 Good morning, everybody. Good morning. Can you hear me? Audio's okay. Ohayou gozaimasu. Thank you. Good morning, everybody. Let me start by acknowledging and celebrating the first Australians on whose traditional lands we meet, and let us pay our respects to their elders past and present. So welcome to this year's Japan update, themed Peak Japan. So I'm Shiro Armstrong. I direct the Australia Japan Research Centre here at the Crawford School at ANU, and I'm really pleased to co-organise this one-day symposium with Fujiwara Ipe from Keio and ANU, who is the Japan Director for the Australia Japan Research Centre, and Professor Veronica Taylor, who's the Director of the Japan Institute here at the ANU. So as with the Japan update each year, we have a panel on the economy to bring you up to date on some of the latest thinking and research on the economy, a panel on politics and foreign policy, and also a panel on society, an aspect on society. And this year, that panel will focus on the demographic challenges that Japan faces. That's part of the reason behind the theme, Peak Japan. Japan's population peaked 10 years ago. Working-age population peaked earlier than that, about 20 years ago from today. And some might think that Japan's economic strength peaked with the asset bubble bursting at the beginning of the 1990s. It didn't. And the theme we're discussing today isn't peaked Japan, it's peaked Japan. So what we're thinking with that is really Japan at the top of its game. In many ways, Japan is in peak form. So as we all know, or most of us probably know too well, Japan's very prosperous and secure society. It's one of the most technologically advanced, cleanest and rich countries in the world, including being very culturally rich. So Japan has escaped deflation and its economy has become stronger. Japan has had stable political leadership now for close to six years. Before that, there were six prime ministers in six years. So we seem to have caught Japan's disease and Japan's gotten rid of itself of that disease. And Prime Minister Abe has managed the U.S. relationship under Trump, as well as any foreign leader has. He's been very active diplomatically. He's also laid the groundwork for improved relations with China. And as due to visit China and visit Beijing in October with a large business delegation. But also Japan's shown leadership in trade in holding the line on the global economic order against the protectionist threat from the United States and elsewhere. And for us in our region, that's the basis for our prosperity. Japan, with some help from Australia, of course, led the conclusion of the Trans-Pacific Partnership Agreement without the United States. And that's the TPP-11 or the CP TPP. Japan also concluded an EPA Economic Partnership Agreement with the European Union. It was also the first non-Azian country to host the ministerial meeting for the Regional Comprehensive Economic Partnership Agreement, ASAP. Now, the second worst acronym behind CP TPP. But of course, all these successes, Japan still has challenges. It's not so much that the population is peaked. That is, presents some problems. But more importantly, it's that the population is aging. So we'll hear a lot about that this afternoon. But how Japan manages this demographic transition matters, of course, for Japan, matters for us here in Australia, matters for the region, but globally as well. Japan is systemically important in the global economy. But also, South Korea and China and other countries will be watching how Japan handles this transition and learning from Japan's policy innovations and the transition. But this will involve big social changes. They'll be at the forefront of this transition. One of them will be the equal treatment of women in the workplace and in society. You'll notice in the program today, two of our panels, we have men in the minority. So that's all too rare in Japan. Japan will have to manage the unprecedented government debt of 240% of GDP. That'll be a big challenge. And the close relationship that Prime Minister Abe has with President Trump may not count for much at the end of the day, given the randomness in policy direction out of Washington. And moving beyond a temporary repair of the China relationship will be a big challenge for Japan going forward. So things have calmed down a little bit from last year when North Korea launched missiles into Japanese airspace. But the underlying crisis has yet to be resolved. So these are some of the issues that we'll be talking about today. And we're joined by an expert group flown in from the United States and Japan and around Australia as well. So we're really delighted to have our guests, expert guests joining us today. And we'll notice we've got a mixture of academics, think tankers, people from the media, and practitioners. So I think it's a good mix and hopefully will mean a good discussion. I just want to thank the Australia Japan Foundation for the funding support as well as the Japan Foundation, which makes this possible. It makes it possible on this scale that we want to run it at. I acknowledge the presence of Ambassador Kusaka and Mrs. Kusaka here who are very strong supporters of our Japan update, but our ongoing work on Japan and the Australia Japan relationship here at the ANU. So we have a magazine, East Asia Forum Quarterly, which we launch every year at the update. That's titled Peak Japan. That's almost just in time delivery. It's coming from the printers as we speak. So we'll be here in the morning tea break. But for now, let me welcome the chair of the Australia Japan Foundation, former ambassador to Japan, Myra McLean to introduce our keynote speaker. Thank you. Thank you very much, Shiro. And let me acknowledge Ambassador Kusaka and Mrs. Kusaka. It's a wonderful pleasure once again to be here on behalf of the Australia Japan Foundation at this Japan update. The Australia Japan Foundation, which for those of you who may not be aware, is a government-funded body that provides grants to encourage non-official contact between Australia and Japan. Has been a founding partner of the Japan update, and we have in each year been very pleased with the tremendous variety and expertise that has been on display and the fruitful discussions that have been held each time. So the Australia Japan Foundation is obviously very pleased to once again be here to support this event. Let me very briefly introduce our very distinguished keynote speaker, Dr. Sheila Smith, who told me when we were sitting down earlier that she was born in Scotland, which I'm very pleased about because a lot of Scottish heritage is here in Australia, not least in my own family. But of course she's an American through and through and very much a central part of the Council on Foreign Relations where she is the Senior Fellow for Japan Studies. Director of the Japan Studies Programme and the project of the Asian Nationalisms and the U.S.-Japan Alliance. She's a contributor to the Council on Foreign Relations .org, and the CFR's blog on Asia, Asia Unbound and Author of Intimate Rivals, Japan's Domestic Politics and the Rise of China published by Columbia Press in 2015. I understand she shortly will be publishing her latest book Japan Re-Armed The Politics of Military Power which will be published by Harvard and that will be a book that will be very timely indeed and I'm sure will to a certain extent or in fact quite a significant extent will probably be the theme of her discussions today in part at least. She is an extremely knowledgeable expert on Japan's Foreign Policy and Security Policy and at a time where the region is so unsettled if I can put it that way with the growth of China, with the North Korean crisis and with the doubts pervading about Trump's foreign policy in the region this conference and her address I'm sure will be extremely timely. Let me please join me in welcoming Sheila. Thank you very much. Thank you for that lovely introduction. It's great to be here in Australia. It takes a long time to reach you but I have been looking forward to reaching you for some time now. I want to thank Professor Armstrong and Professor Drysdale who is somewhere there you are. And also to the Australian Japan Research Center everyone here for making my trip and my visit and today possible. I'm particularly honored to be partnered with Ambassador McLean, chair of the Australia Japan Foundation and also to see Mr. and Mrs. Ambassador and Mrs. Kusaka again. If our conversation at the Ambassador's residence last night is any indicator of today's conversation we are going to have a very lively exchange. I was asked to come and talk and I wasn't quite sure what peak Japan meant. So I was on my long airplane drive thinking peak Japan what does that mean and I understand the demographic reference but I was starting to think as an international relations scholar is apt to think about peaks and valleys and topography and landscapes and terrain and uncertainty. So I'm going to talk a little bit today about what I see as Japan's challenges going forward. I don't think Japan actually is as challenged as some writers think but it does have some significant new challenges that I think will ask new questions of Japanese decision makers but also of the Japanese people as they attempt to devise their own well-being prosperity and safeguard their security in the years to come. It is a difficult landscape here in the Asia Pacific not least of all it has been made more difficult in the last year and a half by the unpredictability of my country and I apologize for that but as you know democracies are unpredictable and I've been watching the Australian conversation about your democracy with some interest so to each their own I can't take full responsibility for mine but I will attempt to at least try to explain it but I think there's every reason to feel confident that Japan will demonstrate the skill that it has always demonstrated diplomatically and I think it's one of the underestimated aspects of Japanese foreign policy is the skill to which not only the diplomats Ambassador Kusaka among them but the Japanese politicians are able to adapt and reform and meet the new challenges in the international environment but there are some things we can talk about today and I'm going to talk about five of those. We have policy reform issues at home of course, how Japan manages its demography, how Japan sustains its economic growth, how it basically thinks about its political system how it deals with leadership challenges all of these matter in terms of how it will implement some of the things that I'm about to talk about but we have a full day of conversation and other experts to grapple with that what I thought I would do this morning to start us off is to talk about Japan. Japan can't control like any other nation even the United States, can't control everything that comes its way the question is what is coming its way what is different, what are the instruments it can bring to bear and where do I think there is maybe some need to reconsider some of the supports that Japan has had in the past one of which is the alliance with the United States so I have five priorities that I considered really important for Japan's future I have four of them, the last one is really about economics trade the global liberal order and I think we're going to get into that in more detail later and I am not an economist so I will leave that to others but let me share with you the five priorities that I think may be the most important for Tokyo. The first is will Japan and China manage to stabilize their relations sufficiently so that the balance of power between them doesn't become the underpinning of crises distrust and suspicion we could easily imagine and several years ago we did imagine that this was a relationship that was fairly doomed to recurrent crisis but I think we're on a little bit of steadier footing today I don't know that we know yet whether that steady footing will hold whether the foundation of Japan-China relations will remain stable and predictable or whether we're going to see just in and out phases of manageability and crisis so China-Japan relations I think are one of the hugest priorities I think for Japanese decision makers the second is clearly the North Korean missile and nuclear threat it goes without saying and we say it in Washington all the time that if you are looking for any situation that might result in military conflict in Asia it's most likely to be on the Korean peninsula post-Singapore summit I am not relieved of the anxiety I'm not sure we have solved the problem unlike President Trump who thinks that the nuclear threat has been diminished I think it has been temporarily receded we are in a better place than we were in 2017 when the missiles were flying but I'm not sure we've solved the problem and so for Japan it's two-folded one is obviously the missile threat every other country in Northeast Asia has the capacity to retaliate except for Japan and that was a deliberate choice by the Japanese I'm not sure that choice is going to hold and I'll leave that discussion to our Q&A session the missile threat is one piece of the puzzle but the other piece is obviously the nuclear threat and that gets at the heart of the extended deterrent of the United States again something that we're going to have to think carefully about something that Japanese decision makers and policy makers have been engaging US policy makers with now carefully for a number of years whether or not they are comfortable with the extent of American capability to exercise the nuclear deterrent so there's two facets of the North Korea challenge one is the immediacy of the missile threat the second is this longer term structural question about whether extended deterrence is sufficient the third priority I would suggest for Japan is can it build partnerships across Asia that will help it manage along with others and it will also include regional relations in a way that mitigates at least the impact of China's rising influence I'm not saying contain China obviously but I'm thinking that there is a need for regional government structures be they in the economy be they in security or in the diplomatic sphere and we have relied largely on the ASEAN centric notion of multilateralism for the region I feel that the ASEAN is weaker today it may not be up to the challenge of major power competition in the Asia Pacific it may not and we have to at least openly talk about what is to be done if it is not and one of those pieces of the puzzle and I think it has been very well articulated in the Indo-Pacific strategy by Japan embraced now in Australia especially out in western Australia yay Gordon but and also now being initially embraced by the Trump administration as the framing of Trump's Asia strategy I wrote very early on at the invitation of ANU that I wasn't quite sure Trump was ever going to have an Asia strategy and I am changing my mind we have seen now I think in Secretary of State Pompeo's articulation a fairly clear American engagement with the idea of an Indo-Pacific strategy and I am not an Indian specialist by any means but clearly Prime Minister Modi has embraced an Indo-Pacific concept they may be slightly different visions but I think this is where the Japanese initiative on the Indo-Pacific could really bear fruit but I think we have two competing visions here of what kind of structures we are seeing emerge to deal with the myriad challenges in the region fourth and this is the one where I am sure you want me to talk most about and that is whether the U.S. Japan alliance is up to the task this is a very difficult challenge for our policy makers at the moment but it is a very difficult challenge I think for our alliances in general in the region there is a lot of pressure being put on the U.S. alliances be it the U.S. alliance with Japan or even more visibly with the U.S. alliance with South Korea and there is some new intellectual thinking that needs to go into those alliances should we actually see a negotiation with North Korea bear fruit I think the U.S. Australia alliance is on very firm terms so I am not worried I don't know if that is good or bad for this audience I am not worried about our alliance but I think in Northeast Asia there are significant changes here that need to be accommodated by our alliance the flip side of this for Japan though is will America is changing political understanding of its obligations abroad especially its commitments through article 5 protection of its allies are these fundamentally altering in the United States and if so that raises some very significant challenges, problems, questions of decision makers and then finally and I am not going to belabor the point we all understand it here the global trading order global liberal economic order maybe deeply threatened by economic nationalism led by none other than us I am not going to get into that too much here we can talk about it if you would like to in the Q&A I am happy to do that but I will leave that to our economists to discuss later so let me focus a little bit on the first four and share a couple of thoughts in the idea that we will talk about more openly together in a few minutes with Ambassador Murray here with Murray rather I am sorry I wrote a book a couple of years ago on Japan-China relations mostly from the perspective of looking at domestic politics in Japan and how that was shaping the perceptions of China I think we have seen a fair amount of policy adaptation in Japan and I got the book was translated last spring into Japanese and I went and I had a lovely book launch in Tokyo and many Japanese academics were there to help me celebrate the book but every one of them said to me why are you so critical of Japan I talked about policy adaptation and I was talking about it's not accommodation it's not confrontation it is what we would expect when power relations shift it is adaptation and it's the same thing the United States is doing you have a new significant center of economic and political and now military power you will adapt you have to so for me that was a neutral term but in Tokyo it was viewed with criticism that I was saying that Japan was adapting and that was a bad thing just so we all are clear here I think it's a positive and I mean it in a positive but neutral sense the adaptation in Tokyo though has been ad hoc it's been issue by issue and I think you're only now beginning to see strategic underpinnings of a fairly significant shift of Japanese thinking about how it's going to live in the region how it's going to build relations with China as much as possible and it's how it's going to think about the military implications of China's military power I think military tensions worried both Xi Jinping and Abe Shinzo which led to their meeting at the APEC and led to the discussion that was ongoing for years on risk reduction in the East China Sea that conversation in and of itself is positive it's not necessarily going to avoid tensions or military crises but it is a better place than where we were in 2012 I think the Prime Minister of Japan has also been very adroit and astute in making sure that the economic underpinnings of the relationship got back on track to embed the relationship and the economic benefits of both countries I think as Shiro said in October the Prime Minister visited Beijing and I think again you're going to see a reassertion of the economic interest the common interest, shared interest between the Japanese and Chinese that has been the steadying force I think in that bilateral relationship but other things have changed too both President Trump and President Obama have reasserted American Article 5 protections that they extend to the Senkaku Islands and that has helped Beijing achieve some clarity on the military pressures that they may put on the islands in the East China Sea so the alliance has also adapted and we have now a fairly good conversation not possibly as good as it could be but good conversation on how do we de-escalate crises before they reach the level of military tensions and so the alliance now is not just about defense and deterrence it's also about making sure that crises don't rise to the level that they rose in 2012 where we were seriously concerned about some kind of miscalculation again I won't belabor the point here but I'm looking forward to the October visit of Prime Minister Abe to Beijing to see also how China and Japan talk about the region how Obor or the the Belt and Road Initiative meets the free and open and reciprocal Indo-Pacific and so I think all of us should listen to the rhetoric and listen to the statements and I suspect we'll hear slight dissonance we might have a very friendly meeting but a very different interpretation of the economic potential and the roles of both countries in the Asia Pacific and I'm looking forward to hearing that so second challenge North Korea I don't know what to say about North Korea I lived in Washington throughout the 2016-2017 iterated accelerated missile tests we could talk all about reactions to that but you lived in the region you know them as well as anybody so I won't go over that history we all know that the bulk of those missiles were aimed in Japan's direction and they were no longer pseudo civilian tests of satellite launches they were clearly missile tests they were military tests and they were designed in a way to make Japan very aware of the fact that North Korea not only had one or two missiles and I think that message was received loud and clear I think our government decided that it was not to be accepted as did the Japanese government I think we had an interesting moment in the fact that the South Koreans didn't have leadership on the ground at that time so Japan-U.S. conversation was the preeminent response by the alliances to that initial testing of Kim Jong Un I think what we've got now is what we saw on display in 2017 was an unprecedented level of synchronized military signaling by both alliances you saw military exercises being conducted in Korea in response to a launch over Japan you saw Japanese missile defense exercises synchronized by the U.S. ROK missiles on the second long-range test so it was an interesting moment I think U.S. and Japanese forces were trying to push the envelope a little bit with their South Korean colleagues more explicitly together but as we all know here that's a tender topic for South Koreans and so we didn't see that move into a full trilateralized military demonstration of the alliance response then we had the surprise of the Singapore summit I'm not here to say it was wrong of the president to meet with Kim Jong Un I in fact thought that was not a bad idea we have had every kind of negotiation with North Korea except at the leadership level it was worth a try in my book what came out of it though from the very initial statement by President Trump after the meeting with Kim Jong Un what came out of it was alarming to me and I suspect it was deeply unsettling in Tokyo and that was the statement by our president that war war games war games were provocative and not only that they were expensive so you had two messages from the United States to its ally in South Korea one the North Koreans had it right we didn't have a legitimate right to do these exercises and two the burden sharing argument was front and center after diplomacy immediate diplomacy with Kim Jong Un bad mistake both of them in my view we can certainly debate that more alarming though was the president's statement that the nuclear threat was taken care of and what I think you've had since the Singapore summit till now is I think you've had a very serious effort by Secretary of State Pompeo to make Kim Jong Un make good on his promises but it has not reaped much benefit so we now have a situation in which there's no immediate military threat but there's no resolution of the military problem and I suspect the longer that goes on the more uncomfortable it will be in Tokyo and I hope that somewhere along the way we'll start to see something the gears mesh the president has announced that he's not going to really take it on now until after China in the United States resolve their trade dispute so it has become a very complicated story it is no longer a story of defense and deterrence which is in my view what it should be it is now a very difficult story embroiled with the US relationship with China again if I were sitting in Tokyo I would be uneasy we can talk about the what ifs there's several scenarios we can spin out from here on North Korea none of them I think are particularly positive for Japan but we can let's save that for the discussion Japan and the regional order number three and I'll be very brief here because it's well known in this audience the competitive vision with China's rise may on the surface today be dissipated somewhat in Tokyo but I don't think it's gone and this is where we're on the this is where we have to think about the Asia Pacific in a very concrete sort of way it may now rest on the powers in the Asia Pacific Japan, Australia India and maybe a little bit the United States to lead a conversation about how to avoid that competitive dynamic from becoming the norm I'm hoping it will happen I think Japan has been I think Prime Minister Abe and his team have been exceptional on TPP I was quite happy to see TPP-11 continue and now the CPTPP I was very happy to see the Japan EU trade agreement I think now you're seeing also infrastructure talks with us for the region as well as with Australia and others Japan as I mentioned earlier the Japan India conversation is very constructive as well so I think we're seeing signs here of fairly dynamic and adaptive and positive diplomacy and I hope I'm looking forward to seeing its results I think now we're acting on maritime presence issues with us and with you and with others also very positive I think the largest destroyer is out in the South China Sea today the Kaga, the Izumo was out several months ago I think this is positive for Japan that collective action on maritime security in Asia is the way to go and so I'm looking forward to continuing to watch Japan develop that capacity vision and Japan's framing of it gives us a lot to think about and I will look forward to hearing from those of you here in Australia about what you think of Australia's vision and how we can in the United States continue to articulate that as a priority for the United States there is always that subcurrent of historical memory in the region I see South Korea and China have stepped back a bit from their pressure on Japan it helps that we are somewhat distant from the 70th anniversary of the end of World War II I don't underestimate the power that that kind of diplomacy has however in weakening the region's ability to work together let me then conclude with a few thoughts about the US-Japan partnership I've probably spoken for too long but I will try to make it brief or I could go on about it forever it's a little bit of a handy gap at the moment but the US-Japan alliance of course has been the foundation of Japan's post-war strategy not only in military terms but in economic terms as well and the surface story of the moment of course is the relationship between Prime Minister Abe and President Trump I wrote about it I continue to write about it when invited and so I recognize that's a critical part of Japanese management of our political transition and I appreciate that but I do not think however that that personal relationship is sufficient to ensure that the alliance is strong and so I think we should be realistic and clear about it that it is a necessary but not sufficient condition for a strong US-Japan relationship I think that this is the best and I think I wrote about it in the EFQ it's about to come momentarily it is the best example of alliance management that we've had and I don't say that with any kind of cynicism I think Prime Minister Abe deserves an awful lot of credit it was a risky maneuver it could have gone badly but it didn't it redounded to Japan's benefit and so he deserves credit for that I think it also is to be noted that Prime Minister Abe continues to make sure that that is the mechanism through which he articulates Japan's needs in the alliance and I think that's the right strategy for that process we don't have a normal alliance management structure we have a lot of positions unfilled they are gradually getting filled so we are getting back to what you would normally expect in terms of the way our government works but it is important that that leader channel gets Japan's interests and priorities communicated clearly to the President but the story I think is not all about Trump so if you'll bear with me for a second I'm going to take a step back and take a sweep on the U.S.-Japan alliance over the post-war period and I'll do it very quickly so we won't bore you too much but this is not the first time the United States and Japan have talked about military burden sharing it's not the first time we've talked about our trade deficit we've had moments where that has created deep tensions and frictions in our political system in the United States and likewise in Japan we have weathered them we have adapted on both sides and we have managed to figure it out this time there were two things in the past those moments of tension those claims that the alliance is unfair or inequitable have largely come from our legislative branch they've come from our Congress where the politics of the trade competition or the politics of burden sharing have seen imperative to our elected officials now it's coming from the executive branch and that's important to recognize because it has different implications for how the alliance is managed I think what I feel in Washington is in fact a little bit of pushback from our Congress this is a little footnote I spend more time briefing congressional representatives in the Senate in the House today than I ever had in my 10 years at CFR we get asked by all Republicans Democrats it doesn't matter they ask for us to come and talk to them about Japan and I do it a lot so there's a lot of demand from the Hill on some of these issues and I think that's an interesting engagement because I think our Congress is worried about the state of our alliances but back to the burden sharing and trade we have done this before it's been unpleasant and uncomfortable but the alliance has not ended we've negotiated our way through it we can do it again if we have to I think the 1980s era which was the most uncomfortable was what's still stuck in President Trump's mind he still remembers that era economically in particular and you'll hear it in his references but I think he also has a vision of Japan and its military capability that is lodged in a different era as well so last November when he visited Japan he asked the Prime Minister why he didn't just shoot down those North Korean missiles right okay then this is also not the first US President to deal out shocks to Japan right we can go back to the Nixon administration right one of the things that I think is uneasy even for the Prime Minister is that there were no consultations on Section 232 steel and aluminum there were no consultations on the Singapore summit right and that's very reminiscent of the Nixon shocks we are not calling them the Trump shocks although I did sort of satirically say that in one of my essays and my Japanese colleagues said we don't see it like that we don't see it like that I've said this before and the thing is that we are going to have to be here again the one piece of the puzzle where I feel that we have a lot more homework to be done is if we have a real crisis if we have real military pressure from North Korea and if we can look at last year as some insight into how that would be managed I am actually more positive than you might think because we have such deep integration of our military forces and our security planners but I don't think you would have a situation where the alliance would fail fingers crossed but we are going to have some ugly politics I'm afraid in the fall and maybe into the spring and largely this will revolve around trade but it could also revolve around the North Korea issue what is different I think for Japan today is that episodes like this in the past where the alliance has come has been shaken where confidence in the alliance has been shaken they have usually been in periods of reduced threat they were after the Vietnam war the Guam doctrine Jimmy Carter trying to draw down troops in Korea they were not moments of explicit threat to Japan they are now and so the geopolitical temperature and the American response is very disconnected from these episodes that we've watched the alliance navigate in the past and then about and I'll be looking forward to the conversation we're going to have with our Japanese colleagues in a few minutes I worry then about Japanese anxiety about the predictability or the unpredictability of the United States I worry then that there are serious thinkers in Japan that are beginning to say I'm not sure we should have all our eggs in the US basket and so we've got some real traditional kind of questions about hedging we've got questions about Japan's capacities we've got questions about Japanese military power I think on the horizon that it would be wise for serious thinkers in Tokyo to grapple with and to grapple with out loud because I think it is it is almost it is probably likely that many people in Washington will take for granted that Japan is not worried because Japan doesn't have other options so I think there is some serious thinking to be had in Tokyo I see some of that thinking beginning and I'm hoping that we can talk more about that in the later discussion so let me offer you three basic conclusions about how I look at Japanese foreign policy and its particular challenges it has today there is a question about how much flexibility Japan does have my colleagues in the Japanese government have often said to me we don't have a choice we only have the alliance but I don't think that's true I don't say it in a black and white kind of way I say it is there is a lot of room here for collective action with other partners and I think that's what you're seeing with the Australia-Japan relationship I think that's what you're seeing in other aspects of the Japan-European relationship at the moment and I think that it would be wise for Tokyo to create opportunity for flexibility because I think there is a little bit of a question about the predictability of my country going forward I don't call that hedging I don't call it diversification Japan is very good at diplomatic diversification it always has been whether it's the post-war period or the pre-war period for that matter I think more successful in the post-war so I think that's a good strategy for Japan the second conclusion I'll offer for discussion is Japan is developing more instruments of statecraft and by that I, that's what my subject of my book is and that is the military instrument for the decision makers and it has been in the past that's not to say Japan is turning to the right or Japan is about to attack its neighbors please don't misunderstand me Japan has deployed its military in collective activities that it sees as necessary to sustaining the peaceful order in the Asia-Pacific it has donated those services to the United Nations peacekeeping it understands the importance of having that instrument to communicate its investment regionally and globally I think that's a good thing diplomacy is a skill the Japanese have had in abundance collective action with new partners as I said is the best road I think the economic influence of Japan that economic instrument is the one that is going to be more difficult to wield and that is not because the Japanese are not good at it it's because they have competition China has a lot more economic resources we're watching it, unfold and they are not shy I was watching the leadership meeting with the African nations we all think that actually could be a positive development conversation but we're leery about the way in which China is going to deploy those resources and that influence Japan can't compete with that I'm not sure we can either collectively maybe we can and again those that recalibration of Japanese strategic instruments is probably important to recognize as we move into a potential phase of major power competition let me just conclude on something that is obvious to this audience and that is regional partnerships with or without the United States as an American I believe strongly that with is better but I think for those of you here in the region I understand that with or without these regional partnerships are going to be a priority and so that is not only in bilateral terms that is one of the key differences I think of the increasing closeness of Japan and Australia in terms of how you think and speak and develop opportunities for collaboration across the Asia Pacific it matters it matters particularly given our politics but it matters more importantly for the future peace and stability of the region so thank you very much for having me thank you so much Dr. Smith it's a really fantastic tour de raison we will say and flagging all the major issues and obviously you could have given a keynote speech on all of the points that you made and I think it's very good that this session will be followed immediately after as we are broadening out some of the points that you've been making so we only have 10 minutes for Q and A's before morning tea I wonder if somebody would like to ask the first question please yes Peter thanks very much Sheila for a real tour de force a comprehensive review of where the Japan-U.S. relationship is at as you said the questioning of the alliance relationship and the fussing about the trade deficit is not new but the circumstances under which this is taking place now are really fundamentally different from anything that we've had in the past and one of the circumstances I want to highlight is one that you didn't mention and ask you about is that in which the assault on the trade side is not just an assault on Japan but on the whole system economic security system within which Japan has been nested in the post war period and threatens to bring that down already the trade rules have been broken in this respect and 232 does it again so this is a deep security issue it's not just an economic security issue for Japan and I wonder what you think is the comprehension of that in Washington because at times there seems to be no comprehension of that and what it means for Japan not only managing its relationships with the United States but also its relationship, big relationship extant relationship with China not its potential relationship with China so reflection on that would be most helpful the second question is Indo-Pacific is and you know we all sort of scratch around and think about what our idea of the Indo-Pacific is but I'd like you to spell out a little bit more what you think Washington's idea of the Indo-Pacific is is it principally a maritime security framework arrangement or has it much substance beyond that the substance that Pompeo outlined in Singapore was not much substance really of hard cash on the table and so on and instruments defining instruments for action on the Indo-Pacific so I wonder if you could tell us what Washington's idea of the Indo-Pacific strategy is as always very great question so let me deal with the liberal trading order economic order first and so I think you're right it's not just the U.S. behavior that's challenging the liberal order right and from Japan's perspective in a devastating kind of way I would say it's China but it's both and so one of the things I'm going to be interested in hearing about when Prime Minister Abe goes in October is whether Xi Jinping tries to court Japan as a fellow partner in sustaining the liberal trading order we all watched Xi Jinping speak at Davos about China being the great champion of the liberal trading order but I suspect there will be a little bit of a campaign there on the part of the Chinese to at least rhetorically continue that thrust but I ended my intimate rivals with a couple of paragraphs about what this is really all about for Japan and it is really all about the order within which Japan reasserted its interest in the world stage without the post war order as you point out the way it is Japan is deeply challenged and I don't see and again I'm looking for maybe our colleagues in the next session can address this more directly than I I know that that anxiety exists Peter I don't know and hear much of a debate about well what if what if that's what happens because I think many people don't want to recognize not only in Japan but in Europe as well the thing about Japan though it doesn't have the protection of the European Union right it doesn't have the comfort even though the European Union is under stress there's a partnership there's an economic partnership and Japan would be hard pressed to create a new one that's why I think CPTPP is important that's why I think some of the regional initiatives that the Japanese are pushing for in the region along with Australians and others are so important because that framework of a sturdy regional economic order is probably the right way to think about the what if now I we could spend a long time thinking about the Chinese challenge the post war order I suspect although I can't with great confidence predict I suspect that President Trump will be given a great run for his money if and when because I think it actually is going to be when they announced the 232 application on autos there are so many interests inside the United States that will respond to that and again there are others on the panel today who may have a different view of this so that inside the United States let alone the devastation it would do to our economic relations across Canada, Mexico, Asia will be will be strong and the consumers in the United States will have will feel it fast it may take us years to undo the damage of the imposition of 232 on the auto industry so I think the Americans will rectify this I don't see us going full on economic nationalist beggar neighbor purge but I can't say that with great confidence because I don't think any of us could know exactly how this conversation inside the United States is going to emerge but there will be pushback for sure on autos in a way that there weren't for steel and aluminum one more very brief question we have time for yes thanks again for your comments very interesting you mentioned that you don't think ASEAN would have the might or the ability to assist the regional players in creating a new regional order that could both accommodate or as you would say adapt to the rise of China given if that is the case and Japan's strained relationships with historical reasons with China and South Korea what other option do they really have India I don't think well you said that you think India had a vision of the Indo-Pacific which aligned somewhat with the Australian Japanese and US but my reading of Modi's speech from the Shangri-La Dialogue was a little bit different and we obviously know that they have a long history of non-alignment and whether they help ASEP or make it worse is up for debate so I would like to hear your thoughts on whether Japan should put a full press into the ASEAN region or whether they should prioritise as we all need to other players and if so who would they be and why would be better than ASEAN since time is short I'll try and be very brief no no no no it's me I think I'm answering in a way so let me try to answer succinctly and also in the same way address Peter's question about Indo-Pacific I don't mean to suggest that it's an either or so the ASEAN Japanese commitment to the ASEAN is deep and has been long-standing you can go back to the 1992 support for the ASEAN regional forum Japan has deeply engaged and invested and supported in ASEAN based multilateralism so I'm not saying that Japan is not I think we have to recognize so that the major power competitions that are emerging are putting some strains on the ASEAN especially on the they're dividing maritime from continental there's other kinds of strains afoot it will be very hard for the ASEAN going forward to feel the full brunt of major power competition and again you know better than I that ASEAN was formed to protect the Southeast Asian nations from major power competition right it will be all that they can do to do that I think without taking on the mitigation of the tensions between major powers right so that's the context within which I was talking about ASEAN's challenges Japan I think will continue to play a very strong role in supporting the Southeast Asian nations and in ASEAN institutionally I don't think the Indo-Pacific is an either or either it's in the eye of the beholder the Modi-Abe dialogue is not a complete integration of their visions of an Indo-Pacific overlap there that I think it's constructive I think there's also what's different from Japan's articulation from the United States which is underdeveloped to say politely where we are at the moment in Washington is that Japan looks to Africa I mean the Indo-Pacific has two oceans three continents in the Japanese you know if you look at the MOFA website they're very explicit it's very expansive it's not major powers necessarily it's functions and oceans and continents but it has a very deep resonance Japan's entry into Africa on the other side of the Indian Ocean or the other side of the South Asian is also a very important part of its strategic play with China so connectivity infrastructure development all of these economic components of the Indo-Pacific strategy for Japan have a very significant strategic value I think in terms of Japanese presence the United States doesn't have that we have a very narrow rendition of Indo-Pacific and I think Secretary Pompeo's speech was welcomed because it was it happened and I was happy to see it not be about the South China Sea to be it about our economic interests he didn't use the word connectivity but he talked about digital energy and infrastructure so we're starting to scoot over a little bit to that economic conception of a space in which we can work with Australia and India and Japan across this vast region the strategic vision is not there the closest I heard of a strategic vision was Rex Tillerson's speech early on and as we know that is not the game plan that I hear coming out of Secretary Pompeo so I think it's okay Peter that it's still focused on economics I wouldn't want it to get over abrasive at this point given everything else that's going on Thank you very much Sheila and before I close I just wanted to throw in one little additional issue which perhaps could be discussed in the next session that is Taiwan is really mentioned these days but Taiwan is always there as an issue and could be the touchstone of well it would bring it would draw in the United States back into the region again it would be a move not necessarily a classic invasion by China but perhaps a pressuring of Taiwan and to what does the United States do in that situation and of course what does Japan and Australia do in that situation I'm not expecting you to respond now but perhaps that's something we can talk about a bit later but thank you very very much for your wonderful opening remarks and keynote speech it's really set the tone for the rest of the day again for coming all the way to Canberra, thank you