French Presidential Election

Following on from the Dutch general election in March, the election in France of the pro-EU candidate Emmanuel Macron has stemmed the spread of anti-EU sentiment and nationalism in Europe. In Germany, the governing Christian Democratic Union has also won recent regional elections, bolstering support for Chancellor Merkel.

If stability returns to the EU, the rallying European economy is likely resume course for steady growth. The US economy is on a strong footing, and prospects for the entire global economy are bright. Moreover, preservation of the EU framework is vital for Japanese companies doing business in Europe. President-elect Macron is just 39, but he has ministerial experience, and I understand that his personal networks are extensive. I believe he will make a major contribution to setting direction for France and managing and developing the EU.

Constitutional Reform

As President of the Liberal Democratic Party (LDP), Prime Minister Abe recently set a clear direction for constitutional reform. For the business community, this was an important and weighty announcement. Keidanren outlined its fundamental views on the Japanese Constitution in a policy proposal issued in January 2005. The international security situation and other circumstances have altered considerably since then, and public awareness and expectations of the Self Defense Forces (SDF) are changing. In response to these developments, Keidanren will review its position on constitutional issues. The Committee on Comprehensive Strategy will first summarize points for discussion, and Keidanren executives will then debate these points at the Summer Forum.

Seventy years have now passed since the constitution was enacted, and during this period Japan has enjoyed peace and prosperity under its pacifist constitution. The tremendous significance of this achievement should not be underestimated. Japan needs to base its consideration of constitutional issues on a sound understanding of this point. Essentially, we should maintain the spirit of our pacifist constitution, and consider the nature and role of the SDF. However, Japan’s political, economic, and security circumstances have changed a great deal over the past seventy years. Japan’s position and role in the international community have evolved, as has public opinion. Keidanren aims to summarize and publish its views by the end of the year. As I have often noted, however, the Abe administration should focus first of all on the economy. Although constitutional debate is an important necessity, economic measures are the top priority.

Ending Deflation

Japan is steadily beating deflation, albeit at a gradual pace. Although some retailers are lowering prices on everyday goods, in certain industries prices are trending upwards. I recognize that economic activity as a whole is moving towards achievement of the 2% inflation target.

Trans-Pacific Partnership

Keidanren has consistently called for a 12-country Trans-Pacific Partnership (TPP). Since President Trump took office we have not abandoned our support for the agreement, and have continued to highlight its significance. However, given that the US has withdrawn from the TPP process, and Vice President Pence declared the TPP “a thing of the past” during his recent visit to Japan, there is no prospect of achieving a 12-country TPP for the time being. In this situation, the important thing is to realize the intent of the TPP by creating a comprehensive, high-quality framework for free and open trade and investment in the Asia-Pacific region. The current discussions among the remaining 11 potential TPP members are a step towards achieving this goal, and may lead to a 12-country TPP in the future. Keidanren thus supports the Japanese government’s efforts to pursue an 11-country TPP. The high-level talks in Toronto appear to have elicited a variety of expectations from participants, but they all agree on the significance of the TPP itself. Following the meeting of trade ministers in Hanoi in May, I hope that the APEC Leaders’ Meeting in November will provide an opportunity to conclude an 11-country TPP.

Economic Diplomacy

Economic diplomacy is a key priority for Keidanren. We have identified issues relating to various countries and regions including the US, EU, Russia, China, and ASEAN, and are working towards stronger economic ties. All regions are important to us, but in the short term we regard strengthening Japan-US relations as the top priority. This month we are sending a mission from our Committee on US Affairs to the United States, and I will lead another mission in the fall.

At the invitation of the Chinese government, I will join LDP Secretary General Toshihiro Nikai at the “One Belt, One Road” summit beginning in Beijing this weekend. Japan and China will celebrate the 45th anniversary of the normalization of diplomatic relations this year, and the 40th anniversary of their Treaty of Peace and Friendship in 2018. Various commemorative events will be held to mark these milestones, which will build closer bilateral ties. The “One Belt, One Road” concept is a key topic in advancing infrastructure development in Asia, and infrastructure projects need to be backed with joint financing by institutions such as the Asian Development Bank and the Asian Infrastructure Investment Bank.

Source: Keidanren

Image: Keidanren