Remarks by H.E. Ambassador Odano at
The Committee of International Trade of the European Union
10th November, 2009
(Photo Copyright European Parliament 2009)
H.E. Ambassador Odano addressed the European Parliament's Committee on International Trade on the 10th November, 2009.
The following is the text of his speech:
"The Honorable Chairman Moreira, and distinguished members of the European Parliament Committee on International Trade,
I am here in Brussels to deepen and widen the relations between Japan and the EU. I am delighted to have an opportunity to discuss with all of you for this purpose today. Yesterday there was a celebration to mark the 20th anniversary of the fall of the Berlin wall. That was a historic moment, in many senses bringing to an end to the cold war structure. Since then, the EU has expanded mainly to the east and today it encompasses 27 member states, accommodating about 500 million citizens and has consolidated its organizational arrangements and structures. Today the Lisbon treaty is about to enter into force in the next month. Japan welcomes stable, cohesive and vibrant Europe.
The first encounter for Japanese people with Europeans goes back more than 400 years. At that time, history tells us that the Portuguese brought rifles and gun powder, and then Japan exported, or the Portuguese and Europeans purchased, porcelain, silk, gold and silver. Japan has been a trading partner of Europe ever since those encounters with Europeans. In 1582, Japan sent a youth delegation on a Portuguese ship, stopped in Macao, Batavia in Indonesia, Goa in India, Lourenço Marques in today’s Mozambique and then all the way to Portugal and they then took a land route through Span and Italy and then on to the Vatican in 1585. They had the honor of being received by Pope Gregorius XIII. Once again, you can see that Japan emphasizes the exchange of people and dialogue so as to maintain good relations.
Now, let me explain briefly about the current state of Japanese economy to begin with. Japan has a population of about 127 million, the tenth largest in the world, or roughly equal to the population of France and the UK combined. Its economy is the second largest in the world amounting to nearly 10% of global GDP. This figure is roughly equivalent to the German and Dutch economies combined. Japan had been in prolonged economic recovery since the beginning of 2002 after the collapse of bubble economy and the “lost decade” which started in the middle of 1990s. While the economy faced a downturn due to the Lehman Brother’s shocks in September 2008, the yearly economic growth rate in the second quarter of 2009 was +2.3%. There are visible signs of recovery in activities such as manufacturing and export sectors. The new Hatoyama administration also recognizes the importance of stabilizing the economy and to securing employment. The new administration aims for sustainable economic growth, trying to shift the focus of economic priority from public work projects to support towards family life such as parental care and increasing domestic consumption.
At the end of the 1980s, when I lived in London, one could not talk about Japan-Europe relations without reference to the intensified trade conflict due to a large amount of trade surplus in Japan and the sluggish economy in Europe. The bitter memory of import restrictions by some European countries on Japanese electronic products was still vivid to businessmen on both sides. Thankfully, it is now a footnote in history. Japan and Europe entered into “an age of dialogue and cooperation” in the second half of 1990s. Now, there is an estimate that, in 2008, the number of Japanese companies operating in the EU area is about 3200 including around 750 manufacturing companies. They play a significant role in creating job opportunities in the EU area, i.e. they employ more than 340,000 people. These companies also generate tax revenues to local communities. The net in-flow of direct investment from Japan to the EU area amounted to more than 15 billion Euros, which places the EU as a major investment destination for Japan. In addition, since 2007, the EU has been the largest origin of Foreign Direct Investment (FDI) in Japan. Japan imported goods from the EU to the amount of about 47 billion Euros. Now, Japan is the sixth or seventh biggest export destination for the EU, after countries such as the United States, Russia, and Switzerland. These figures show that Japan and the EU economically depend on each other to a very large extent.
Turning to the political relationship, the new Hatoyama administration, in its first six weeks, enabled a number of meetings with their European counterparts. Prime Minister Hatoyama met Italian President Napolitano, UK Prime Minister Gordon Brown, Austrian President Fischer, Danish Prime Miniseter Lars Rasmussen and Dutch Prime Minister Balkenende. On the occasion of the G20 summit in Pittsburgh, Prime Minister Hatoyama and President Barroso sat side by side at the working dinner. New Foreign Minister Okada made his diplomatic debut at the Japan-EU Foreign Ministers Troika Meeting in New York in September where he met and discussed with Swedish Foreign Minister Bildt, Spanish Foreign Minister Moratinos, High Representative Solana and Commissioner Ferrero-Waldner. Foreign Minister Okada also met UK Foreign Secretary Miliband, Finnish Foreign Minister Stubb, Slovakian Foreign Minister Lajcak and the UK First Secretary of State, Lord Mandelson. In addition, Japan’s Economic and Trade Minister Naoshima, not only had a series of meetings with his counterparts of the EU member states, but also visited Brussels just a few weeks ago and had discussions with Vice President Verheugen and Environment Commissioner Dimas. I think that the new government has made a strong start towards strengthening the Japan-EU relationship.
What are forming the foundations of this close relationship and partnership between Japan and the EU? The answer is the fundamental values and principles shared by Japan and the EU such as democracy, the rule of law, good governance, free trade, the market economy and sustainable development. We should recognize that, although people tend to pay attention to emerging economies, Japan and the EU are strategic partners sharing these fundamental values and principles and are a stable element in world politics and in the world economy. Together, we can play a significant role in meeting a variety of challenges in the international community. In the current economic and financial crisis, Japan and the EU are taking concerted actions in establishing an appropriate financial regulatory system, reinforcing the financial foundations of international financial institutions, fighting protectionism and promoting free trade through negotiations for the early conclusion of the WTO Doha Development Round. We also have common public awareness on protection of consumers, the environment and the safety of food. In these policy areas Japan and the EU can cooperate further and take a global lead in the development of research, human resources, standards and laws towards a wealthy and sustainable society.
Let me touch upon two more concrete forms of cooperation between Japan and the EU in the trade and economic sphere. Firstly, it is on the question of maintaining and strengthening the multilateral trade system: Both Japan and the EU have benefited from promoting free trade, based on international trade rules. Japan and the EU are in a close contact during the current WTO Doha Round negotiations. We should continue our cooperation and play leading roles toward the early and successful conclusion of the Doha Round in 2010 which the G20 leaders committed to, in Pittsburgh. With regard to moves for protectionism seen in many parts of the world, if Japan and the EU, accounting for about 40% of the world GDP, closely cooperate and take a lead together, it will be a more effective way of tackling these problems. In a similar context, we should also remember the importance of keeping our shipping lane free from piracy. French wine, home appliances made in the Netherlands, Nokia mobiles made in Finland, BMWs made in Germany and other European products are shipped through the Suez Canal. Beyond that point, there are activities of pirates. Japan conducts escort operations in the Gulf of Aden and off the coast of Somalia by sending frigates with helicopters and by sending fixed wing P-3C patrol aircrafts. Some European cargo ships have been able to foil attacks from pirates thanks to the information provided by Japanese patrols. The EU’s “Operation ATALANTA” and Japanese patrols are well concerted on the spot in that part of the world. There is very tangible cooperation between Japan and the EU.
Secondly, it is on the issue of driving forward the economic partnership between Japan and the EU: At the 18th Japan-EU Summit in May 2009, both sides expressed their intention to cooperate in strengthening the integration of their economies with a view to better exploiting the full potential of their economic relationship. Japan and the EU have equivalent levels of economic development, sharing a variety of common values, as I mentioned beforehand, such as democracy, free trade and sustainable development.
Let us ask ourselves whether Japan and the EU have done enough to strengthen our relationship for mutual benefit in the past 10 years. The answer would be that we could have benefited ourselves more. During the same period, Japan has most definitely strengthened its economic and trade ties with neighboring Asian countries. Let me give you one example. While the total value of import to Japan has doubled from 2000 to 2008, the value of import from the EU area increased only by 45% in the same period. This is partly because both Japan and the EU paid much of their attention on ‘emerging markets’. The current Japan-EU relationship can be considered ‘mature’, free from major political friction. I consider that because of this maturity in our relationship, we must use this opportunity to progress our cooperation to a new level. For example, Japan concluded an agreement on free trade and economic partnership with Switzerland, which is the first economic partnership agreement Japan has with Europe. In that agreement, there are provisions not only on reduction and elimination of tariffs, but also on the promotion of investment, protection of intellectual property rights, cooperation between competition authorities, harmonization of customs procedures, promotion of electronic commerce and so on. These measures are expected to bring win-win results for both Japan and Switzerland through further enhanced economic and trade ties. Japan would like to develop economic and trade relationship with the EU as well. In April 2009, Nippon Keidanren, the largest economic organization in Japan, presented its second proposal for the Japan-EU Economic Partnership Agreement. This accord will be more comprehensive than any other existing free trade and economic partnership agreement. Following this move, the European Business Council in Japan, which represents over 2,500 local European companies and individuals, issued a press release welcoming the economic partnership agreement proposal by Nippon Keidanren. The government of Japan has also been seriously examining how we can build the foundations for further development of the Japan-EU economic relationship in light of these discussions in the private sector. Especially after the change of government in September in Tokyo, the new Japanese leadership gives consistent direction towards the early realization of the Japan-EU Economic Partnership Agreement. Under the instructions of Prime Minister Hatoyama, Foreign Minister Okada and Economic and Trade Minister Naoshima, Japan will accelerate domestic coordination aiming for this objective. This agreement would no doubt bring much benefit to the European industry as well, especially in providing more market access opportunities in trade and investment by addressing tariffs and other regulatory issues. We will count on political initiatives by the new European Parliament towards achieving this goal. I myself, as a representative of Japan, am committed to make every effort in this respect. In order to strengthen future-oriented economic integration between Japan and the EU, we are looking forward to working with the distinguished members of the European Parliament.
Before concluding my introductory remarks, I would like to briefly touch upon two other issues. One is climate change, one of the major global challenges of our time. At the UN Summit on Climate Change in September, Prime Minister Hatoyama promoted his pledge to cut greenhouse gas emissions by 25% from 1990 levels by 2020, which is premised on agreement on ambitious targets by all the major economies. Japan and the EU should cooperate with each other to seek a workable and ambitious international agreement on climate change in Copenhagen. In order to tackle climate change, new investment in business and R&D is required. Carbon capture storage, energy efficiency, clean coal technology, renewable energy, and solar power are but a few examples of the fields where Japan and Europe can work together.
The other issue is the concept of an “East Asian Community”, which Japan wishes to promote. Prime Minister Hatoyama’s proposal was well received by the leaders of China and South Korea when they met recently. It is a concept based on open regionalism so as to secure stability, prosperity and development. In this respect, Japan and the region can learn a lot from the experience of the integration of the European Union.
What I wish to stress most today is that there is much potential for stronger Japan-EU relations which can enable further prosperity and better responses to international challenges. In order to extract that potential, we must try to find ways to enlarge our interest in each other, and then translate them into concrete actions. It is my sincere hope that the discussion today provides an opportunity for those of you who lead the foreign trade policy of the EU to reevaluate and recognize the value of strong Japan-EU ties, especially in terms of a more consolidated and comprehensive bilateral economic and trade relationship."