by Rachel Wagley
Japanese prime minister Shinzo Abe’s historic upcoming visit to Washington will emphasize trade and defense ties as Tokyo and Washington seek to update the U.S.-Japan alliance for the 21st century. Abe will address a joint session of Congress—the first Japanese prime minister ever to do so, and enjoy a State Dinner at the White House with President Obama before traveling to a handful of the United States’ largest cities. Looming even larger than imperative trade and defense cooperation is the need to commemorate and set a constructive tone for the 70th anniversary of the end of World War II.
NBR offers the following backgrounder on four areas that policymakers, media, and others should watch during Abe’s visit.
Prime Minister Abe’s visit comes as U.S. and Japanese officials negotiate the final stages of the Trans-Pacific Partnership (TPP) and as Congress moves closer to providing President Obama with trade promotion authority (TPA). House Ways and Means Committee chairman Paul Ryan reassured Abe that Congress would advance the fast-track TPA legislation during a high-profile delegation to Tokyo in February 2015, while ranking member Sandy Levin announced in mid-April that Abe’s visit is helping drive passage of the legislation. TPA would fast-track trade deals that come through Congress without subjecting them to a politically fueled review; this mechanism would simplify TPP trade negotiations for Japanese leaders, who are being asked to make politically difficult compromises.
Japan and the United States are by far the two largest economies in the twelve-nation TPP, and a pending bilateral agreement is key to concluding negotiations. Since Japan’s entry into TPP negotiations in 2013, the countries have held numerous bilateral administrative-level talks to resolve issues in sensitive areas, including opening up Japan’s agriculture sector and lifting barriers in Japan’s automobile markets. Major breakthroughs have been stalled largely due to Japanese domestic resistance against open access to the country’s markets for agricultural products (specifically, rice, pork, beef, dairy, and sugar) and automobile parts.
For Japan, the conclusion of TPP negotiations will be crucial in furthering domestic structural reform and improving economic competitiveness, the challenging third arrow of Abe’s proposed economic reforms. Eliminating tariffs on agricultural products under the TPP will help Japan liberalize its heavily subsidized agricultural sector and help bolster Abe’s push for reforms in the country’s agricultural cooperatives. Abe and the previous Japanese administration have increasingly embraced domestic agricultural reform as crucial to reinvigorating Japan’s long-stagnant economy, and the TPP will provide political cover for advancing some of these policy changes.
Despite being the United States’ major ally in Asia and second-largest trade partner, Japan has never had a free trade agreement with the United States. The combined GDP of both countries constitutes nearly 80% of the total GDP of all TPP members. A bilateral agreement would pave the way not only for the conclusion of TPP negotiations but also for a Free Trade Area of the Asia-Pacific.
The Trans-Pacific Partnership: Lessons from Negotiations (September 2014)
Japan’s Entry into the Trans-Pacific Partnership (July 2013)
Will Abenomics Restore Japanese Growth? (June 2013)
Japan’s New Foreign Policy and The U.S.-Japan Defense Guidelines
Since the escalation of tensions over the Senkaku/Diaoyu Islands in the East China Sea in 2010, and as China’s military power continues to rapidly expand, Japan has been driven to dramatically re-examine its defense posture. In May 2014, a panel advising the Abe administration recommended that the country reinterpret Article 9 of its constitution to allow for collective self-defense—part of a broader strategy to enable Japan to play a larger role as an ally of the United States and as a key guarantor of regional stability.
According to an April 2015 poll from the Pew Research Center, the U.S. public is far less hesitant about an expanded military role for Japan than is the Japanese public, which still harbors reservations about collective self-defense. Nonetheless, Prime Minister Abe has expanded Japan’s defense relationships with other countries in the region, including Vietnam, the Philippines, and India. Such cooperation with Southeast Asian countries looking to maintain sovereignty and modernize their forces, particularly their coast guards, will be crucial in strengthening regional security.
Japan has experienced considerable anxiety over the past few years as to whether the United States will defend it if a conflict were to rapidly escalate in the East China Sea. China now regularly patrols the disputed Senkakus and is allegedly building runways capable of hosting military jets on the islands. While it is unclear if China has the capacity yet to completely control the territory, it certainly can intimidate and coerce. It is increasingly conceivable that Japan could experience an attack or other incident necessitating a military response. Contemporary Japan has little experience with threat response or deterrence strategy, though it is still the largest maritime power in Asia.
Abe met with Chinese premier Xi Jinping on the sidelines of APEC in fall 2014, a meeting that sparked hope that the two countries might begin government-to-government talks. While Japan and China clearly disagree on their territorial claims, they should agree on a mechanism to observe and mitigate crisis escalation in the East China Sea, if an incident were to happen. Both countries have a shared interest in cooperating on risk reduction strategies as their ships cruise the Senkakus.
In April 2015, U.S. secretary of defense Ashton Carter traveled to Tokyo to finalize the U.S.-Japan Defense Guidelines ahead of Abe’s visit to the United States. These guidelines will modernize bilateral cooperation on surveillance, missile defense, cyber and space issues, and self-defense. Carter stressed that the guidelines, which had not been updated since 1997, will allow the U.S. military and Japan Self-Defense Forces to cooperate more “seamlessly” around the world. The guidelines are a major centerpiece of the U.S.-Japan alliance and will help soothe Japanese qualms about China’s power in the region. But Japan’s changing security story is larger than these guidelines, and much of it is being driven domestically in response to heightened maritime tensions.
Top Pick: The Sea Change in Japanese Foreign Policy (June 2014)
Can Shinzo Abe Make Good on His Promises in Japan? (January 2015)
The Japan-China Feud in the East China Sea (November 2013)
The State of Cooperation in the East China Sea (April 2013)
HISTORICAL CONTROVERSIES AND JAPAN’S ROCKY REGIONAL RELATIONSHIPS
The treatment of “comfort women” during World War II and territorial disputes over the Takeshima-Dokdo islets are a persistent Achilles’ heel in the Japan-South Korea relationship. Strained diplomatic relations between these two key U.S. allies have slowed U.S. efforts to coordinate cooperative strategies in the Asia-Pacific. This year marks the 50th anniversary of the normalization of bilateral relations between Japan and South Korea, and U.S. officials have their fingers crossed that the anniversary will help calm contemporary bilateral relations.
Leaders from Japan and South Korea have met under U.S. mediation, but until a security dialoguebrought together the countries’ top defense officials in April 2015, they had not convened a high-level bilateral meeting since Korean president Park Geun-hye took office in 2013. Regional tensions heightened when Prime Minister Abe took office in 2012 due to his past remarks questioning the validity of the Kono Statement of 1993, which officially acknowledged the use of comfort women by the Japanese military. The Abe administration has been accused of whitewashing the severity of Japan’s wartime sex slavery and downplaying the occupation of the Korean Peninsula. Abe has reassured critics that his administration will not revise the Kono Statement, but President Park has refused requests from Abe to hold an official meeting, instead urging Japan to correct its historical views.
In March 2015, the foreign ministers of China, Japan, and South Korea met in Seoul for the first high-level trilateral meeting since 2012 to discuss regional cooperation. In a statement after the meeting, Chinese minister Wang Yi said, “The war has been over for 70 years, but the problem with history remains a present issue, not an issue of the past.” The United States has been stuck between a rock and a hard place, condemning the historical practice of sex slavery but distancing itself from the ongoing diplomatic conflict. In March 2015, a bevy of South Korean politicians and media outletscriticized a senior U.S. official who made remarks seemingly dismissive of the historical tensions, inducing State Department officials to issue a clarifying statement.
In the months leading up to Abe’s visit, some current and former U.S. lawmakers have called on Japan to issue a formal acknowledgement and apology for the human rights violations committed during World War II. Abe will speak before a joint session of Congress on April 29, 2015, and many are hoping he uses the forum as an opportunity to soothe tensions with South Korea. With this year marking the 70th anniversary of the end of World War II, Prime Minister Abe is expected to issue an official statement on Japan’s actions during the war. There is much skepticism, however, as to whether the Abe administration intends to genuinely apologize, particularly given recent controversies over historical revisionism in Japanese textbooks and the Japan foreign ministry’s surprising request to U.S. publisher McGraw-Hill to delete paragraphs about Japanese sex slavery from a textbook.
Growing Tension in Northeast Asia (December 2013)
Japan’s total debt to GDP ratio is an astounding 600%, and the ratio of government debt to GDP is close to 250%, the highest among developed economies. The country’s economy has not grown in nearly twenty years. One of Prime Minister Abe’s chief goals has been to increase Japan’s economic competitiveness and shake up the country’s labor markets. Since taking office, Abe has sought to boost GDP and increase inflation to 2%. While these reforms caused significant excitement when announced, national energy for inflation and growth has dwindled. Abe’s stimulus turned into a new recession before mid-2014, and the promised consumption tax increase that was supposed to pay for the stimulus has been delayed.
Abe’s trip to the United States is a good opportunity to check in on the progress of Abenomics, or Japan’s “three arrow” economic reform policy. What are the three arrows? Fiscal expansion, monetary expansion to combat inflation, and structural, longer-term reforms.
The second two arrows are fairly weak in terms of available policy choices and their ability to significantly alter the country’s economic trajectory. Critics stress that Japan’s stimulus strategy has not led to increased growth either this time around or in the past, and Abenomics proposes red-tape policies that have failed to increase competitiveness. The TPP, however, is an economic curveball for the country and may help push needed structural reforms. The impact that the TPP will have on Japan’s GDP is unclear, as the trade deal is a new agreement in a new environment. Nonetheless, the upcoming year may produce minimal growth.
Reforms that diversify the workforce, such as “womenomics” and immigration, may help combat the crippling effect of demographics on economic growth in Japan. Abe would do well to create opportunities for labor mobility and find ways to open up the economy for young workers who face high unemployment. But policy is not enough; the country must embrace social changes that reward talent in the labor force, welcome female labor, and transform the uninviting seniority system in Japanese companies. Regardless, there are fewer jobs to be had in today’s Japan. Companies are still largely skeptical of the country’s economic future, and choose to invest abroad.
Will Abenomics Restore Japanese Growth? (June 2013)
How Can Japan Compete in a Changing Global Market? (February 2013)
See the USA, Mr. Abe (April 2015)
Abenomics and the Japanese Economy (March 2015)
Originally published at NBR by Rachel Wagley, Assistant Director of External Relations, NBR and Sara Itagaki, Project Associate, NBR.