 Very, very pleased that Senator Gartner is with us today. This is a real privilege to have you here, sir, and say thank you, especially for bringing your daughter Allison. She doesn't normally get to Washington because she's in school, but her dad thought she could use a little civic education. Your teachers will straighten it out when you get home. So as we're on the cusp of a very important decision in the Congress, I rather suspect next week or maybe the week after, we're going to see the House of Representatives take on and pass trade promotion authority, which is that crucial step before we can adopt the Trans-Pacific Partnership, very important development, important for Japan, important for the United States. I would say important for the world because what we're doing is establishing a norms-based system where rule of law, transparency, accountability do process, becomes the foundation for trade. And I think this is going to be a very important development. I'm sure that Senator Gartner is going to get into that a bit with us today. We're very grateful to have him with us. It's, I was just saying, one of the great benefits of democracies is that we have a way of bringing new leaders up, fresh new leaders for the country, and Senator Corey Gardner is one of those leaders. And we're delighted that he's serving at this time. It's not an easy time, and we're glad to have him in this service, also especially because he is the chairman of the Asia Subcommittee in the Senate Foreign Relations Committee. I asked, I said, you know, it's unusual for a senator, a freshman senator to be seeking on a Foreign Relations Committee because it doesn't have as much content. And he said, wait, he said, all of Colorado looks west. Colorado is intensely interested in Asia. It's why he sought this committee and why it's important for him to be our keynote speaker today. So could I ask you with your applause to please welcome and thank Senator Corey Gardner for being with us. Well, thank you very much for the opportunity to be with you today. And I wish you the best of luck throughout the remaining portions of your conference. It is an intriguing conference lineup. And of course, our daughter, Allison, I'm very excited that she is here with us today as we were going over questions and talking about the speech. I reminded her. I wanted to make sure that you were here to see this so that you could be reminded that no matter how old you are, your homework never ends. I don't know that she appreciated that or not, but it is great to be here today and certainly honored to be among so many of the foremost experts to have this historic dialogue today and the historic transformation and the challenges to future progress of the Asia Pacific region. With crumbling governments, heightened military conflict and an advancing Islamic State, American policymakers and the American public have been focused on the Middle East for the better part of this century. There is no doubt that we face imminent challenges in that region. Challenges that may take decades to get under control. But as war and division grip the Middle East, a great opportunity awaits us in the Asia Pacific. That opportunity begins with the most significant economic integration project of the modern era, the Trans-Pacific Partnership. The TPP leads us into a new era where we will need real leadership and commitment from the United States, our traditional partners and emerging allies as well as a rising China to unlock the true potential of the region. But in order to usher in a new era of prosperity in the Asia Pacific, there are numerous historic, economic and security challenges in the region that must also be addressed. As the title of this conference suggests, let me begin with Japan's experience. In the wake of World War Two, the United States and Japan were able to accomplish what seemed impossible. Working together from a tragic past, we were able to transform two bitter enemies into two of the world's strongest allies. Burned out cities became bustling factory towns. A population that had been preoccupied with war focused itself on the path to peace and prosperity. And we found that free people when allowed to dedicate themselves to the pursuit of a better life for themselves and their children can accomplish anything. That the power of prosperity and potential lies within all of us if given the right circumstances. The right to be free and the freedom to prosper. Unlocking this human potential was by no means preordained, but was the result of close cooperation between the United States and the long term dedication of Japanese leaders to empower their citizens to achieve and innovate. The U.S.-Japan relationship has served as a pillar of stability and security in the Asia Pacific for over 60 years. In the 1980s, former Senate Majority Leader and later Ambassador to Japan, Mike Mansfield, would describe the U.S.-Japan relationship as the most important bilateral relationship in the world, bar none. Japan today is the world's third largest economy, the fourth largest trade partner for the United States, and our nations are leading the way to complete the TPP. This relationship is a tremendous example of the path from historical enmity to shared prosperity, common security, and indeed unlocked human potential. But not all nations in the region have dedicated their efforts to promoting freedom and regional prosperity. Just around 600 miles away lies North Korea, the most isolated and repressive regime in the world, a regime that is dedicated to fear and oppression, a regime that callously tosses aside human rights, starves millions of its people, and brutally murders anyone who voices dissent. North Korea not only shamefully ignores human rights and imposes barriers to economic prosperity, but also presents significant military challenges to the United States and our allies in the region. Much attention has been rightfully paid to the possibility that the belligerent state of Iran could obtain a nuclear weapon and further endanger some of our strongest allies in the world. Well, North Korea is already a state that has nuclear weapons and is endangering some of our strongest allies in the world. Some experts estimate that North Korea currently has 20 nuclear warheads and has the potential to possess as many as 100 warheads in the next five years. North Korea has consistently tested ballistic missiles while also expanding the size and sophistication of these missiles. The administration has dubbed their approach to North Korea strategic patience, but strategic patience with North Korea is and has been a strategic failure. I recently introduced a Senate resolution calling for stronger sanctions on North Korea, sanctions that target the regime's financial assets, condemn human rights abuses, and redesignate North Korea as a state sponsor of terror. Additionally, I'm drafting legislation to strengthen and more aggressively target our sanctions. Aside from working to cripple the Kim Jong-un regime, increasing these sanctions will send a strong message to the region, a message that makes clear that the U.S. will remain a force in the Asia Pacific, a message that strategic patience is giving way to strategic engagement with our allies. Unfortunately, the Obama administration has taken a wait and see approach to nations like North Korea, and while they have talked about increasing focus on the Asia Pacific, progress on that front has been slow. In 2011, President Obama announced the Asia pivot, subsequently termed the rebalance, prioritizing engagement in the region and repositioning and reasserting U.S. leadership. In that speech to the Australian Parliament on November 17, 2011, the President stated, I have therefore made a deliberate and strategic decision as a Pacific nation, the United States will play a larger and long-term role in shaping this region and its future by upholding core principles and in close partnership with our allies and friends. I know our partners around the world and around the region have enthusiastically welcomed this major realignment of U.S. policy. But four years later, our Asia rebalance has yielded few tangible results, and those of us who support the intent of the policy have been disappointed with this lack of results. The rebalance must be re-energized. I believe that a genuinely effective policy of strategic engagement in the region is one of determined action and consistent leadership, not one that shows up at the end of a presidency when legacy building is on the line, but one that is seamless from one presidency to the next, a permanent focus on the region. While I commend the President's leadership on TPP, his handling of the Asia pivot has not been reflective of presidential priorities. I intend to use my position as chairman of the East Asia and Pacific subcommittee to bring action to a policy of strategic engagement that benefits the region and the United States. It is time to ensure appropriate resources are flowing to the region. In that same 2011 speech, the President stated, my guidance is clear. As we plan and budget for the future, we will allocate the resources necessary to maintain our strong military presence in this region. That remains an unfulfilled promise. Currently, only 4 percent of our assistance is spent in the East Asia and Pacific region. That is only 4 percent. That puts it dead last amongst all the bureaus at the State Department. And the United States spends a mere 1 percent of its total foreign military financing funds in the area covered by the U.S. Pacific Command. What kind of rebalance is that? Where is the evidence that this administration has allocated the resources necessary, as the President has promised? It simply hasn't. Without a consistent focus on the growing economic and security challenges in the Asia Pacific, this administration's Asia pivot appears to be nothing more than a head fake. How long do we have to wait until the Asia pivot turns from talking points to actual policy? This isn't a question of missing resources alone, but a question of misguided priorities, which sends the wrong message to our friends, allies and adversaries in the region. This administration and the next must conduct a comprehensive overhaul of its spending priorities to get this policy right. In March, I offered an amendment to the fiscal year 2016 budget resolution, which passed unanimously to provide an independent assessment of the administration's spending on the Asia rebalance. I have included similar language in the State Department Reauthorization Bill, which will be marked up later today by the Senate Foreign Relations Committee, and I have a similarly worded amendment filed to the fiscal year 2016 National Defense Authorization Act. We must also enhance the capabilities of like-minded partners in the South China Sea region to build a new regional security architecture, particularly focused on maritime security. Last month, the Shangri-La Dialogue in Singapore, Secretary of Defense Ashton Carter announced a new initiative, a new initiative that would provide a boost in U.S. military assistance over the next five years to enhance maritime security efforts with Indonesia, Malaysia, the Philippines, Thailand, and Vietnam. This effort is a welcome step, but alone is not enough. These initiatives cannot take place in a policy vacuum. Department of Defense efforts need to be more effectively wedded to efforts of other U.S. government agencies into a coherent and comprehensive strategy of assistance and engagement in the region. It is my hope that in my position on the Foreign Relations Committee that we can work cooperatively with our committees and the administration to bring about such a strategy. But as we consider the future of the Asia rebalance and U.S. engagement in the region, we must also address a rising China. As the President stated in that 2011 speech in Australia, the United States will continue our effort to build a cooperative relationship with China. All of our nations, Australia, the United States, all of our nations have a profound interest in the rise of a peaceful and prosperous China. But now more than ever, we need a renewed policy, a renewed policy focus with regard to China. There is no doubt that the rise of China over the last 30 years has been remarkable. China has lifted 500 million people from poverty since Premier Deng Xiaoping began his economic reforms in 1979 and is now the second largest economy in the world. But China's economy has recently shown signs of a slowdown and without the necessary structural reforms, this slowdown imperils not only the futures of 1.3 billion Chinese citizens, but also the region and indeed the entire global economy. Foremost, these reforms should include significant improvements to China's legal system, opening China's economy to foreign and private investment, and altering the way China's state-owned enterprises are owned and operated. The upside of these reforms for China and the world can be enormous. But despite economic success, China is still a poor country by Western standards. As of the latest World Bank estimates, there are more people living in China on less than $2.50 a day than there are citizens of the United States. Bringing those citizens from poverty to Western standards has the potential to radically expand the region's middle class and create higher standards of living in China and beyond. To cause these changes, we need increasing economic engagement with China that brings international norms and transparency. We must continue the efforts to bring China into the global economic order that began with their historic entry into the World Trade Organization in 2001. That entry has demonstrated that international engagement and following the rules can enhance, rather than erode, China's standing abroad. The United States must also continue bilateral economic engagement with China that brings high levels of transparency and accountability. The U.S.-China Bilateral Investment Treaty, or BIT, that is currently being negotiated is an important step. The BIT, which is based on a model text the United States has negotiated with dozens of other nations around the world, will bring legal and economic standards that would allow U.S. companies to compete on a more level playing field and will open up the Chinese economy to additional investment opportunities. But we must also understand that our current economic engagement with China means ensuring that they participate fairly in our system. According to a 2013 report that was authored by Admiral Dennis Blair, the former U.S. commander of Paycom, and John Huntsman, the former ambassador to China, theft of U.S. intellectual property is estimated at over $300 billion annually, and China accounts for 50 to 80 percent of that amount. Beijing must understand that its behavior with regard to the massive and well-documented theft of intellectual property is unacceptable and antithetical to global prosperity and international norms. Finally, we must consistently work with our partners to offer viable alternatives that address the most pressing economic challenges in the region. When the United States is absent, others rush to fill the void. We cannot be surprised when China fills that void with policies and programs crafted from their own vision of what is beneficial for themselves in the region. China's establishment of the Asian Infrastructure and Investment Bank is the prime example. While on its face, the AIIB is a positive response to address infrastructure challenges in the region, it is also the clearest evidence yet that the U.S. has a serious credibility gap in the Asia-Pacific region. Some of the strongest U.S. allies in the world, including the United Kingdom, Australia, and South Korea have indicated that they will join the AIIB, and we need to understand why. Do they view the AIIB as primarily an economic opportunity for their companies? Perhaps, but I would contend that the reason was the lack of leadership from the United States. The AIIB is envisioned as a $100 billion enterprise with China as the largest shareholder that will hold the veto power over major investment decisions. Its rules of governance and standards remain unclear. We should remember that the amount of a capital this institution is going to offer is smaller than existing multilateral institutions that have already been doing development work in the region for decades. Organizations, agencies like the World Bank, the Asian Development Bank, or amounts contributed by other regional leaders such as Japan. The United States should have worked to strengthen these institutions or offer a viable alternative to promote additional development programs in the region that would have included China, but lessened the fears about the lack of adequate standards of transparency and governance. A AIIB is a fact now, and it is my hope that the direct participation of our partners in the AIIB can be a positive influence in the way that the institution is run and managed in the future. China is at a crossroads. The pace of their growth has slowed and sustaining their prosperity is not possible without a change in course. Should they choose a path of cooperation and abiding by international norms, they will find a welcome partner in the United States. Defining that partnership may be challenging, but we do know some of the parameters that Beijing must first address. We know it doesn't include land reclamation activities and contested territories for military purposes. We know it doesn't include allowing rampant theft of intellectual property. And we know it doesn't include undertaking cyber activities aimed at undermining U.S. government and our private sector. While they are exercising their economic muscle in an effort to promote development, it is clear that China's recent activities in the East and South China Seas have been destabilizing and not befitting the great power that China strives to become. China's actions means that the United States must continue to work toward regional stability, including through enhanced security measures. This also means that consistent and assertive diplomatic engagement with China is important to reinforce that these actions fall outside of accepted international diplomatic norms. These diplomatic opportunities must be pursued at all high-level bilateral dialogues, like the U.S.-China Strategic and Economic Dialogue, and in personal discussions between our nation's leaders. In September, President Obama and President Xi will have such an opportunity. In those discussions, President Obama must stress that the United States will not stand for destabilizing aggression, but is dedicated to securing regional economic prosperity. It is my sincere hope, however, that China pursues the path of adhering to rules, embracing peace, and supporting regional economic security. Peace and prosperity will take the combined effort of everyone in the region, including China, as well as our traditional allies who have synergies of difficult history between them. We know that Japan and South Korea have an especially complex and painful history, but we need these two U.S. friends in the region to establish a viable path forward on overcoming this difficult past so that we may focus on building a better future. Our bilateral partnership with Japan has stood the test of time and tragedy, and our bilateral partnership with South Korea has endured through generations of shared challenges. Just imagine what we could accomplish with a strong trilateral relationship in the region and a strong trilateral alliance in the region. The United States, Japan, and South Korea united as one force for freedom and prosperity, a partnership that looks past adversarial history. One forged through sheer determination and will that liberty and peace in the region must rule, bound by a commitment to the notion that tomorrow will indeed be brighter than today. Think of the standard that we could set not only for the Asia Pacific, but for the world. Such a partnership would enable a more effective security deterrent to known and emerging threats in the region. It would serve as a force multiplier for our shared economic goals and leadership in the region, such as the promotion of free trade under genuinely high-level standards. And it would send a strong message to other powers in the region that great nations with the same values and principles speak with one voice. I am encouraged that small steps are being taken in this direction, with the first meeting between the defense ministers of Japan and South Korea in four years. While the leaders of Japan and South Korea must take the final step, the United States should continue to encourage reconciliation and close partnership. Ultimately, the key to unlocking the Asia Pacific's economic potential is to ensure that individual rights and basic freedoms are respected, so that citizens of these nations are fully empowered to succeed. We witnessed this in Japan, which rose from the ashes of World War II by standing alongside the United States and enshrining individual freedoms, competition and a democratic system of governance. That is the example that other nations in the region should look at, to realize its potential, its possibility to unlock the full potential of their citizens. Successfully concluding the Trans-Pacific Partnership is just the first step in this process. Working with Japan, South Korea and other regional partners, we can ensure that U.S. policies strengthen existing friendships and build new partnerships that will be critical to the region's security and prosperity for generations to come. Opportunity awaits the world in the Asia Pacific. No nation can seize that opportunity alone, but our generation's cooperative leadership will secure it for the next generation. It has been an honor and a privilege to be here today. I look forward to taking some questions, and thank you so much and look forward to hearing from you. Thank you. Thank you. Thank you very much, Senator. I'm Mike Green, Senior Vice President for Asia and Japan Chair here at CSIS, and I want to thank the Senator for joining us and for his very proactive leadership as chairman of the subcommittee. If you listen to what the Senator said, especially if you're not from Washington, I hope you'll appreciate that the debate about Asia is not a debate about the importance of the region or the direction we should go, but rather whether we're doing enough, and Senator Garner and his colleagues have really spotlighted areas where in terms of engagement resources we can and should be doing more, and for those of us who work on Asia, that's incredibly important and appreciated. We are going to have a few minutes for questions. I'll ask you to raise your hands. We're particularly interested in questions from students from Colorado, if there are any in the audience today, but let me first ask the Senator. The rumor is that TPA could pass in the House this week, but if you read the front page of the Wall Street Journal or the Washington Post or Politico, you get the feeling that the consensus for free trade is completely collapsing. So could you give us briefly a sense of the dynamics of international trade politics in the Congress right now? It's about as clear as mud from the outside, so maybe you can help us understand it. Well, thank you. It's a great question, and I think I was discussing with some participants this morning to the conference who expressed their optimism that this was very, very close to happening, and somebody else said, no, I'd only give it one very, so very close to happening. Congress remains very supportive of free trade, and this notion that there has been a collapse of free trade importance, I think, is mistaken. I think there's also a mistaken, well, there is a disappointing response to some who wish to blame the administration for past grievances they may have that have nothing to do with trade promotion authority, and they are using those grievances to taint their vote on TPA. So I think we're overcoming those objections. We're gathering obviously great support, tremendous bipartisan support in the Senate, and now with later this week eyes on the House of Representatives to see what we can accomplish there, where I do believe we have a bipartisan coalition who has coalesced with the votes to support trade promotion authority. But again, I think this has been a mass undertaking with people throughout the country expressing their desire to move forward on TPA, which will lead to a successful Trans-Pacific Partnership. Make no mistake about it, this morning when we talked about the generational opportunity that Trans-Pacific Partnership represents, it can only happen with the passage of TPA, and I believe that members of both sides of the aisle, the House, the Senate, Republicans, Democrats, understand the importance of doing this, getting this right, and that we will indeed have a successful passage soon. Very good. Thank you. Important. So please, I think we have time for one or two questions before the Senator has to go back and get to work on the topic he just addressed. Yes, sir. Thank you. My name is Frank Barone and I'm a previous resident of Boulder, Colorado. Very good. So I am one of your voters for many years in your career. I'd like to thank you currently of here in our region. I'm a private individual investor in the energy area, so I work quite a bit with Congressman Upton's committees on energy and commerce. What role do you see for gas and oil and energy from the United States, Colorado as well, with respect to supporting the trade with Japan? If I understood the question right, it's what role does energy play with the United States and Japan in terms of trade and markets? This great privilege of serving as chairman of the East Asia Committee, subcommittee. One of the first comments that anyone makes coming into my office, no matter where they are from, is about energy. And in regards to our ability to provide U.S. energy opportunities to the world, including Japan, that would provide a stable, affordable source of energy. In the House of Representatives, last year I carried HR6, which was the built expedite the LNG permit process. I am a co-sponsor of this year's efforts led by Senator Barrasso to expedite the permitting of liquefied natural gas exports. This is an opportunity that we have to give our allies around the globe the ability to rely on abundant energy from the United States instead of dictators and tyrants who are tying their hands right now with exorbitant contracts and cutting off their energy supplies at an economic whim, excuse me, the political whim. And so by continued U.S. energy production, by assuring that we have the policies in place necessary to allow this trade to occur, not only will this strengthen the U.S.-Japan economic relationship, help the region in a security standpoint, but help East Europe, Asia and our allies right now who are facing the brunt of these energy politics in Ukraine and beyond. There is a Colorado right here. I didn't know that. Senator, it is good to have you here. What are we doing in the Congress to see that this fracking can be successful so that we have a better supply of oil and gas in our country and also for export? The entire energy debate over hydraulic fracturing has been a fascinating one. If you look at the votes from last year on HR6 out of the House Energy and Commerce Committee and also on the floor where it passed with a very strong bipartisan coalition, if you look and break down the vote you will see members of Congress who come from states that have banned hydraulic fracturing or imposed moratoriums on hydraulic fracturing. And yet they voted for HR6, the bill that would expedite the permitting process for LNG exports. The reason they voted for the bill was because they understood the important role that it could play in security. The reason they acknowledged that we have enough to export is the tremendous advancements that we have had in developing our resources, which would not have occurred but for hydraulic fracturing and horizontal drilling combined. And so there is recognition by people who view energy security as a great diplomatic tool that it wouldn't be possible unless we had the ability to reach an unconventional resource place, hydraulic fracturing and horizontal drilling being the contributor to an abundant supply that allows us to export. Recent news also of the EPA report, the Environmental Protection Agency, put out a report in the past week that shows this can be done. Hydraulic fracturing is performed safely and responsibly, I think was a significant step forward and hopefully we'll start peeling back some of the moratoriums in those states that have currently imposed them. Let me ask if I could, Senator, follow up question on your point about the Asia Infrastructure Investment Bank. You described it as a fact. It's going to happen. There is demand for infrastructure in Asia. How do we shape that institution so it doesn't undermine the age development bank, the World Bank, but allows us to, or allows China to play a role with all its resources in building up the infrastructure? Well, I think the fact that you have an AIB in the first place shows a credibility gap with the United States, the fact that we left a void or vacuum that China felt that it could fill. And because it has others joining, some of our closest allies joining, it shows that we needed to have stepped up our operations, our activities, our policies in a way that we simply did not. So it's fact, and now we move forward, knowing that we have great allies who will be a part of an organization that will hopefully be able to bring some kind of international norm standards, transparency, and accountability to this organization. But it also is a cue for us to minimize the credibility gap, to step up our game when it comes to development, to step up our game when it comes to partnering on infrastructure and other issues in the region so that we can continue to fulfill our commitment and show that we are in this for the long term, not just for the short term. I think that's a theme throughout your speech and your tenure in the committee, and it's going to be a big theme and challenge for the administration and then the next one. We have a good hand to play. We just have to play it. That's right. It sounds like. Well, Senator, thank you very much for opening the conference. Thanks for having me. Enjoy the day. We're going to let the senators party escape and turn to our first speaker from Japan and our partner in this CSIS JETRO annual conference. This is our 13th conference on U.S.-Japan cooperation and the emerging economic architecture in the East Asia and Pacific region. And we've worked with the leaders of JETRO all 13 years. And I think this conference has become something of an institution in the Washington debate and discussion about America's role. And as both a kind of a zeitgeist check of where we are in Washington and if we're aligned with some of our friends and partners in the region, but also a good way to get ideas and policy proposals and focus on areas where the U.S. could be doing more. So to give us an overview of the trends in Asia this year in terms of trade, diplomacy, and economic development, as always, we're turning to our top colleague from JETRO, Hirayuki Ishige, the chairman and CEO of JETRO. He's been running the organization since 2011 after a long and distinguished career in the Ministry of Economic Trade and Industry. So Ishige-san, please, we look forward to your presentation as always to help set the scene for us. Thank you very much for the kind interaction Senator has already gone. Good morning, ladies and gentlemen. I would like to express my sincere gratitude to all of you here for joining us today. In particular, my friend Mr. Ira Shapiro is there. Please. And I would also like to give my thanks to Dr. Hamere and Dr. Green as well as their colleagues at CSIS for their continued dedicated work on this forum. JETRO has held this seminar here in Washington DC since 2004, and today's seminar commemorates the 10th anniversary of cooperation with CSIS. 10 years brings us a variety of changes. 10 years ago, a copy of Washington Post was $0.35 at a newsstand. Now it is $0.50. 10 years ago, the Washington Nationals made their major in their view in Washington DC. Now, the team is frequent champion at the National League East Division. Congratulations. This year, I believe the Nationals will win even the World Series. Do you agree with that? Thank you very much. Not many Washingtonians in the audience. This is not your career, I understand. 10 years ago, there was no public transportation from the Dar es Sera port to the city center. Last year, Metro Silver Line began partial service toward this route. I hear the whole line will be completed by 2018 and hope this annual seminar continues until then, and beyond. This is called and beyond. Regarding Japan's participation in the Transparsive Partnership or TPP negotiations, the first feeder from the United States came to Japan in 2008 during the Bush administration. It's actually on the margin of the APEC leaders meeting in Peru. It was tough request. Anyway, before announcing its own participation, the U.S. invited Japan to also consider taking part in the agreement. For Japan, however, the TPP really meant U.S.-Japan Free Trade Agreement, or FTA. And the U.S.-Japan FTA meant Agriculture Trade Liberalization. It was an acceptable offer for Japan at the time by any measure. Looking back on that time from today, we must appreciate the groundbreaking progress made in negotiations, especially during the last two years. Having said that, the game is not yet over. As one Japanese saying goes, he who goes a hundred miles should consider himself halfway at the year 1999. This means that the last mile is the most challenging part of the journey. In this case, the U.S. Congress seems to be the last mile. That said, I believe that TPP negotiations will reach an agreement soon. To make this happen, enacting the trade promotion authority or TPA bill is a requirement, a must. Akira Mari, the Japanese minister responsible for the TPP negotiations, also expressed this bill when I met him the other day. He was my boss during my time at the Ministry of Economy, Trade and Industry. Meanwhile, it was of welcome news to hear that the bill passed in the Senate on May 22nd. I hope that the House will do the same in a timely manner and grant that authority to the President. With that, the theme of this seminar is Asia-Pacific Integration and the role of the United States and Japan. I would like to give my views on three points in particular. The first point is the significance of the TPP. The second point is its future challenges. And the third point is the issues related to developing the TPP into a region-wide economic framework for the Asia-Pacific. These views will serve all the topics in the following final session. The first topic I would like to re-examine what significance the TPP has in particular when considering it in the context of economic integration in the Asia-Pacific region. The TPP has three. The first is that it enables high standard platform to be established in Asia and brings with strategic value. The TPP aims to be an extensive agreement that specifies advanced deliberation, not only the trading goods, but also the investment and services. It also encompasses intellectual property, labor, environment, and government procurement covering a total of about 21 fields. Through the TPP, an economic integration will be created in Asia together with countries sharing the same basic values of freedom, democracy, and the rule of law. In his speech before the U.S. Congress in April, Prime Minister Abe said, I quote, the TPP goes far beyond just economic benefit. It is also about our security. Long term, its strategic value is awesome. And of course, this is a critically important point. We should never forget that. Of course, this doesn't mean that the TPP should be a closed nature. TPP should be open to the other countries in the region. I will discuss this later. The second significance of the TPP is that it will connect the U.S. and Asia and stimulate business across the Pacific. We have already seen businesses preemptively expand in this direction in anticipation of utilizing the TPP. Recently, Asian countries and regions have increasingly strengthened their trade relations with China, as this chart shows. However, it should also be no surprise that trade between the U.S. and Asian countries, including Japan, will further expand by the TPP, as the arrow shows. In addition, the framework will also help encourage more vigorous investment into the TPP member countries. In fact, an increasing number of global companies are entering Vietnam, for example, taking advantage of its strategic location as an export hub to other TPP member countries. Seeing this trend, the representative of a well-known Thai think tank described the TPP as a wake-up call for Thailand, which could provide a stimulus to his country. One business from the Philippines told me that they are also interested in the TPP, and for the Philippines to participate, they need another President Aquino. Do you know why? President Aquino's turn will expire in June next year, and strong leadership like his indispensable for the Philippines to make the decision to join the TPP. I believe that the TPP will provide a golden opportunity for the U.S. to reassert its leadership within Asia. The third significance of the TPP is the deeper effect it has on the other mega-FTAs. Around the world, negotiations are currently proceeding on five mega-FTAs simultaneously. The first is the TPP, the second is the Regional Comprehensive Partnership, or CEP. The third is China-Japan-Korea FTA. The fourth is the EU-Japan EPA, and the fifth is the Transatlantic Trade and Investment Partnership, or TTIP, between the U.S. and the EU. It is the thought that the TPP was the catalyst for creating this situation. Japan's participation in the TPP, in particular, has provided motivation for early commencement of talks on the other mega-FTAs. The parties of these other mega-FTAs have been extremely conscious of the TPP. Progress and its negotiations will continue to drive negotiations for those such as our CEP. Now, the status of the negotiations on each mega-FTAs is in this side. Talks related to the EU-Japan EPA are being accelerated on the target to breaching an agreement in principle by the end of 2015. Meanwhile, the eighth round of negotiations on our CEP, in fact, just began yesterday in Kyoto, Japan. Though the participants set a target of concluding our negotiations by the end of 2015, they are still in the stage of discussing the modality. Very slow progress, I have to admit. Speed is a must. In the previous seminars here, I have always emphasized the importance, say, slow and steady wins the race, but it doesn't seem to be the case, unfortunately. It has to be changed in the future. I don't know how long it will take. I hope for the conclusion of the TPP negotiations to boost the speed of our CEP negotiations. Though the US has not joined the talks for our CEP, the investment value for the US into our CEP area is actually larger than that from Japan. I recommend that US companies be more active in submitting requests to the government of our CEP. In this seminar, we have invited Ms. Cathy Santiro, a specialist, who has profound expertise in ASEAN business. We eagerly look forward to hearing her views on this topic. In addition to accelerating the speed of other trade talks, the TPP also leaves rulemaking in the world supplementing or even replacing the WTO by providing templates of trade and investment rules. In this regard, I would like to hear whether this is acceptable to my colleague, Professor Watanabe, who used to be a guardian of the GATT and we'll be speaking later, maybe still the guardian of the WTO. I would like to move to the second topic in the context of integration in the Asia Pacific region. The TPP also has future challenges to be tackled. The largest among them is the its coverage of partner countries. Major countries in East Asia such as China, Korea, Indonesia, Thailand and India are not participating in TPP talks. In East Asia, cross-border supply chains have been established mainly by overseas affiliated companies from the US and Japan. At the factory of the world, vigorous activities are being carried out in procurement, production and distribution. From East Asia, however, only Japan and four Asian states consisting of Singapore, Malaysia, Vietnam and Brunei are taking part in the TPP talks. Involving other Asian states, China, Korea and India in this partnership would make the TPP more beneficial for the US and Japan. We need to send a continuous message that the TPP is not a closed framework, but instead is a wide regional FTA always open to other countries. We also need to encourage the participation of other countries and regions by steadily realizing the benefits of the TPP through its high standard trade and investment rules. This is homework for both the US and Japan. Regarding the participation of China, there are various opinions. One of them is that it would be difficult for China to join the TPP because this is a high hurdle for China. Another is that China should enroll in the TPP as it would benefit the country's domestic reform. For more insight into this topic, we would like to hear the view of Chinese expert Dr. Professor Zhang Jianpin will join the following panel session. In addition, in terms of issues surrounding the TPP, there are two fields that are not included in this agreement. One is the standard and certifications and other is the regulatory cooperation. These fields are covered in the TPP on the EU Japan EPA. It is also necessary for the TPP partners to consider establishing harmonized rules in these fields based on the results of negotiations in the TPP on the EU Japan EPA. This will help reduce cost for companies and industries. The TPP is a living agreement to which new members will be added. In anticipation of this, I would like to propose the creation of the TPP leaders meeting as well as the TPP economic ministers meeting to provide guidance on policy. I would like to go into the third topic. I have talked many about the TPP software. However, it is indisputable that the next important target is the establishment of the free trade area of the HFR speak or FTA. This is imagined as an even broader regional FDA across the HFR speak. The TPP and RSEP are both in a position to be possible pathways to FTA, although I have to admit that TPP negotiations far ahead of RSEP at this moment. To realize economic integration in the Asia Pacific region within the grand vision of FTA as ultimate goal, government-led integration between governments alone is not enough. It is essential to promote business-led integration at the business level. Using this approach in Asia, production and distribution networks have been formed mainly by overseas affiliated companies from the U.S. and Japan. Recently, the situation has changed due to the remarkable growth of Asian companies. The number of Asian companies listed in Forbes 2000 has doubled in the last 10 years. It is anticipated that U.S. and Japanese companies will likely collaborate with these Asian companies to help their global expansion. This will enhance the voice and influence of Asian companies throughout economic integration and consequently accelerate the formation of FTA. In the Asia Pacific group, most members of this region are developing countries at greatly varied levels of development. Economic integration in the real sense of the term will not be realized solely by liberalization of trade and investment and rulemaking. I would actually refer to a survey connected to JETRO, my organization for Japanese-appliated companies operating throughout Asia. According to the survey result, rising labor costs ranked first as an issue related to the investment environment. This is followed by complex administrative procedures and developed and unpredictable legal systems and inadequate infrastructure. For economic integration in the Asia Pacific region, both infrastructure development and capacity building are critical. This economic integration can be realized only if we address soft and hard infrastructure. Without these, it would be a pie in the sky. In these fields, the U.S. and Japan have more room for cooperation. Regarding the development of the infrastructure in Asia in particular, there is a demand amounting to 800 billion dollars every year. In response to this demand for finance, preparation is underway for the Asian Infrastructure Development Bank, or AIB, which will operate at the same time as the existing ADB. Last month, Japanese Prime Minister Shizuo Abe also expressed his intention to provide a $110 billion fund for infrastructure in Asia during the next five years. I would like to hear comments regarding infrastructure development in Asia of the panel discussion, which was already deployed by the senator. Today, I have talked about economic integration in the Asia Pacific region, but regardless of anything else, nothing is going to happen unless we make up the TPP happen. Realization of the TPP is a responsibility of its 12 partners. In the following financial discussion, I'm looking forward to hearing in depth discussions, especially regarding the significance of the TPP and the challenges it faces throughout an economic integration in the Asia Pacific. I would like to finish this by expressing my hope for negotiations on the TPP to reach an early agreement. Thank you very much. I'm going to invite the first panel up to the stage. Thank you very much, Ishige-san. With the permission of Chairman Ishige and the other speakers, please join us on stage. We will post on our website Chairman Ishige's PowerPoint presentations and also the presentations that you'll see from the speakers on this panel. Our plan is to have presentations from our distinguished speakers from across the Asia Pacific region. Then we'll take a short coffee break and then we'll come back and have some debate and discussion up here and then open it up to questions. Ishige-san, you gave us a very interesting overview and a good set of questions to address in this panel, ranging from how to move from TPP to FTAP, what to do about infrastructure, and some bold proposals such as a new TPP leaders meeting. I hope to get to all of those. I want to thank you again and your delegation for coming to Washington. Last week, TPA looked doomed. The headlines were all bad. There were thunderstorms. There was rain. You arrived and all of a sudden members of Congress are saying TPA could pass this week and it's sunshine outside. So thank you and we'll try to think of some legislation to have ready for your visit next year so you can move that forward as well. So I'm joined on stage by colleagues who follow TPP, of course, but trade negotiations and economic development and institution building across the Asia Pacific region. I'm going to go, I guess, in the order everyone was just seated. So we'll turn first to Yorizumi Watanabe, a professor at Keio University with a long history in the Foreign Ministry and Gaimu Show on trade policy and particularly multilateral trade policy and apparently the guardian of the GAT. And then we'll turn next to an American who has a long experience in Southeast Asia, Kathy Santillo to my immediate right. She's the Regional Managing Director in Singapore for the U.S.-Ausian Business Council and has worked in Asia for government and companies, including for Harley Davidson. I see on your resume you're a lifelong writer, remember, of the Harley Davidson and welcome, I guess, your choppers in Singapore right now. Okay, and Kathy looks at ASEAN and Southeast Asia as a whole, so we'll want to ask her about not only the participants in TPA negotiations like Malaysia, but also those that are not in and what we do about inclusiveness of ASEAN. And then I'll turn to my colleague next to Kathy, Professor Zhang Jianping, who is the Director for the Department of International Economic Cooperation at the Research Arm of the NDRC, the National Development and Reform Commission in China, which of course is a very important body for providing planning and guidance for Chinese economic development and reform. And finally, my colleague Matt Goodman, the Simon Chair in Political Economy at CSIS, a veteran of the Bush and Obama White House's on Asia Trade Policy and Economic Policy and an advisor recently to the Under Secretary of State for Economic Affairs on precisely the questions. And Matt will sort of tie together some of the things you heard and offer also a U.S. perspective. So we'll do that, and then we'll take a break for coffee and come back and start cross-referencing what we heard, and you start those discussions and hearing your comments. So I hope the electronics are queued up in this order. We'll find out in a second. So Watanabe-san, please. Thank you. Well, thank you very much indeed for your very kind introduction myself, the guardian of the trade multilateralism. That's a really sort of big title that you gave me. I'd like to come back on that issue towards the end of my expose this morning. The first of all, I'd like to share with you the audience, the first slide. I don't know if mine's okay, sure. The first slide is to indicate or share with you the uncertainties and possible risks on the global trade issues. And I put first the global trade issue such as failure of, sorry, oh yes, the failure of Doha development agenda known as Doha Round, that's certainly a result in the weakening of the trade multilateralism embodied in the WTO. And secondly, the proliferation of regional arrangements such as the FDA or Customs Union, mostly free trade agreement, according to JETRO's investigation or JETRO survey, there are more than 250 FDAs all over in the world. And next one is the lack of multilateral trade rules on new issues such as investment, competition, government, procurement. Those issues have been discussed up until the Cancun meeting, September 2003, within the auspices of WTO. But then we lost the occasion to talk about those new rules despite the fact that the number of trade development or very important economic problems arising from the rising of emerging economies or the financial crisis in 2008 and so forth. But despite those things, we haven't had the new trade-related rules since the successful conclusion of the Doha Round negotiations. And most importantly, we have the TPA still missing and hope that that will come very shortly. Ladies and gentlemen, now I'd like to move on to the issues more pertinent to regional area of Asia-Pacific. The first thing that I'd like to mention is the fact that East Asia discriminates against East Asia, particularly in those fields as textiles or agriculture products. Even in auto and auto parts and components, the trade is not really that free. And maybe the best example to show the fact of this East Asia discriminating against East Asia is like China-Korea free trade agreement recently concluded, but that excrues the auto and auto parts sector from the entire agreement. A couple of things that I mentioned here about China. China emerging as a regional hegemonic power. No explanation needed here. The also in trade field, China emerges as a game changer, particularly in the year 2013, when there was a dispute of anti-dumping on the solar panel, the China resulted in kind of putting enormous political pressure to the German government at that time. And I take it as a kind of China emerging as a game changer in the trade field. And also AIIB, the issue that has been already raised by the senator this morning. That is also another sort of sign of games being changed. The next item here is that what I would call new regionalism. We have Shanghai Corporation Organization that was established in June 2001. And we have also Russia-centered customs union comprising of Russia, Belarus, Kazakhstan, and also most of the central Asian countries are the members or possible members too, that kind of Russia-centered customs union. And at the SEO they talk about human rights, they talk about freedom in trade, they also talk about rule of law, those things, but are they really talking about the same thing with the same language? That's another problem. The following slides to indicate the East Asia discriminate against the East Asia. If you look at the duty rates on agriculture products back in 2002, it was 41%. And the picture remains more or less pretty much the same about 10 years ago. And also the following slide is to show you the membership of the SEO China, I mean China and Russia-centered Shanghai Corporation Organization. And so I just wanted to share with you those imminent uncertainties or possible risks in the world as well as the region of Asia-Pacific. But what kind of responsive responses that we are making in Asia-Pacific? I think the Asia-Pacific, the integration is quite different from integration in Europe. Integration here in our region of East Asia, it's a de facto business-driven integration induced by the foreign direct investment and foreign direct investment establishing supply chain or global production networks. And FDA EPA to consolidate the merits of having that kind of de facto business-driven integration. And we have developed a number of FDAs, EPAs across the region of Asia-Pacific. But those bits and pieces are now moving into the wider regional FDA EPA, such as ASEAN plus one, meaning that ASEAN plus either plus Japan, Korea, China, even Australia, New Zealand, there are five different sets of ASEAN plus one FDA. And beyond that, we have ASEAN plus Japan, China, Korea. Now we have also RCEP, which is on the basis of ASEAN plus six. And as Chairman Ishige mentioned, Japan, China, Korea tried after FDA that we started our negotiation in March 2013. So all of that suggests that we are moving from the regional FDA EPAs to further the kind of inter-regional FDA and the TPP is certainly the champion of that kind of wider FDA. Now, Japan, how Japan has been associated with this kind of movement. Japan started its FDA policy on negotiating the one with Singapore back in 2002 that came into force. And the one with Mexico that I myself negotiated as a chief negotiator some 10 years ago. And all of that, now we have about 15 FDAs, what do we call EPA, Economic Partnership Agreement. And that covers about 25%, one quarter of Japan's external trade. We have some pending FDA negotiation with Korea, Gulf Cooperation Council countries, and also with Canada, Colombia, EU, and Turkey, we are engaged in the negotiations. The following slide to just to show you the coverage, which is quite comprehensive, not only a traditional part of FDA, namely the improvement of market access, both goods and services. But also we try to go on the issues such as government procurement and also some investment issues, the protection of intellectual property rights, and so forth. So those are some Japanese response to the uncertainties and the possible risks in the region of Asia Pacific as well as in the world. Now, the next slide is just to give you idea, the membership and also the economic importance or trade importance vis-à-vis that of GDP or GDP or World Trade. Japan, China, Korea, it's a missing zigzag, I would term it. Although it is very important, it should be nucleus of regional comprehensive economic partnership in across Asia Pacific. Unfortunately, because of historical issues, we haven't done so much about this, but this is really the missing piece of zigzag that we have to certainly fill in for the betterment of regional comprehensive economic partnership in Asia Pacific. That gives me only one minute. Okay, so next slide is maybe important because how Japan would organize itself to further economic partnership or free trade strategy in the region of Asia Pacific. There are two directions as you see. One is East Asia on the basis of our SEP and the other is Pacific Rim on TPP as well as Japan, Canada, bilateral EPAs. In the case of our SEP, it is more with trade facilitation, more with capacity building to be provided to those countries like Cambodia, Laos, Myanmar, and possibly Vietnam, those are the newcomers to the club of ASEAN. On the Pacific Rim, we have TPP and there it's more on the rural-oriented approach and regulatory convergence, harmonization that was also a very important element together with high-level market access. So if you take the regional comprehensive economic partnership in East Asia, it's more of a kind of inclusive growth-oriented approach. That's why I call it integration-oriented approach and all together that will bring us to the Asia-Pacific free trade area of what we call FTAAP as we have previously agreed on the occasion of APEC 2010 Yokohama meeting. So now we are getting into concluding remarks, maybe give me a couple more minutes. What I would like to suggest is kind of increasing coherence amongst those mega FTAs and being a guardian to trade multilateralism embodied in WTO, I would like to suggest to the audience that we should perhaps increase our coherence in the rulemaking and try to make a convergence of those efforts for trade liberalization and rulemaking as well. We have TPP, it's an ultimate FTA for Japan with our ultimate partner that is the United States and in East Asia we have RCEP, it's providing a legal framework to secure de facto business driven integration. Japan, China, Korea I mentioned already that it's missing parts and we have to fill in that dig so. And Japan in you it's another very important large-scale FTA negotiation going on and that's towards an Asia-Europe partnership, it is to create a solid platform for Asia-Europe partnership in the future and all together that most importantly the joint efforts to be made to multilateralize the preferential deals with the view to strengthening the WTO. If you look at this scheme this picture we have three mega regions like EU and Americas and East Asia and it's interesting enough that we have inter-regional cooperation frameworks between say for instance East Asia and Americas we have EPIC, between EU and East Asia we have ASIN and between EU and Americas we have or you have Transatlantic Marketplace or Transatlantic Economic Council. Now all of these inter-regional frameworks have been now upgraded into a more legally binding free trade agreements such as from EPIC, now stemming out from EPIC we have TPP, stemming out from ASIN we have Japan, EU, Korea, EUFTA and EU, Americas, now you have TTIP, TTIP from Transatlantic Economic Council. So altogether it suggests that you know we have several reasons to multilateralize those mega FTAs. The first the systemic reason is now we are moving from non-binding cooperation to fully binding the high level FTAs. Functional reasons from regional production network to global value chain that we are now heading for by making new rules on such issues as investment, competition, government procurement etc. and finally institutional reasons. Now we are in a very good stage to gather like-minded countries to shape a critical mass. So it's a final slide the convergence of liberalization efforts that's really the key issue that we have now looking at beyond TPP and that will create a new momentum to reinforce the trade multilateralism embodied in the WTO and in that regard Japan and the United States should demonstrate leadership in TPP and beyond. That was my 14 minute speech. Thank you very much Mr. Chairman. I see I see the evidence yes thank you sensei and again with your permission we'll have these slides on our website after the conference so people can download them or use them in class or or even send in comments or questions and I appreciate you're making our homework even more difficult by reminding us that ultimately our goal should be a global system of trade liberalization and standards. Kathy. Very good. Thank you and good morning everyone. A special thank you to Dr. Green and to the CSIS colleagues for the invitation here and especially Chairman Ishige and the JETRO colleagues who introduced me here and asked me to bring stories from the region and the experience that I've had in Singapore and the ASEAN region which is the focus of my comments. Also special thanks to the JETRO Singapore office where we are integrating and working with each other and got to know each other over the last few years. Chairman Ishige referred to business led integration and that's what I'm looking at in terms of what we are looking with the government's led integration. How do we interact but what is business doing on the ground. So Professor Zhang and Professor Watanabe are talking about in-depth looks at facts, figures, research, policy and these are very important framework for the businesses. But what I would like to review with you today and I've used this as a framework is what does this mean with regard to the activity in the region. So what are we talking about the region it's the ASEAN the Association of Southeast Asian Nations. What is actually happening on the ground I've been there for four years just coming off of three years with the US ASEAN business council with about 150 multinational member companies and their representatives. So what's happening on the ground with them. Private industry, the multinational companies and the small and medium-sized enterprises. You will hear that this is something that when we talk about new developments this is an area where I see a great deal of new developments. Challenges and opportunities often we ask ourselves are they challenges or opportunities of course they're both but what are we looking at and what's happening there. And AEC 2015 and beyond being asked to come here in the year of 2015 and talking about ASEAN of course we need to talk about the ASEAN economic community what is that and what are we looking at for the future. Based on what I have seen in ASEAN there are really three things or three trends that I bring to you today and they're being talked about and they're getting the most attention. The first we've heard a lot about already Trans-Pacific Partnership TPP. The second is SME small and medium-sized enterprise inclusion how do we include them what does this mean. And the third is AEC implementation the ASEAN economic community we're declaring 2015 some kind of win we're doing some kinds of report cards how do we implement it what does that actually mean. These three things or trends are linchpins to what we're talking about today Asia Pacific economic integration so from an ASEAN perspective that's what I would like to bring today. Many of you know the region some are not as familiar there are 10 ASEAN member states it is consensus forming the countries are listed there we in the region are fortunate to interact bilaterally and as an ASEAN group with all 10 of the member countries I hope to bring a few stories of very recent visits to each of them interacting in a variety of ways over 600 million people so when we look at the the ASEAN region we are also looking at ASEAN's growing economy and how large is it going to be and is it going to be one of the largest in the world what does that mean. So the potential is very strong when we look at the map it becomes very clear to us that ASEAN is central and it is evident just by looking at the map ASEAN's importance to the Asia Pacific economic integration is physical quite literally our Japan US and China collaborators do we compete should we do both and when should we do those things of course time will tell but on the ground these are questions we're answering every day. As we look at AEC 2015 there are many ways to look at some of the components of what is the ASEAN economic community when I think about the growing middle class and the young workforce then of course how does that young workforce develop how does it move from country to country how do we move others from outside into the ASEAN region these are of course important to everyday business plans of the companies that are out there. There was a Singapore Times article just June 6th this week where Prime Minister Lee of Singapore was talking with 17 ASEAN journalists some of you may have seen it I'd like to just quote from that. The PM discussed how ASEAN countries can work together influence one another and even encourage others to tackle serious problems quote but the grouping cannot solve all problems and cannot compel any member to act in a certain way Mr. Lee also told them that ongoing economic integration was helping to promote development across Southeast Asia so this is good for all of us and particularly those in the region so what's happening on the ground the Trans-Pacific Partnership so as I mentioned I have observed in ASEAN that there are these three trends that are being talked about and starting with the TPP is evidently something that's getting a lot of attention in the US in China in Japan and certainly in the ASEAN region US government and US private industry in the region displays unwavering support for the TPP US ambassadors senior officials have been working very closely with private industry trying to collect data information where are the benefits to TPP where are they to the ASEAN countries to the ASEAN business and where are they to the US companies and business and others as well they've tried to bring these TPP benefits to Capitol Hill to ASEAN governments and to SMEs just recently US Ambassador Kirk Ragger ambassador to Singapore had traveled to the US and he also there was an op-ed published in his hometown paper of the Miami Herald I'll quote that he said goods exported from Florida supported more than 270,000 jobs in 2014 and since 2004 Florida's exports under our FTAs our free trade agreements to these markets expanded by 89 percent accounting for 21.8 billion of the state Florida's 58.6 billion and exports last year so trying to bridge the understanding and get some of the facts and figures is what we have been doing in the ASEAN region TPP and the discussion of RCEP is something that in the region and for the senior executives that I've been working with is of utmost importance but how do we learn what that is thanks to the JETRO experts in the Singapore office we hosted a senior executive roundtable in discussion where we heard what is RCEP how do we interact and understand RCEP and how we position that with TPP it was a new initiative for us at the US ASEAN business council it was very well received and there were many follow-up discussions about global supply chain individual company meetings where should you as in Japan cooperate cooperates specifically with trade councils and other areas it was quite an interesting initiative and we appreciated that the trans Pacific partnership I observed that in addition to the TPP and it's important there were other positive trends that are worth at least touching on today and perhaps in our panel discussion later engagement at every level one of the last country missions that I led was to Cambodia in that country mission which was only last month it was the beginning May 7th and 8th we were allowed to have quite a lengthy session with Cambodia Prime Minister Hoon Sen I had with me those US multinationals who were able to bring new investments potentially some who had made current investments and were very much there on the ground and across many industries so it was quite an interesting discussion the Prime Minister had many concerns about TPP and where was Cambodia and all of this and had recently come from the World Economic Forum so the discussion continued on but it also allowed us an opportunity to discuss many other issues including Cambodia's economic plan what we were doing with small and medium-sized enterprises in Cambodia and in the region and also corporate governance to offer some of our resources as a council and those individual companies as well so engagement at every level that's just one example perhaps we can talk about more as well when we talk about ASEAN meetings I constantly hear where is the value of all these ASEAN meetings we don't even know how many there are say many hundreds of them all the time we at the US ASEAN business council were constantly trying to join them those where we have a long-standing more than a decade interaction and those that were still trying to get a seat at the table but one of well actually my very last mission was to the ASEAN customs director general meeting in Brunei Dar es Salaam so that was just a couple of weeks ago and there we sat with all 10 of the teams of the customs directors general it was fascinating because for us after more than a decade we were able to be in the coordinating council and get the input to the private industry the earliest ever the body of the customs director generals and their team had taken that input and we actually discussed in the plenary session which of course is timed and very quick which I understand will be here as well we were able to have very concrete follow-up items this is one of the discussion areas that I hear often how do we get traction where is the value of the ASEAN meetings together government-led business-led integration timely information digestible information from academicians as well as private industry was certainly a key for that particular meeting there was also at that time when we were on the ground in Brunei Dar es Salaam a Brunei Times article and it appeared during the time we were there May 22nd to 24th during the ASEAN meeting and it highlighted an SME event that we had held alongside the customs director general meeting I highlight this for several reasons as we go through and again I will go very quickly but the customs experts who were in Brunei only for this meeting provided time and expertise to the SMEs of Brunei to talk about FTA implementation how do the MNCs do it where should we go for information what does this mean to expanding trade with the US with TPP something that we talk about all the time and lastly bilateral dialogues when we talk about the importance of each of the ASEAN countries they are so diverse in so many different ways so one initiative that was very recent in 2014 is something called the Indonesia ICT consultative forum ICT being information communication and technology with that forum as an initiative this was a broad spectrum of stakeholders so of course it included multinationals from the US ASEAN business council but it also reached out across to the indonesian government officials coordinating ministry ministry of finance others and was tackling and focused on the ICT industry itself working level looking at issues including local indonesian companies local indonesian business councils other business councils mcham indonesia and others so this is an initiative for how do we further the bilateral dialogues that we do have private industry MNCs and SMEs I had mentioned three trends the second trend is that I think it's important to see that the change is creatively engaging with SMEs how should we create what should we do again quite a lot of diversity if we look at Myanmar and what the SMEs are looking for there in terms of capacity and we compare it to Brunei Cambodia Singapore quite different but looking across these SMEs is something that we have been pushed by business to do let's work with spring Singapore let's have over 300 SMEs come to a Myanmar event and let's talk about ICT and connectivity and how to set up a website quite a wide variety in the past much of the discussion from private industry was really focused on multinational corporations experiences I believe that has changed from what I see in 2014 which is our annual trip to the ASEAN economic ministers the official report up to those ministers included the very first SME report that was it was delivered alongside with the leaders from the council as well as USTR from in and his team so the report was also coordinating many important stakeholders USAID which we may be able to talk about later and the ASEAN SM working group which in that year was being led by Ted Tan of Singapore this brings us to challenges and opportunities and I have pages of them so we won't be able to work on those now but what I will say is that the work between the MNCs and the SMEs has demonstrated that these challenges and opportunities are shared there's no time to review them all but I at least want to highlight something that is really really on the forefront especially as I'm leaving from Singapore is the access to finance for SMEs this is something that we have been talking about and people really want to put a great deal of effort into each offers challenges to realizing the full potential of Asia Pacific economic integration and each also offers opportunities for deeper collaboration so how do we include these SMEs if we look at SME inclusion it's very easy to offer but Myanmar has a lot of offers out there for capacity building so how do we make it worthwhile and what about loud PDR as we look for the lead for a ASEAN next year how do we proceed and actually gets results from PPPs or public private partnerships again if we get into a discussion and there are many in the ASEAN region about who should be partnering and how we should do that the question always comes to where are the results where the metrics how do we measure these things those listed and many others are we are really taking more concrete steps to address these complex issues and we're doing it through cooperation so this idea of where do we work with us where do we work with China where are the councils on the ground it is all proliferating from what I see so is this a key area for the US to coordinate with Japan it may very likely well be this is the last slide of the challenges and opportunities I put up there there are certainly a lot more but what I wanted to highlight is I had mentioned the ASEAN directors general customs meeting but how do we best coordinate dialogue dialogue partners there's another very important KPEC or express delivery group that we share members and we go every year to this discussion so with those expressed delivery carriers at customs there are many practical next steps do we implement the national window together do we offer to pilot the ASEAN single window with the private sector what about the plus one business councils they're growing in number they're growing in activity this brings us to the ASEAN economic community 2015 and beyond I will conclude briefly with just touching on this third key trend which is the ASEAN economic community how do we implement it what does it mean so I did note that chairman Ishige had mentioned about the 99th mile of the 100 mile journey so the hardest is at the end we certainly have reports that we're more than 85 percent of the way but there is so much still to be done we will see what finishes in 2015 but as the chairman mentioned we must look beyond so with that in mind as I was in Brunei last I will quote from the Brunei Times article that was on May 24th and it announced quote the new SPCD that's that all working groups have finished reviewing implementation of the strategic plans of customs development that's the SPCD during the 2011 to 2015 period and now they have agreed this is in May to the new SPCD for 2016 to 2020 this was very encouraging as many quote and function and function and look at the ASEAN single window and the national single windows as one of the banners of the AEC 2015 as well as beyond so we are focused on the AEC as a reality and focused even more so on how to implement it that's what I see in here on the ground in the region but how do we continue forward and we are certainly marking AEC and we will continue to do so through these events that are coming up after four years in Singapore I am definitely optimistic that Asia Pacific economic integration is moving forward a senator Gardner referred to unlocking the potential of ASEAN and that is certainly what I see feeling here on the ground pursuing sustainable growth will certainly lead to prosperity for everyone in the region and everyone involved thank you very much for your attention so we'll want to come back to that issue in particular is the AEC real enough that member states are at a stage where we can consider APEC excuse me consider TPP F TAP participation my guess is not yet so we'll want to sort of think about how we bridge that gap let's turn to Professor Zhang please end the view from Beijing thank you Mr. Green it's my great pleasure to be back the year before last year I talking about China's attitude to TPP here and the last year I was talking about F TAP issues and many thanks to both CSIS and General you'll make me come here and to introduce my personal viewpoints today due to very constrained time I'm just you know talking about APEC and China's Belt and Road Initiative all of you know that today actually China is facing with a very critical period of economic transition we very we are very clear in China now our you know in the last we were enjoying our so-called demographic dividend but in the next maybe five years ten years this type of dividend will be disappeared so for China's future development what type of you know economic growth points should be explored by China that's a very critical issues we think that we have to chase this type of new type of you know driving force by innovation by reform and opening up that's why in China now we are making efforts to promote reform by opening up we are making efforts to promote development by reform because in the past China is a transition economy from planning economy to market economy even today in China we said that you know government to government to function is too strong but market driving force market decisive role didn't play we think that in case we can you know adjust the relationship between government and the market and then we can explore very huge in development space that's why we have to have our more open you know strategy meanwhile we have to create you know our open the economic system however it's very difficult for China to promote reform for example for those you know a department for those local provinces it's not easy to make them to reform open up will be a very important driving force just you know think about 37 years ago you know that when first special economic zone established in Shenzhen China started our first round of reform and opening up so this round Shanghai free trade experimental zone becomes a very important source for you know new round of reform I think that China's you know China's economic pattern transition and China China's economic restructuring should be you know happened on the platform of regional economic integration I saw as you know globalization meanwhile as a second biggest you know economy in the world today China also have to play a more constructive role in regional economic governance I saw as global governance on one hand now China is making efforts to build a new opening economic system we have to liberalize market access we have to accelerate the construction of both free trade zones network I saw as a regional trade agreement network we have to expand you know our opening up along the border we have to make our you know neighbor countries can benefit from China's development on the other hand China also wants to play constructive role on the platform of UN and G20, IMF and WB of course you know that now China's efforts for IMF reform is facing these blocks that's why you know that BRICSK and AIIB you know emerged today also for China we realize that WTO dollar round is still can play important role for international trade in the world of course we are making efforts to promote RTA, APEC, AFTAP, some of sub-regional corporations such as GSM and GTI also is in progress of course now we are promoting our you know bilateral BIT negotiation with both the US and EU governmental procurement agreement I saw as environmental product lists I saw as trips this type of you know international rules and regulation are considered and promoted by China's government now in China we have our new belt and road initiative I think that's a new international regional cooperation platform also this is a very comprehensive and multi-level system engineering projects the I think that the the consideration is like this the sick road found I saw as AIIB and plus you know PPP models meanwhile maybe some of other international agencies such as WB and ADB actually all of those financial institutions we can work together and we can improve the infrastructure connectivity as well as people to people connectivity along the routes and then mutual trade and investment will be moved and then we can create new global supply chain and regional production networks along the routes and then I think that FTC, FTA these type of institutions could be explored along the routes and then co-prosperity along the routes will be achieved of course I think that this is very difficult to mission but I do believe that China as you know second biggest economies actually we need to provide more you know public goods along the routes meanwhile we have to cooperate with we will balance development on the regional level I saw as a global level I just have a very brief comparison of the belt and road you may find that one belt and one road along routes those countries population is more compared with APAC platform 23 percent higher but economic scale and trade scale just half of them just half of APAC that means in the future I think that the growth potential will be from you know one belt and one road of course Asia Pacific AFTAP will be our Pacific dream last year we produced the Beijing roadmap of AFTAP I saw as communication and connectivity blueprint by 2025 that will be you know our you know goals for Asia Pacific cooperation but for China on the platform of APAC we will you know now we have already make China Korea AFTA successful and the next step I think that CJK AFTA will be very critical and in the media and the long run our step will be a very critical platform for China but for on the other hand you know that APAC platform is on the right but on the left one belt and one road platform actually have four opened and inclusive characters to the outside world of the belt and road initiative I mean the concept is the concept the space and the space and our you know few cooperation domains and the cooperation you know institutions all of them are opened and comprehensive so that means this type of cooperation is quite different from you know regional trade agreement on this regard I just had a saying that is one belt and one road is like a Chinese medical or you know Chinese medicine but regional trade agreement is more like you know western medicine but for one belt and one road cooperation we will combine both Chinese medicine and western medicine and the effect will be better in the future of course for AIIB I just like to briefly to say that some of the points already here I will not read it because time will be end I just like to emphasize one point that is I think you know European countries has made a smart choice because some of your European economies when they were they are involved in and they can you know discuss rules and regulations they will impact the progress of AIIB development given that China could be the member of WB and ADB I hope in the near future maybe Japan and the US could be the member of AIIB of course before AIIB establishment in order to promote infrastructure improvement and in order to improve investment environment as well as as well as business environment China set up a Silk Road Fund I think this Silk Road Fund will be opened and will be focusing on infrastructure improvement and now we can explore some of you know very detailed and concrete engineering project along the route meanwhile we will encourage and promote PPP model thus I think that we can start from now and gradually we can promote you know China's Belt and Road Initiative construction so as a conclusion I'd like to say both AIPAC and actually both AIPAC and the Belt and Road Initiative will be important for China's new round of opening and reform of course the initiative also will boost China's and those economies along the route economic transition and more balanced economic more balanced and more stable economic development meanwhile mutual discussion common building sharing and a win-win situation will be chased by all economy along the routes also of course constructs the Belt and Road will be beneficial to a more balanced regional economic development and globalization in that process coexistence of many types of civilizations should be respected and also will be important for regional economic cooperation so that's my point so thank you for your attention okay before the seventh inning stretch Matt all right thanks Mike thanks to Jettro Ishige-san for partnering again with us on this terrific concert conference thank you all for for coming today it's a great turnout I have the unenviable job of trying to discuss what has been presented that's you should have sympathy for the discussant it's a very difficult role because there are three rich and wide-ranging presentations and it's very difficult to try to comment on all of that but let me let me try to do it this way and then we can talk more on the in the moderated panel so I've been involved with this conference for since long before I came to CSIS it's been going on for about 10 years and as Ishige-san used this framework of looking at what's changed over that time period let me do that in a sort of narrower sense looking at last year versus this year and look at what hasn't changed and what has changed as the backdrop to this conversation and reflecting what what has just been presented by the three presenters I mean one thing I'm struck with that hasn't changed in these presentations is that regional economic integration in the Asia Pacific is a messy endeavor and that that you have an you know an extensive exhaustive alphabet soup of different initiatives that you have to understand and interpret whether TPP, RCEP, APEC, CJK you've heard some new ones here today CJK SEO my favorite new one is 1B1R which is the way some people are shorthanding the 1B1R initiative from China here in Washington so it is it is messy and and we haven't in this year we haven't we haven't sorted all that out we still have a complicated a complicated array of of things to work through here and that's just the reality of the Asia Pacific I don't think that's going to change next year. Another thing that strikes me is is a bit of tension it's not explicit in this but I think it's implicit in a lot of these discussions in these presentations today that there's a tension between sort of Asian only regional economic integration and trans-Pacific integration and this is an important issue when you talk about these these matters particularly in Washington because obviously we have an interest in both of those things but we ourselves as a Pacific but not an Asian country very much want to be involved in a trans-Pacific process of regional economic integration and that's something that that again is an underlying theme that really hasn't changed in in these conversations certainly over the past year and then the other thing that strikes me is that we we end up talking about some of the really the big players in the region the US China Japan ASEAN but we we seem to not talk about some other really important players you don't hear much about Korea you don't hear much about Indonesia you don't hear much about India in these conversations and they're all very critical players in regional economic integration but question to me is why we don't focus more on those big important economies in these conversations so I sort of pick up all of that as continuity from from year to year what has changed in the past year is first of all I think the macroeconomic situation in the past year has shifted a bit we have a I think a better performing Japan a Japan grew 3.9 percent in the first quarter of this year which is probably unsustainable but but certainly but certainly but certainly encouraging it feels as though I was in Tokyo last week it feels as though things are getting better there's sort of a a bit of a virtuous cycle that seems to be kicking in I don't want to predict that because there have been many false dawns in Japan but I do I do think there's there's a better story in Japan today than there was a year ago on the other hand China feels less positive than it was a year ago I think there were already concerns about the pace of Chinese growth now it looks as though Chinese growth is really slowing pretty dramatically the Chinese official target is still about seven percent growth for this year the IMF is down in the six percent range and I think some economists really think that growth is slowing more than that and the behavior of the Chinese government and trying to throw a lot of money at the economy is is an indication that they're concerned about the pace of slowdown and that I think changes this conversation a lot the US is kind of similar position to last year in that we're doing okay but there are some uncertainties and questions about our growth our first quarter growth a number was not good it was in negative territory so I think you have to look at the macro maybe because I'm a treasury guy I always start there look at the underlying macro economic trends in these big economies because those I think have a big impact on what kind of regional economic integration we're we're seeing we're going to see the other big change obviously and it's been touched on by everyone is that unlike last year when we were still talking of asking questions about whether TPP was going to get done I think now there is a a much greater sense of confidence maybe not a very very great sense of confidence but a a very good sense of confidence that the TPP is going to be completed soon probably by the end of this year with TPA passing probably this week and and then and then probably TPP being signed at the APEC meeting in November if all goes well so that reality is is a big change to last year and something that I think raises a bunch of questions that I'm going to come back to by the way though since this is a conference that focuses on U.S. and Japan's role in the region just as somebody has been watching U.S. Japan economic relations for 30 years one has to step back and realize what a big deal this is I mean it is unbelievable that we are on the brink of a U.S. Japan FTA something that I think most of us who have been following this for a long time did not believe was possible until well until now so so this is a big a big deal the other thing I think that has changed since last year is that RCP the AEC don't feel quite as real as they did last year I know there are targets for completing both of those things this year but my sense is that we shouldn't hold our breath on either of those things being fully completed and then obviously the other big big change from last year is China's new economic diplomacy in the in the Asian the broader Asian region with the announcement of these various initiatives the One Belt Run Road series of initiatives and the Silk Road Fund and the AIB of course and all of this is extremely interesting and certainly impressive in the in the dollar numbers that are being put behind these initiatives hundreds of billions of dollars and I've lost count at that level maybe in the trillions by now that have been committed to these various initiatives I mean it is changing the narrative about regional economic integration creating I think some new competitive dynamic and as an economist I don't mind competition it's a good thing Japan has announced a big infrastructure initiative the US is talking about these these issues in a much more active way than we were a year ago I think still in my mind questions about these Chinese initiatives of what their impact is ultimately going to be Professor Zhang had a couple of questions which he didn't have time to go into but about about exactly what kind of infrastructure problem we're facing here whether this is a financing gap I think you were going to ask the question because you had a question of demand for infrastructure versus financing for infrastructure it it doesn't feel to me like the problem is a lack of money it's a lack of bankable projects and constraints on land acquisition on political risk and so forth that are preventing money going into infrastructure so no question there's a need but whether whether this is a financing question or not you mentioned but didn't have time to really get into the questions of governance of these new institutions the standards of lending and so I think I think it remains to be seen exactly what these size and speed of the activity of these in these various areas is going to be but there's certainly a new part of the picture and then I can't fail to mention APEC I feel like since last year my baby APEC is is which I'm the only person in this room who cares about APEC perhaps but I still think it's important plays an important role in this conversation of sort of incubating a lot of the discussion of of regional economic integration efforts and it feels like APEC is kind of back again it had a couple of rough years under frankly Russian and Indonesian leadership and and I think with with China in charge last year and the Philippines is doing a good job as well it feels as though things are moving forward so looking forward and then I'll wrap up over the next 12 months or what to expect I think the big question the TPP world is going to be how do we bring on how do we dock on other members of APEC and possibly beyond I think definitely beyond ultimately there's some narrow questions like how do we get the Republic of Korea how do we get the Philippines and Taiwan and others who have expressed interest and then bigger questions about how we get China Indonesia and others aboard and then how do we move from that onto an an FTAP again questions over the next year in my mind will be where does RCP where do the AEC AEC CJK EU Japan all the things that have been mentioned that are pending where will those go over the next year these Chinese initiatives obviously will all be watching closely and then I think this is now with my sort of more political economy hat on questions about whether the US having done TPP which I think we will get done this year is going to be able to expand much more capital and energy on on other initiatives in regional economic integration frankly I'm a little worried about that I think after TPP is done this administration is not going to have a lot of energy to pursue new initiatives and frankly until a new president is in place and and probably not until the second half of 2017 you're gonna have an ability to I think launch new initiatives so you've got a two-year hiatus Japan on the other hand has has a political stability and a leader who's probably going to be in charge over that whole period so I think it's a very important period for Japan to step up and play a leadership role in regional economic integration final point is that since Ishii Ge-san raised it I am confident that over the next year the Washington Nationals will become the world champion baseball team so we'll you can hold me to that next year