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«7 No. Recent Articles from the Tokyo Foundation Website The Myth of China’s Leadership Financial Time Bomb Development ...»

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many EU countries are experienced in providing capacity building assistance to Middle Eastern and African nations.

The Challenge of Myanmar The situation in Myanmar is an omen of developments that could influence regional rule making over the long term. Its political and economic structures are far from stable, however, and there is no guarantee that the process of democratization advanced by President Thein Sein will not be reversed.

The lower house of Parliament in the capital of Naypyidaw, Myanmar. (©Htoo Tay Zar) The initial challenge will be whether Myanmar can amend its constitution, under which the military is granted 25 percent of all parliamentary seats and three important ministers—the internal minister, border management minister, and defense minister—are appointed by the supreme commander of the national military. Since a constitutional amendment requires the approval of a 75 percent-plus-one-seat majority in both houses of parliament, it remains a high hurdle. Opposition leader Aung San Suu Kyi is now cooperating with the Thein Sein government in seeking an amendment. One litmus test will be how steadily democratization proceeds in the next election, scheduled for late 2015.

A critical task for the international community regarding Myanmar will be to share its notions about and technical knowledge of establishing a healthy civil

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8 INTERNATIONAL AFFAIRS

ian-military relationship through the process of democratization and economic development.

The second challenge will be to address the ethnic conflict from which Myanmar is still suffering, even after 25 ethnic groups signed a ceasefire agreement with the military government in 2007. The Karen and Shan (Myanmar National Democratic Alliance Army) continue to fight the central government in the east of the country. Small, armed ethnic Rohingya groups are active in the west. Ethnic conflicts are a grave matter that could derail Myanmar’s economic and democratic development. Economic assistance, combined with reconciliation support, from the international community will be a critical facilitator.

In this area, Japan has demonstrated new thinking. To facilitate the reconciliation process, the government is collaborating with an NGO that has been assisting ethnic minorities in Myanmar for decades. The Nippon Foundation— one of the largest nonprofit, philanthropic organizations in Japan (which also helped establish the Tokyo Foundation)—has been providing food and medical assistance to ethnic minorities since 1976. In February 2013, the Japanese government appointed Nippon Foundation Chairman Yohei Sasakawa as special representative to help achieve ethnic reconciliation in Myanmar. Sasakawa was the sole observer at the first official peace talks between the Myanmar government and the United Nationalities Federal Council—an alliance of 11 ethnic militias—held in Thailand in February 2013. That the chairman of a Japanese NGO would be granted government status to facilitate such a reconciliation process is a new development. This shows that collaboration between the Japanese government and NGOs in the international arena has been growing in areas such as in advancing disarmament, demobilization, and reintegration (DDR) activities in Afghanistan and Africa, and Japan’s civil society can henceforth be expected to make further contributions to expanding the role of civil society throughout East Asia.

Myanmar faces enormous challenges, however, and addressing them is beyond the task of any one NGO or foreign government. Sasakawa has stressed the critical importance of the international community’s continued economic support for Myanmar’s ethnic minorities, many of whom are suffering from extreme poverty. This can play a key role in the domestic reconciliation process and abet the country’s democratic development. 3 Such a role may be identified Interview with Yohei Sasakawa, “Toward Reconciliation with Minorities and Ending 3 Poverty: Issues in the Current Democratization Process in Myanmar” (in Japanese),

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as a common mission for the civil societies of Japan, the United States, and Europe.

Japan-US-EU Trilateral Cooperation The international community’s role in helping Myanmar meet the challenges of reconciliation, democratization, and economic development must be considered wisely. One dilemma would be an excessive emphasis on business development in urban areas, as this could widen the gap between the rich, urban majority and the poor, rural minority. In this context, the international community’s continued assistance to rural, minority areas is of critical importance.

Formulating a common strategy and enhancing coordination among Japan, the United States, and the EU in their assistance would be a symbolic model case in supporting the steady economic and peaceful development of Myanmar and other ASEAN countries. Such trilateral cooperation, moreover, would not conflict with China’s rise in the region, as long as all actors share the common goal of a stable and prosperous East Asian region. The process itself may contribute to creating a rule- based and liberal international order throughout East Asia.

Reprinted from “Unlocking the Potential of the US-Japan-Europe Relationship,” a collection of papers written for Trilateral Forum Tokyo 2013, co-organized by the Tokyo Foundation and the German Marshall Fund of the United States.





Gaiko (Diplomacy), published by the Ministry of Foreign Affairs of Japan, July 2013, pp.

51–56.

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October 17, 2013 China and the Trans-Pacific Partnership Paul J. Saunders Parties to the negotiations on the TPP should not ignore China’s concerns that the TPP and other major international trade agreements represent attempts to economically “contain” China’s rise. Aiming for inclusive, rather than exclusive trade pacts, argues Paul Saunders, would make not only economic sense but political and strategic sense, too.

N otwithstanding President Barack Obama’s decision to remain in Washington to manage ongoing budget and debt talks with Congress, the Asia-Pacific Economic Cooperation summit in Bali appears to have produced modest progress toward the Trans-Pacific Partnership trade agreement. Success with TPP would be a major accomplishment for the United States, Japan, and other participating countries and could produce substantial economic and strategic benefits.

Nevertheless, its participants should also take care to avoid potentially counterproductive unintended consequences, particularly in their relations with China.

China’s new President Xi Jinping had an opportunity to shine in Mr.

Obama’s absence and by all accounts he did. Press reports from the summit describe other APEC leaders jockeying for opportunities to interact Group photo of APEC leaders with their spouses. (© APEC with Xi—as well as a 2013) unique and massive media center to promote Beijing’s role and perspectives. As a result, many dePaul J. Saunders Project Member, Tokyo Foundation’s Contemporary American Studies Project; Executive Director, Center for the National Interest (Washington, DC).

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scribed the event as a diplomatic victory for China’s leaders, and perhaps it was.

But whatever warm glow Mr. Xi may have felt in his hotel suite following the final day’s events is likely tempered by growing anxiety about the TPP’s progress. Although it is the world’s second largest economy and recently became the number one trading nation, China could face significantly greater competition from TPP members if the agreement is realized. TPP participants make up over 40% of world trade, while China is responsible for about 10% of global merchandise trade and around 5% of the international market in services.

Worse from China’s perspective, TPP is not the only major international trade agreement currently under negotiation. The United States is simultaneously pursuing the Transatlantic Trade and Investment Partnership with the European Union—and the EU represents approximately 19% of world trade. If both TPP and TTIP are successful, America would be at the center of a global free trade system accounting for 60% of international trade, without even considering Washington’s other existing trade pacts, most notably with South Korea and Mexico.

Setting aside America’s current political dysfunction, the success of these two agreements could reinvigorate both the US economy (and, of course, those of the others involved) and Washington’s international leadership. It would also demonstrate compellingly Washington’s power to attract partners, despite its occasional mistakes—a power that China still lacks.

Maintaining Openness

Creating TPP and TTIP at the same time could well look like—from China’s perspective—a form of economic containment, particularly because commentators in Asia, Europe, and the United States are all describing the agreements as not only economically important but strategically necessary in managing China’s rise. As a result, if the two trade agreements are not handled carefully, they could contribute to a dangerous backlash in China that might undermine their strategic benefits.

From a historical perspective, major powers that feel increasingly isolated have generally looked for new allies and partners to strengthen their political, economic, or military position. With this in mind, China is likely to seek partners outside TPP and TTIP—and looks like it is already doing so. This is most evident in Beijing’s increasingly active efforts to cultivate Moscow and its expanding engagement in Central Asia and the Middle East.

12 INTERNATIONAL AFFAIRS

At the same time, the United States is disengaging in Central Asia—as the war in Afghanistan winds down—and appears likely to reduce its energy imports from the Middle East, a key component of the US role there. A new Silk Road linking the Middle East, Central Asia, and China—an idea that currently seems to have wide support from not only these nations but also the United States and Europe—could promote this kind of integration, especially if Moscow and others successfully develop the Eurasian Economic Community.

The critical question for the major economies participating in all of these ventures is whether they will be inclusive or exclusive. Inclusive new groups that lower barriers and expand trade could energize the global economy, forming large and important building blocks for worldwide trade liberalization.

Conversely, however, exclusive and competitive groups could lead to growing trade tensions while giving away the potential benefits of wider and deeper economic integration. That path would likely heighten political tensions as well—and the consequences could be costly for all.

With all of this in mind, it is quite important for the United States, Japan, and others discussing the TPP to ensure that any eventual agreement is clearly open to new members, including China. This not only makes economic sense— by expanding the boundaries of freer trade and prosperity—but political and strategic sense too.

Eventually bringing China into the TPP could require one of the most complex and difficult trade negotiations in history—not to mention challenging work in Beijing to meet the agreement’s appropriately high standards—but would be well worth it. Until then, leaders in the United States and other parties to the talks should more clearly state this goal and look for ways to take small steps toward it.

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November 21, 2013 Japan’s Agriculture and the TPP Yutaka Harada Japanese agriculture is in a dire state, and misguided agricultural policies are partly to blame, states Senior Fellow Yutaka Harada. He sees promise, though, in that some sectors have demonstrated potential for growth even under such circumstances. Japan’s participation in the TPP should benefit many farming households, inasmuch as their income is reliant on a healthy economy as a whole.

Introduction*

Many Japanese industries are perceived to be strong, active, and competitive in the global market, but agriculture is usually considered an exception. For years, the farm sector has sought protection from international competition, subsidies, and favorable government treatment, and it has been largely successful in getting them until now. In spite of these privileges, Japanese agriculture is in a perilous state, and most farmers oppose any movements toward free trade.

Japan has free trade agreements (FTAs) and economic partnership agreements (EPAs) with many countries, but their ratios of trade liberalization are low—around 85% or 86%—with the unliberalized items basically being agricultural products. 1 Japan decided to join the negotiations for the Trans-Pacific Partnership (TPP) in March 2013 and has been participating in the talks since July 2013. For the TPP, the United States and other member countries are believed to be seeking liberalization ratios of 96% or higher. 2 The Japanese government is believed to be interested in protecting rice, Yutaka Harada Senior Fellow, Tokyo Foundation; Professor, School of Political Science and Economics, Waseda University.

This manuscript was prepared for the Chicago Council on Global Affairs conference * on ”Frontiers of Economic Integration,” in Chicago, Illinois, on October 29–30, 2013.

1 See Harada and the Tokyo Foundation (2013), p.18, Chart 2.

2 Liberalization rates of FTAs between the United States and other countries are higher than 96%. See Harada and the Tokyo Foundation (2013), p.18, Chart 2.

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wheat, beef and pork, milk products, and sugar, but if it protects them all, the liberalization ratio will only be around 90%. 3 This would mean that the goal of the TPP—to achieve high-level trade liberalization—will not be realized.

The Japanese government is now reportedly trying to persuade powerful agriculture lobbies to accept liberalization in exchange for new subsidies. The main lobbies, the Japan Agricultural Cooperatives, actively opposed joining the TPP negotiations until March 2013 and are now trying to reduce the liberalization ratio and to get more subsidies by arguing that Japanese agriculture has been seriously damaged and that Japan’s food self-sufficiency rate has drastically declined.



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