United States from the agreement particularly Japan has some quotas and so if the United States does not compete for that quota that is a huge advantage for countries like Australia and New Zealand so I'm guessing that's the reason for the change thank you you get an A to Jim let's see do we have time for one more very brief question I agree with your argument of you know encouraging and using TPP to encourage China for more reforms and especially SOE reforms but when we say about talk about it you know TPP includes the rules of state-owned enterprise and also intellectual property rights and then that's actually our usually the issue of our complaint now you say that many of the rules of the intellectual property rights and SOE are kind of suspended so do you think still CPPP is a good tool to encourage China for reform yes still TPP 11 would be great about 11 provisions have been suspended with regard to intellectual property but that's okay that's okay SOE you know making sure that the level playing field would be maintained for SOEs so subsidies and favorable treatments of SOEs should be dismantled under TPP 11 Malaysia made a request for a change for the petrol SOE Petronas but that that that was the only exception China may want to ask for exceptions but too many exceptions you know cannot be cannot be accepted and I think TPP 11 is actually maybe better for China than TPP 12 where the US is in because then US-China confrontation would become the issue now in the absence of the US China can change and China can show to the US and the rest of the world that China can change I think that that would be very useful of course over how many years change should take place maybe the subject matter of negotiation but I think even including that if China comes to the table of TPP 11 membership expansion I think that would provide a very productive opportunity for everybody well unfortunately our time is up I have really enjoyed this conversation and lecture so please join me in welcoming and thanking Professor Kawaii thank you very much Kawaii sensei and Abigail I appreciate that we're going to make a very quick switch over to the final panel we'll get a couple of waters up here it's new name plates name plates that was I did enjoy how the professor got the whole class involved there that was that was good this is a good time to mention a couple of the things that the Japan America Society of Washington DC does and contributes to to the area in addition to to this event of course it's big signature event is the Sakura Matsuri the kind of centerpiece of the cherry blossom festival every spring also runs the Japan Bowl Japan language competition for high school students around the region but around the country as well and Japan in a suitcase an education program at at elementary schools and and and other schools in the area Sina Matsuri Japanese Film Festival so there's a whole range of things that the Japan America Society does here in in Washington we get just a couple names oh here I'll give you them okay Abigail is is is the one to see for membership oh and of course Japanese language instruction oh I'm standing in front so my effort to be a good citizen is actually preventing us from moving on yeah yeah why don't why don't we invite our second panel to join this will be moderated by Matt Goodman who's back with us and he'll introduce the uh the the panelists Hihoko here let me take a look okay bear with us just a minute where we might move to handheld microphones here I could make a joke about Chinese manufacturer of microphones but I'm I'm not going to okay while they're getting there set up I'll get started welcome back or if you were here for Kawaii-san's presentation then we're carrying on my name is Matthew Goodman again I'm the chairman of the Japan America Society of Washington DC and delighted to have all of you with us again if you weren't here first time first thing this morning when I was here earlier I understand we had a good discussion on the domestic panel this is the international panel in case you think you're supposed to be somewhere else we're going to talk about Japanese foreign policy the US-Japan alliance issues in the the pacific region and and anything else that our panelists decide is interesting or that you want to ask about so for about the next hour and a half so we'll go until 3 30 and then we'll conclude so I have a great panel here and I think these people are well known to this audience but I'll move down the line from my left your right pushy hero Nakayama is a Japan fellow at the Woodrow Wilson Center's Asia program he's also a professor in the policy management faculty at Keio University in Tokyo and he is an adjunct fellow at the Japan Institute for international affairs he focuses on American politics and foreign policy and international US-Japan relations international relations more broadly and I think he's well known again to this audience as a real pro and expert in in the issues we're going to be talking about today so next to him is Shihoko Doto who is a colleague at the also the Woodrow Wilson Center we're not deliberately here tilting the field towards the Woodrow Wilson Center but we're delighted they've got such great expertise she's senior northeast Asia associate there and is an expert on Japan Korea Taiwan northeast Asia let's call it broadly she was a journalist for a decade writing about the international political economy with an emphasis on Asian markets she's done a diverse set of work in political economy my home area as well and so we've got a lot in common and a lot to talk about so delighted to have you there Shihoko and then at the end is Eric Altback who works for Albright Stonebridge Group. Eric is a former official at USTR he also worked at the White House in fact he was both my predecessor and my successor at the White House which is a neat trick if you can pull that off and they couldn't move about it basically and so I'm delighted to have Eric with us he is an expert on Japan he did a lot of work on China and Taiwan when he was at USTR and covers those parts of the world as well so we've got a great a great group here tilted a little towards economic issues that wasn't deliberate and we'll try to actually what I'll try to do is maybe broadly divide the conversation into economic and other issues but they're going to blend together I'm sure in people's initial remarks so what I thought we'd do as a start is to ask um if we turn off all our phones up here they may be interrupting the disturbing the signal I'll ask uh professor Nakayama to start and and give us some over overviews on the kind of the big challenges in the region from an international perspective and what is facing Japan and what Abesan's priorities are going to be this year okay thanks for having me here a bit about a different subject that we touched upon this morning about the name of the era I think uh you focused on this newness and she was a freshness but I think it's going to be more about calm and peace because Heisei was a very rocky era for Japan right it started out as a bubble it bursted we had uh March 11 so I think uh something that sort of symbolizes uh peace and calm would be right right and this is very important for Japan how this this name of the era how it sort of penetrates the Japanese vernacular like uh when I'm at a university I will be labeled as a showa guy a very old you know there's some kao students there you know they would make make fun of me as a showa but now that I can make in front of them that they're the Heisei uh so it's it's very important and this is a sort of like a spiritual it's not psychological I would say more spiritual uh rebirth so I think it's symbolically very important in looking at 2009 uh and and secondly uh I found out a very interesting poll on nike and it says that you know what is Japan's strength this technology is is at the highest at near 80 percent but if you look at the lower end it's the language politics diplomacy and military insecure they're all under 10 percent that's a tough uh number so we have to sort of keep that in mind as well and and then I'll go uh sort of jump into the topic I was given Japan foreign policy uh in us in Japan I think uh were extremely lucky that we had uh prime minister Abe as our leader uh in this rocky times uh because prior to uh prime minister Abe I was sort of made fun of by my American friends as Japan being a failed state right politically because we're having this leadership change almost every year for like five six years so uh professor Takeuchi sort of uh emphasized that this continuation and and and his initiative on sort of national security infrastructure the fact that he came out with this national security strategy is quite important because uh drafting a national security strategy is an effort to it's a narrative to shape the desirable kind of all that you want in our region and Japan was never known for these kind of shaping you know attitude but now we have this you know uh FOIP right uh and and others of conceptual framework that defines uh uh Japan foreign policy and I think that's based on the institutional change that the Prime Minister Abe undertook uh so we're I think extremely lucky that we had uh prime minister Abe uh but my role here is not just to praise him so I I guess I should be not to bury him either not to bury him either right uh so uh Japan is expected to play a role of you know upholding this liberal international order uh with some others but in Asia Pacific almost alone you know Japan as seen as a guardian uh on maybe on the economic front to a certain extent I think you know it has a rationale but when it becomes to sort of political security and especially like on the human human rights front it's going to be very difficult for sort of uh uh Japan to take that sort of the role of the guardian of liberal international order so we should be a bit cautious about you know relying too much on Japan and then now on the state of the US-Japan relationship I think it's a sort of like a double-edged sword you know for Japan there's no other options right if we think about the fact that we're facing the rising China uh threat on the Korean Peninsula uh we have no other options but to sort of beef up uh uh and and sort of double down on the US-Japan security alliance no matter who the president is you chose it we we deal with him no matter who right it's not our fault right so you can't criticize Japan for being friendly with any administration so I think that's the basic position uh but that doesn't mean that we are so uh on the trade front uh as uh uh other panelists explained we are sort of nervous about it starting of the negotiations uh this year about the US-Japan sort of trade talks and also this general mood I think Sheila touched upon a bit in the uh the opening that there's this sense of rising retrenchment why does US has to be there if you talk talk to sort of the Washington foreign policy establishment types you're worrying too much America is always there it's a resident power but you see this retrenchment not just on the Republican side right but you see that on the Democratic side as well I don't say it's a consensus maybe I may be overreacting a bit but we see that because US is the only option we have at the moment right so you can't criticize for us being too worried about uh and there is a consensus in Japan that uh you know we have to sort of double down on the alliance so if you ask the Japanese public do you support the alliance people will answer like 90% in support and 98% is not a number what you usually get in a democracy so it's a very strong support but I think like the content of that support is changing a little bit uh because there are doubts in Japan like I said about US commitment to the region whether you will be a resident power in the region uh in the longer context so I call that like the shogunai mentality within the sort of support you know support base is I think increasing so we although Japan is among the major western nations Japan is the most comfortable nation with President Trump and his team I think this notion that US is potentially an epicenter of world uncertainty in instability is having a big sort of a psychological effect on on Japanese and I think particular in particular to the younger generation it's having a strong impact on that uh so we're not hedging but searching for other partners like in Australia, India and we're trying to inviting uh you know UK to our region they're feeling a bit lonely now so you know they're there we're willing to partner up with us France for that matter we have this two plus two dialogue between France as well but that would not sort of take place the role that US Japan alliance is playing because Indian Navy would never come to the you know East China Sea and deal with the situation that might arise uh and there's also this theory that Japan even Japan is hedging look at Prime Minister Abe going to China and probably Xi Jinping is going to visit Japan sometime this spring or maybe a bit later than that uh but I don't buy that argument because uh you know Japan-China relation PRC relations in the past 10 years was was really bad it was like minus 10 so this effort is just bringing up to like minus one was zero so I don't think you should treat it as uh Japan hedging because even Japan can't trust the US we took size I think that's the uh the uh the correct uh depiction uh with uh ROK it is extremely difficult uh we used to call our relations with uh or how we see South Korea as being we're we're too tired so Korean fatigue was the keyword in trying to this uh you know explain how we approach uh South Korea but now some of my colleagues was not like the typical anti-Korean types would say distrust right I don't want to talk with them there's no use so that kind of uh mentality is increasing and I'm extremely worried and this is not just because of the history issues I think and history issue has never been purely about history issues it was always more than that so there was this strategic uh a sort of understanding that if you look at the future of Korea's position in east Asia which is important Japan or United States uh Japan or China uh we feel that they see China as playing a more important role in the future with uh between us and China uh Koreans think that they can balance between it it's China and Japan it's China that's the kind of uh you know I don't know whether this uh analysis is correct or not but that's the kind of feeling that is is is rising in Japan uh I'm going over time a bit so I'll quit uh so the uh the state of the alliance is I think okay you know quite good uh maybe among the policy people even better during the Obama administration right that's the exception no one thinks that way around the world but Japan does the alliance is is in a better state than during in the Obama administration but you know this alliance doesn't exist in a vacuum right it only functions when us is fully committed to the region and when us has an east Asian policy which we don't quite see so yes the alliance is okay but it doesn't exist in a vacuum so I'm not extremely uh you know comfortable or optimistic about uh uh you know how uh you know alliance alliance would kick in when it needs to to function to to deal with a situation uh you know your election is coming back Japan is known to be the 51st uh you know state it's the it may be the most reddest state uh you know among the 51 state that's how I'm joking a bit uh but you know this time around you know there's a high probability that it may flip right and uh the the new and incoming Democrats are not totally new but many of them are so new and we don't have the connection to them so I think it's not too early for us to establish connection with them understand their thinking we're trying to go so I would like to sort of emphasize to the embassy here and and you know the Japanese business and all that to try cultivating the sort of the new networks among the up and rising uh you know Democrats who's just joined congress so thank you great thank you and I have a couple of questions already to ask you but I will um let Shihoko um make some opening remarks and um perhaps touching particularly on the China Japan dimension that would be particularly interesting to me but whatever you're interested in presenting I'm happy well thank you Matt um so looking ahead 2019 the real challenge for Japan is going to be and it to be a stabilizer in a sea of global uncertainty and I really want to take my five 10 minutes to talk about the political economy um especially regarding um the impact of the U.S. China that spills over into the global political economy we've already heard today um about the risks facing not just um the United States and China in a trade war but to the global economy writ large but there is if there is a silver lining to this conflict it is that it has actually led to a queen of relations between Japan and China um but at the same time what Japan is doing at the moment is really having a two-pronged approach to dealing with this trade war the first approach is to side with the United States against China and really trying to encourage China to abide by the norms of the international community by adhering to the rules and also being part of a multilateral approach in ensuring that rules that have been key for growth um in the in the um uh in the post war era continue to flourish so that has led Japan to join forces with the United States as well as the as well as the European Union in the WTO in taking action or against not China per se but against non-market economies in making sure that they adhere to um uh transparent transparent rules that there is restriction um and ability to combat voice technology transfers protection of intellectual property rights uh regulation of state-owned enterprises etc um that comes um at a time where Japan is also taking another second approach that is to say a more conciliatory approach with China um as professor Nakayama has mentioned um there has been a following of relations between Japan and uh China in October there was a summit meeting and we the challenge though for Tokyo is going to be to have a decoupling a decoupling of economic interests and trade relations with China on the one hand and also um acknowledging and trying to come to terms with the political as well as the street strategic rivalries that it has with Beijing I should point out there that the relations that Beijing and Tokyo now have go beyond the cosmetic um there is it it isn't simply a summit diplomacy in October for the sake of a summit diplomacy um and instead of simply having another meeting and bring this year in Tokyo it um there is great commitment between the second and third largest economies in the world to have what um Prime Minister Abe has called moving from competition to cooperation and this isn't an altruistic issue it really is something that both countries see as critical in in part to offset some of the risks that is being imposed by a more unilateral trade approach by the United States but we've seen an agreement between Beijing and Tokyo to have an easing of maritime tensions we've also seen specific a roadmap for a joint energy development projects and we've seen a commitment to develop um third world uh third I'm sorry third party um country cooperation especially in Thailand for a smart city growth that said I have to agree with Professor Nakayama that we that um uh Japan's relations with China have really started at a very low point and the fundamental rivalries that um the rivalries um and quite frankly the mistracks continue to persist and if we look at a poll done by Gendong which is a um nonprofit organization at the time of the Xi Abe summit we found that uh China's public sentiment on Japan has actually improved remarkably um from the nadir of uh very bad relations between China and Japan following the nationalization of the tank up islands in uh 2012 um we see that China about 40 percent of the Chinese now have a very favorable view of Japan and that comes in part from greater tourism and more Chinese people going to Japan and seeing firsthand what Japan has to offer it also has a great deal to do with a more positive tone in the Chinese um state media coverage over the last year or so um but what's interesting though is that whilst we've seen a dramatic rise in um in a favorable impression by the Chinese the Japanese still continue to have a very unfavorable view according to Gendong nearly 90 percent still say they have a very very unfavorable or unfavorable view of China and why is that one of the biggest reasons that the Japanese say they have a great distrust of China is they see China as a selfish power selfish power that is to say that it is not committed to the global goods that it is not an active contributor to the international community and that it is more of that the China dream is more about imposing Chinese will and China's own um uh standards while they've been trying to have a more conciliatory collaborative relationship with the uh with the world at large but especially amongst Asian nations there's also mistrust in the Japanese public about the governance system of China and the one-party uh rule of China as well um and but this is actually um precisely where Japan can actually play a considerable role um in being an advocate and a leader in the international liberal order that it does have an inherent um interest and commitment to international organizations and adhering to the rule of law that we have really seen um Japan taking um a greater responsibility for since the advent of the Trump administration and certainly we've already heard today about expectations for the uh for Tokyo in 2019 from everything from um hosting the next G20 uh meeting with a very global agenda also to um enhance um the CPTPP and expand membership for CPTPP but quite frankly that's not enough um for Japan to be really to take on the mantle of the global stabilizer stabilizer um it's not enough to uh execute carefully and thoughtfully the plans that are already in the making um it needs to do much more to offset um the insularity that we're seeing in Washington and the expansion ambitions of China um that is really um because we're also seeing a seismic shift in in global growth and global growth trends mainly that comes from the challenge of the digital global economy and we already see um that issues like um automation and artificial intelligence um can disrupt the labor force it has led um to a lot of fear a lot of weariness um a lot of um uncertainty and anxiety in the workforce at all levels and it's also contributed to a rise in um nationalism and especially economic nationalism one of the issues that will really be critical for a country where countries to take leadership in is on data and privacy and data will um be really the defining power and lead to power struggles in the future as any natural resource like oil like um air pollution right now today how tonight might have had um in the past and it will probably be a bigger source of friction um in this year and the years um looking ahead but at the same time what we do need to know note is that there are clearly very different ideas about um data privacy in particular and just how valuable data can be um we're already seeing differences even amongst um like minded countries like the united states and the european union uh this week we've already seen france and imposing a fine of um almost 60 million dollars on google for violating some of the privacy and data laws that those kinds of frictions at a corporate level will probably increase at the national level and um really impact public policy debate moving forward um there's also clearly a divide in how china proceeds um privacy and uh japan um proceeds privacy as well um this is an opportunity um we we this is an opportunity for japan to really take the helm on that and we've talked today extensively about tpp and it's uh reincarnation the cptpp as as a force to bring countries together like minded countries at different levels of economic development um it is also an opportunity it could be an opportunity also to ensure that um e-commerce and the service sector side rules are actually adhered to as well and um what we are going to see if we're to talk about the future and the immediate future we see for instance a gathering of global leaders and business executives at davos this week as we may recall uh two years ago it was actually shijin who took to the stage and made a great deal news talking about the need for the international order to come together and that there needs to be a um working towards a common good that kind of um debate and discussion um was of course met with great cynicism by um the participants of davos but at the same time it did raise an issue as to on the one hand those issues are important and on the other hand with the retreat of the united states and a greater reluctance of the united states to take on this leadership role in economic architecture who can actually take on that role um prime minister abe will be giving a presentation uh later this week at davos um i we've already heard today that there is a lot of excitement and expectation as to what um prime minister abe may or may not say certainly there is a great deal of hunger for him to take on a greater role to talk about interests of global goods and within that i think the issue of data and privacy should really take on a higher level of um of importance um thank you okay great shioko um we've introduced some important issues um on uh with respect to china in particular and i want to come back again on a couple of those but let me uh bring eric into the conversation erica you're particularly i think following the trade issues but i'm you know happy to have you again talk about whatever thanks very much a pleasure to join the conversation um i'm i have the problem that you always do if you're the last speaker everything interesting has already been said uh including by kawai sensei during his his presentation earlier um but in terms of just looking at the year ahead 2019 and the challenge facing prime minister abe just to pick up on a lot of the the policy agenda that stands before him um if you look at how he has navigated the first two years of the trump administration and advanced japan's economic interests broadly construed in the context of all the chaos and uncertainty about the global trading system and the relationship with the u.s. he's really done a very commendable job both in terms of building a positive relationship with president trump uh deflecting and sort of moderating u.s. demand for concessions that would address the trade deficit which this administration is so obsessed with but he's also done uh yeoman's work in exercising leadership in the region particularly with getting tpp 11 over the finish line in the absence of u.s. participation being a very constructive uh force of the wto in in working with the u and other wto reform concluding a uh fta with the u that will also provide another sort of example of the possibilities of trade liberalizing cooperative activity in the global system even in spite of this so protectionist moment that we're living in so he's done uh he's accomplished a lot during this very challenging period um but we're entering perhaps an even more difficult time ahead with global growth slowing a lot of uncertainty about uh china's economic trajectory um that is worsened substantially by the extremely uncertain outlook for the u.s. china trade talks um which we just heard some unfortunate news today about uh apparently the trump administration this is welcome of ice ministerial uh delegation terms and conditions uh the high level talks at the end of this month so uh that remains a huge risk factor for the global economy and one that impacts japanese economic interests very substantially but one that abe and indeed most of the international community can have very little to do a positive outcome um so in that context what is what is abe to do he has taken on a new challenge um now with launching agreeing to launch the bilateral trade negotiations uh that are variously referred to as a trade agreement in goods or a u.s. japan a trade agreement um so clearly there are some substantial gaps between the understandings and aspirations of the u.s. and japan and this is going to be a real challenge for him um there are questions as to whether the trump administration is prepared to adhere to the agreement that was laid out in the joint statement that this negotiation will be primarily focused on the good side uh and that the particularly in the area of agricultural liberalization the tvp there is tremendous ambiguity about the disposition of services and other issues in this negotiation phased negotiation with agreements reached on a rolling basis potentially with early harvests or will this be a kind of intractable challenging negotiation because of the different visions of the two sides and of course as we've discussed on an earlier panel japan's domestic political calendar between now and july is very challenging for abe to even give any initial signals as to what japan may be prepared to provide in the negotiations and then of course the shutdown is not helping on the u.s. side in terms of our preparations so um what other than that everything's going great on the bilateral side um and uh it was very i i listened with great interest to the i think relatively positive assessment of uh the potential to conclude the arsep agreement this year um and and i think there are certainly a lot of motivations on the chinese side to get momentum moving uh i understand that japan has begun to become more comfortable with the perhaps lower level of ambition as as developed country participants but i think we can never fail to give india the credit it is due as being a difficult trading partner in the world in terms of what they will demand and whether it will be possible to exceed to contemplate the treating them as a least developed country with long etc um even that may not be enough to guarantee the indians providing their necessary level of commitments to get get a possible agreement through so i i think i think our setup is going to be a very big uh boulder to push up the hill before the end of the year um the other uh x factor with that is what's the u.s. perspective i think the trump administration has had the opportunity to remain relatively quiet on the benefits uh or dangers posed by arsep if it gets closer to being real uh and having a regional agreement that includes china that leads the u.s. out i think that becomes a more difficult thing for the trump administration to accept and we perhaps should expect the kind of subtle diplomacy uh and messaging uh coming out of the white house if we see a development that we don't like on that front so um i think there's there's some real hurdles to be overcome uh for abe to play the kind of leadership role advance to pan's interests and contribute to stabilizing the global rules based trading system this particularly the case of the wto where we are uh in the midst of a long descent into uh chaos and dysfunction um there has been no breakthrough that would allow us to save the dispute settlement system by the end of the year when it will no longer have a quorum to hear cases there have been many proposals some of them constructive i don't see any of them being acceptable to the u.s. at this point um japan could certainly become more involved and and work closely with uh the u and others to try and reach a solution that would be acceptable to the united states but it remains a very dangerous situation and with the sort of multilateral trade liberalizing agenda of the basically collapsing if the dispute settlement process also uh completely fails and uh no longer able to hear cases i think that's incredibly worrying for the rules based system and something that japan as as one of the leading supporters will have to figure out what it can do to be constructive but this is an example i think of in the absence of u.s. leadership and in this case uh u.s. willingness even to participate in the crafting a solution uh uh hands efforts well critical uh maybe insufficient to get to the outcomes we want but with that little dose of sunshine maybe i'll stop there okay thanks eric um so we have a i have a long list of things that i want to try to cover it's going to be very hard to do this um in whatever 20 minutes or so before i turn to the audience but um it's also tempting to get into some of the deeper structural questions um like explaining why that's not kama sensei but maybe we'll do it over a beer why why um why this uh red state phenomenon in japan because all the data points seem to suggest that that but many data points seem to suggest that that are off the democratic administration that's not a political statement that's just a observation going back to the nixon shocks that a lot of the problems that japan's had in the alliance had been under the public administration but that's a deeper issue this is a 2019 conversation so let me just zero in on a couple of things that we didn't get into that are in the news this week um russia so uh the president i'm prime minister abe is in russia as we speak and um and there is talk of a uh some sort of rapprochement or possibly even a piece of traumatic um with respect to the four islands um nakama sensei do you predict that there is going to be some sort of major breakthrough in russia this year and what are the implications of that for the u.s. and alliance in particular i don't see any major breakthroughs and in fact if you read the papers talk to experts literally everybody no one really understands why i'm prime minister abe seems to be confident about reaching some sort of view and uh you know russia is not a trusted sort of uh country in japan as well we have uh north korea china and then it's that question i don't understand it's it's it's very different from what mr trump uh how mr trump trusts putin i guess but somehow prime minister abe trusts putin and i think they have met 25 times that's a lot and i don't just simply i don't see the logic and i don't see any breakthrough happen so the answer that what kind of invocation we have on the u.s. because i don't know there's a welcome to jump in but let me ask you put another one on the table which is north korea you talked about south korea and that's an important issue that that relationship but what about north korea what are the risks for abe san with respect to um north korea there's a group in sweden right now i understand trying to negotiate on the on the abductees but meanwhile president trump's moving ahead with his summit in um probably hanoi i don't know if that's now been confirmed but um and in february um what are the risks for abe san and how is he going to right uh according to our government officials we are supposed to be fully informed of uh what's happening that's and uh some of our high ranking uh diplomats are you know always around the meeting getting briefed by the u.s. officials so that's the uh government position so calm down is what what we hear but i think we are extremely worried uh no one on the u.s. side do not completely understand what's going on uh so even the high ranking briefing by the u.s. official to the japanese high-ranking official doesn't fully convince us uh the short uh range and mid-range missiles maybe not on the deal uh there are some issues that you know like the abduction issue that we are very much interested in although the public is not as you know emotionally attached to the issue as a couple of years ago but still it's a big issue and the biggest uh uh fear is uh u.s. forces uh in r.l.k. and the kind of deal that president triumph might sort of make with kim jong-un i don't think that's gonna happen but he's been hinting that consistent so maybe not now but like sort of in the future sort of arrangement if that comes up that would worry us a lot but i think if that happens there will be a revolt on the u.s. side uh i was quite shocked about uh the reaction of the the republicans uh when mr trump said he's going to retreat from syria you know many of them were quiet on the domestic issue but many came out publicly and saying that we cannot read and that might happen on the uh you know u.s. forces on r.l.k. for instance this is just hypothetical that mattis mcmaster kelly and tulis and they all come out publicly and saying that we're against president's decision and if the somehow since out of a sense of duty revealed what was going on in the white house that would be a big blow to the kind of beard off will be a question there's again a lot more to say about either of those topics and chihoku you're welcome to jump in on either of those if you're if you'd like but let me ask you about the china story that you raised on the notion of this more conciliatory approach um by obvious on to what extent is that i mean and you touched on this but just i want to press again on on how much of this is a strategic play because you know china japan relations are obviously you know fundamental for japan and there's some longer term play that abe's doing and how much is sort of more tactical either because it's a hedge against the u.s. or because you know shijun ping is is reaching out or because i don't know i even heard a story that you know abe's objective is to make sure that shijun ping comes to the olympics in 2020 and so he's going to be nice to him until until then and then after that it's back to back to the normal uh spatting i mean it seriously is this you know is this just tactical or or reactive or is there some deeper kind of play here by abe right get to the uh the china issue if i could just add my two cents on the north korea issue japan store remains the only major country that does not in the neighborhood that has not had a summit to maintain with kim jong one of the remarkable developments of 2018 was that he um north korea goes from the korea state to to the darling and japan has really had to scramble to readjust its position um the understanding now is that abe would be open to a meeting with uh kim jong one but that um interest is not really being that will really need to be something that to be focused on and at the end in the meantime there really isn't a party that is able to carry japan's interests and um regarding uh north korea and japan's interests are actually major concerns for regional stability and the lack of clarity about what exactly denuclearization is what the timeline is um but at the same time a lot of um hypothetical talk about reconciliation for potential reunification what kind of economic existence there could be no latter there is already um you know pressure uh from for japan to actually contribute to those kind of um reconstruction efforts so it's in a quagmire and i think the situation really remains very much in flux um on the china issue the again this this is at we're starting from a a threshold of negative threshold going to a positive we're going from a relationship that was very very much acrimonious to something that is um within the realm of acceptability in in the region and one of the reasons of course is uh the two sides have um shared economic interests and shared economic concerns about the fallout from the um persisting um us trade policy uh but at the same time even if there wasn't a um trade dispute uh such a major trade dispute and the threat of terror from the united states china again we're facing a uh considerable slowdown in the chinese economy um and that will continue to be a burden on the chinese leadership and the china is not simply reaching out to japan it's also reaching out to india and to other countries as well and so we will continue to see this kind of um reconciliation between china this charm diplomacy that that china is moving forward with of course um this could uh turn on a dime my concern really is this um this um continued divide in public sentiment between japan and china and um how that can actually be reconciled if i could add just one anecdotal information i was actually um in new delhi last week for a conference um that was organized in part by the indian foreign ministry and at the one of the conference um one of the panel discussions was actually about the india pacific um security regime and the panelists were actually um the admirals of japan the quad the japan united states australia india moderator was a was british and there was also participation from a french admiral as well um as you can probably imagine in a public forum in india none of them were going to go out of their way to say anything controversial but at the same time it was clear that they wanted to present this unified uh position speak with one voice and what was that one voice that one voice was to talk about the threat of china and the rise of china and the need for the quad to actually cooperate together to uh take to um take it from position against Beijing and that is going to be the challenge again going back to what um i said at the beginning to what extent will japan be able to decouple its relations with uh with china on the one hand have strong trade and economic relations whilst continuing to view china as a uh not just a strategic rival but as a military threat as well okay um okay um eric um just simple prediction is there going to be a us japan trade banana whatever you want to call it um this year and how does your and use a yes or no question and then how does that uh your judgment on that affect um the ability of the us in japan to positively or negatively to work on other things in first of all in the in the trade and economic realm um whether it's the trilateral um work with the e you on on the agenda you know forced technology transfer and subsidization and state and enterprises and wto reform or or broader things in the alliance that that they could be working on other than this which is going to take a lot of so first yes or no question is there going to be a deal or not well i guess so i think the odds the odds of an agreement of some kind that the trump administration will claim as a victory by the end of the year are decent whether that is a comprehensive free trade agreement i would say the odds of that are zero um but it really depends as you all of these negotiations first and foremost uh what is the trump administration really want um the trump administration set up you know the nafta renegotiation as if it was going to uh kind of de novo entirely new agreement that would fix all of the ill-defined problems of nafta and you know render our trade balances even with canada and mexico in the end what you got was a kind of tpp gloss on the existing agreement with some additional protectionist elements uh in the auto sector so very far from what was originally promised in part because i think the trump administration came to understand the depths of the resistance it was getting from virtually all us economic constituencies in the case of the us ro k fta uh i think the north korean the need to maintain positive relationships with korea in the face of the challenge of north korea i think was also moderating factor uh and the desire not to have to take it to back to the hill under tpa so you know just a really modest and frankly meaningless uh of that agreement so the question is is is that going to happen with japan is it going to be kind of just getting the things that we would have gotten under tpp but lost out because of our incredibly bad decision to pull out or are we going to upset the apple cart and really put the screws to abe and the japanese using the threat of auto tariffs to get substantially greater liberalization uh and to impose some kind of managed trade in the auto sector which is what it would take really to make a dent in the bilateral trade deficit uh and the answer is we really don't know what the trump administration's bottom line is if they're prepared to be reasonable if they're prepared to have a phased series of agreements that are within the sort of political uh space that abe has available at the moment you could certainly get uh the first of these agreements by the end of the year yes or no do you think there's going to be a trade deal this year and how does it affect the ability for the trade or else well if i could really move probably wouldn't be in this job um but um around this panel you're supposed to predict um take a wild guess march japanese strategy i think on and delay as much as possible in bilat that it um has to do with the united states um bear in mind that it was only um until until last autumn japan really made public that it was it had no interest in having a bilateral deal with the united states that it wanted to bring um the united states back into the fold of tpp and pursue a multilateral um approach to doing getting into a deal um that has been overturned and so it's pursuing this um bilateral agreement so in light of the um current uh i i don't want to say instability um the the prior the the um japan would be smart i think to take advantage of the fact that the united states has is is pursuing trade deals on multiple fronts with a lot of restrictions some of them self imposed and to have the stall and delay tactic um i think it can overcome 2019 we're going into an election year and so it will be even more difficult to have a trade deal in place so i i would think that that would be the strategy that would be making this sense okay um nakayama sensei you can also address that but i i also wanted to ask uh you um this trade issue a clear threat to the u.s. japan alliance in 2019 than something else uh you know the possibility of a fallout over any of the issues we've already discussed you know north korea or russia or or some problem in okinawa or the just the absence of of jim mattis or something else that could that could uh unstate destabilize the alliance what's the biggest risk of the alliance this year well simply put the biggest crisis that japan can face is the u.s. japan relations of crumbling you know china is a problem dpr k is a problem and the whole point about u.s. japan alliance and the relations is to deal with those kind of situations we know that crisis out there but if that's basis the root uh you know the rock part salt part would sort of crumble down that that would be the biggest crisis and what's the potential dangers in managing the u.s. japan relations which i think it is huge and i think prime minister abe and his team understands that well first of all the best that you know the japanese bureaucracy is good at is the delaying and we're in a full mode of training but i i guess the u.s. side understands that already so we think that part is kind of over so we have announced that we are buying a hundred more additional f35 uh yes we do need them but is it really f35s no there's a question about that but people are being so quiet silent because we kind of know what what that's about and as long as u.s. china negotiations is you know is is is is not settled i think u.s. tr is not fully in position to deal with japan and it seems like it is too you know going on so and uh goto some mentioned when the election season comes in things would slow down on the u.s. side so not a delaying tactic you know that's that you know that part is over but trying to sort of you know is a delaying tactic but slow down do other things i think that's how we're going to sort of but at the last point if we have to do it i think the other is not that u.s. put tariffs on cars that may ignite i'm going to bring the audience in but before i do so think of your questions but but um but let me just ask one final question that i at least in my mind sort of links the economic and the strategic which is um whether there is a tension between uh japan's more conciliatory approach towards a specific initiative of china's which is the belton road initiative and the interest in working together to find projects and so forth which is part of the part of the uh the the warming um of the two countries between that and the quest japan interest in the free and open indopacific which in the u.s. case seems to largely focus on pushing back against belton road or at least offering an alternative to belton road that in terms of the content of the free and open indopacific there isn't a lot else at the moment other than trying to find some alternative to belton road is there any tension there in the relationship for anybody down the line you could start simple we're going to do both be tough and try to sort of cooperate with china at the same time and managing that is i think the the toughest task that japanese diplomacy has at the moment uh we were urging us to be tough on china uh the situation now is that you know be careful what you wish for you just might get it and uh there might be a moment where u.s. becomes too tough on china and we sort of background so many people although we're very skeptical about china's rise that you see this kind of discourse a narrative uh uh uh rising in japan that japan has to play the role of a mediator not neutral we're on the u.s. side but try to calm down the situation but at the same time we have to be careful so that's the delicate person in the industry i agree that um japan has to do both and both in so far as it has to be part it is really um um on a project by project basis opportunities both in belgium road as well as in the pacific um bear in mind there is a huge infrastructure investment gap that even if both um plans were to materialize in full that's still wouldn't need the gap um that is uh needed in um asia and as well as in latin america and africa japan remains the um uh a powerhouse and investments in latin america it also provides quality financing um that kind of um quality over quantity will really continue to define uh japan's aid effect that will be should be the uh just one word on that i think the japanese strategy on both the indopacific and belton road is very sensible they have uh been somewhat more enthusiastic about the indopacific a little more cautious on supporting the belton road but in both cases i think the true incentive of the japanese government is to avoid creating problems in the china or us relationships and they view sort of collaboration on infrastructure projects either under the indopacific and particularly under the belton road as highly problematic for a lot of very sensible reasons and there's going to be less that meets the eye with both in terms of japan's collaboration they'll probably be more going on and maybe even more going on in the indopacific even though it's a concept that lacks substance just because of the serious problems of actually doing collaboration with china and many of these projects so many of which have run into problems with recipient government so i think they're uh being positive but cautious and and balancing it pretty well all right i'm gonna ask folks in the audience if you have a question please um raise your hand and uh i might be brought to you uh okay right up here in the front and then stay in the back um my question is the um the u.s. japan trade um bilateral trade um negotiation and uh related to um the uh call licenses keynote speech and um looking at the agreements uh between uh among the us china then mexico of the four us mca um one of the problematic rules is um it's actually tries to kind of prevent uh any country from concluding a trade agreement with china um and uh you can guess that that might you know us may raise the same demand to japan during uh by lateral trade negotiation but if this happens it will make our step not work and uh it will make it impossible for to expand tpp into china and so uh so kawaii sense is like argument of using tpp for encouraging china for reform that would not work so um how do you think uh should japan uh try to dodge that kind of demand from japan uh from us at the poison pill provision the premise that us here is probably going to ask japan to adopt something like that um and how does japan respond yeah i mean i think this is a great example of you know of the trump administration laying out an extremely tough policy demand that the canadiens and the mexicans clearly didn't care that much about they had bigger fish to fry and getting that agreement done and avoiding the disaster that it would pose if uh nafta collapsed um but this is you know potentially quite problematic for japan with regard to arsep so whether the us is prepared to put abe and that kind of a difficult position in addition to all the sensitivities involved in the negotiation beyond that is a great question and whether the us thinks that it can make all of its trading partners choose between uh deepening economic ties with the us and freezing them with china that historically has been something that nobody in the region wants the us to do there's no reason to think they are any more enthusiastic about that us demand now particularly given how uh utterly unreliable we are so that to me sounds like picking a fight that is not in our interest uh or in japan's interest um but if we don't make that demand the best doesn't make that demand people will say why is it in the best mca and not in the japan agreement so i think it's a gigantic headache i think it's going to be problematic for japan and it's you know just another reason this negotiation is going to be a complete nightmare can i can i just add um bear in mind it doesn't say china per se it's non-market economy so one way that could uh skirt this issue could be to define a non-market economy perhaps a wording of non-market economy in transition but china is trying to solve but um adantic society um i completely agree it is a tremendous problem and uh japan will um ought to um do it's avoid um having this clause in uh another perhaps way to to avoid it impacting our set is to say um not in negotiating with non-market because it's moving forward that i that existing um current negotiations won't be impacted and if you don't understand this boils down to the question of words and the balance that the trump administration is something that really um it it it does more harm than good in forging alliances okay thanks there was a hand way in the back please identify yourself hi thank you my name is jung from radio free asia question about the north korea despite of the upcoming second summit us and north korea but still the fully denuclearization is going to be a long way and just skeptical at this time but at this time then maybe the couple things could be um uh agreed uh us and north korea for example the icbm dismantling the icbm something like that but that that one is not enough for the japanese government i think you mentioned short range and long range short range middle missile is still the treatment to the japan uh now but i want to ask you that what uh japanese government can ask to the trump administration uh to maximize uh japanese own national interest well i guess we'd have to uh ask the trump negotiation team to be uh you know tough on north korea include short term uh short and mid-range missiles in the negotiations uh although the term maximum effort is almost gone uh that we we have to keep on emphasizing putting pressure to a certain degree uh but if it all doesn't work out we'd have to do the negotiation ourself i guess uh sort of short and mid-range missiles uh are not a direct threat to the united states of course that would uh you know shake you know japanese trust towards the us to a certain degree but uh you know uh we'd have to take care of the situation also i think uh in order to do that uh there is a willingness on the uh the japanese side in the leadership that there has to be some kind of direct talks with the north korean side uh in order to sort of prepare for that kind of situation so i think that's that's the only way to go i think minji reiser global peace services usa this is a panel on foreign policy and i'm curious what you can tell us about japanese policy towards some contested parts of the world for example the arab israeli palestinian dispute challenges in austria poland and hungary in terms of the direction of the governments is japan really trying to stay away from saying very much is it working behind the scenes i'm curious what impact the the shifts and policies in some of these areas have on japanese diplomacy it's a good question because we we've focused a lot on not just today but in the last couple of years and looking at our base foreign policy on you know the end of pacific region and what he's doing there but what about these other challenges in the world that japan's going to step up and and play more of an assertive role these are important issues that is it interested as involved i don't know if i have the expertise to fully answer to your question but although japan is not a superpower we'd like to see ourselves as a a country with a global scope interested in various issues so i said that we doubled down on the trump administration u.s. japan alliance and all that but at the same time uh we're a strong supporter of paris agreement uh you know e u e p a t p p eleven uh jcpoa although we're not a member of that we strongly support that so we are very interested in uh maintaining the global norms so i you know i'm sure the embassy will like this i'm saying this but i wasn't particularly in favor of japan withdrawing from the i wc international waiting commission you know if you don't like it just pulled out i don't think that was right but there are some you know political reasons for that and all the countries have those kind of issues but you know that putting that aside i think we are very much interested in playing the role of you know like uh uh goto san said you used the word sort of stabilize stabilize but you know the region that we're living in is so dynamic and dangerous so honestly speaking i think we're preoccupied with our region directly you know actually japan doing something so when there was a talk about peace and security legislation in 2012-13 period there was many elements according to the sort of the recommendation there were lots of a part mentioning about japan playing a more bigger role in collective security in u n operations and all that but that sort of faded out because we live in a tough region we have to take care of ourselves first so that mentality is surely there but in abstract we're interested in becoming a country with a global scope but that doesn't necessarily mean that we play an active role in condemning the saudi for the kashou you must murder can still have aspirations to become a permanent member of the united nations security council officially we do uh the prime minister i believe uh announces it in the unga every year i think the prospects of it is getting dimmer but because i still think uh you know the the phrase that yoichi finabashi sort of came a coin uh uh the global civilian power is i think the right model that japan should pursue that doesn't mean we're not going to focus on on security and all that but the kind of image that we have of ourselves uh i think the term global civilian power although it's an old term i think it's still and becoming a member of uh you know a permanent member of u n so fits into that so we're still pursuing that but that's the momentum itself is not on the japanese but the whole reform process of course trump okay um actually i should mention if it hasn't been mentioned already today if i've missed it that japan is hosting its fifth or sixth tea cad meeting the africa conference this year than one of the many summits it's doing this year so it does at least on issues that are you know more distant than than its immediate neighbor uh try to play a role um but uh but on those issues i don't see as much yeah involvement um okay other other questions yes ma'am that may be there may be one more after that and then we probably wrap up right hi chi-a-ching with united a new group taiwan um just a question that taiwan government has been expressing the will to join cptp what does taiwan have to do to gain other country's support especially japan thank you let me ask eric to answer that question but but then if i can just add part b to that question a corollary which is is it time for the us to consider a bilateral ft whatever because it probably can't be called an agreement or whatever with taiwan uh since the first question wasn't hard enough you had to make it 10 times as hard um on the easier of the two questions on taiwan's interest in tpp i think the problem is that china is willing to invest considerable political and diplomatic resources to deterring tpp members from welcoming taiwan into tpp the us of course is no longer part of this uh decision making process um but i do think china would pull out pull out all the stops to get um tpp members to understand that uh china would seek to punish champions of taiwan's inclusion um obviously i don't agree at all with that position taken by china but i think we should expect that um and as as i think co license i mentioned earlier you know maybe a more likely model if you think about wto accession and apac membership and other things of that kind would be a kind of a joint entry china and taiwan entering tpp at the same time as one potential way of coming at the problem uh in limiting the blowback obviously that uh delays this prospect very substantially so um but i hope i'm wrong about that but uh i'm not sure seven members want to deal with the blowback from the chinese on that um but you know maybe maybe they will be prepared to do that um and then on the us taiwan fta or uh economic agreement side um you know it's interesting it's a partly there's the bandwidth question um but i certainly think uh especially given the trump administration's willingness to create problems with in the us china relationship um it ought to be a more permissive environment to explore the possibility of a bilateral trade agreement i think that we still have the agricultural politics that have been such a stumbling block in us taiwan trade relations for many years including beef and pork so i think um taiwan would need to make a very strong case and have strong allies particularly in the ag community in the us um and be where you could get i mean i i think it would be well worth trying and and i think taiwan should should bring an ambitious package to the table to see if the trump administration would be willing to take it up okay well answered any final burning oh sorry can i just add to the taiwan question um i was in taipei um in december and what struck me was not only at meetings at the trade and economic ministries but also as council at the national security council at all levels there's this whole issue of the national and taiwan's interest uh to join cptpp and to have a bilateral trade agreement with the united states that it is more than an economic interest it really is a secure necessity as well that said this is something that's going to be negotiated on a trade ministry basis and whilst the taiwan's um position in the international arena has become increasingly uh challenging over the last year or so um the negotiators are going to be focused on the economic issues and as eric said some of the issues that remain sticking points in this remain unchanged not just from the trump administration that during the obama administration for that um and so whilst there is recognition of taiwan's interest to pursue this um it will be difficult unless taiwan is really able to significant concessions um on pork in in particular and i'm not sure whether that kind of interest is really been pressed on the taiwanese side one thing that could help taiwan i believe is whether or not there is a um uh final deal or not a formal um expression of both sides both the united states and taiwan to have some kind of trade uh formalized trade um deal would help taiwan in raising its stake in and but hold in the international arena so that could be one um step that i could pursue okay i think we're out of time but i'm gonna ask one more quick lightning round question to everybody on the panel which is we mentioned the g20 we mentioned t cad but rugby world cup to which point will japan's team reach will it win will it get to the final will get to the semi-final a quarter-final i can't decide we were never really graded but there are some hopes we don't know whether we will win but at least we can we're in a position that we can compete a quarter-final semi-final finals finals we have a prediction anybody else want to stick their neck out and okay so um i went to graduate school at wasada and wasada university has the strongest um rugby team in japan therefore um i'm very solid so yeah i have the best while i'm rugby team in japan and um i i am a fan of the wasada rugby team i am a fan of the japanese rugby team i know nothing about the rules and i don't know how you win but hey um definitely the semi-finals because just because eric want to stick your neck out pan all the way yeah win there we go okay we'll we'll invite you back next year and we'll check on that prediction among the others but a terrific panel thank you so much please join me in thanking the panel and again before before jim wraps up let me say on behalf of the japan america society of washington thanks to the carnagy endowment thanks to neijazz thanks to all of you for coming we really appreciate your support and your attention so late in the afternoon so thanks so much thank you matt i i couldn't say it better myself so i will leave it there thanks to all of you for for coming out this concludes our japan in 2019 it's been a full day a very productive day and that's thanks to our all of our panelists and speakers and to your participation as well thank you very much