Overview of the 17th “Asia Pacific Forum, Awaji Conference Japan”
International Symposium

Following the opening address from Representative Director of Awaji Conference Japan Satoshi Iue，welcome speech from Governor of Hyogo Prefecture Toshizo Ido，and awards ceremony for the Asia Pacific Research Prize，the purpose of the Awaji Conference was explained by Makoto Iokibe，President of the Hyogo Earthquake Memorial 21st Century Research Institute．This was followed by commemorative lectures from three speakers，coordinated by Fumiharu Mieno，professor at the Center for Southeast Asian Studies，Kyoto University．
Summaries of the commemorative lectures are as follows．

Abstract of the Commemorative lecture："The Way the Wind is Blowing over the TPP"

Speaker:Yoshimasa Hayashi（Member of the House of Councilors/Former Minister of Agriculture，Forestry and Fisheries）

1．Negotiations

During its short time as an opposition party，the Liberal Democratic Party of Japan（LDP）created something called the Nihon Keizai Saisei Plan（lit．Plan for regeneration of the Japanese economy）for deflation breakaway in the event it regained control of the government．In recognition of the need for an economic policy not only on GDP（gross domestic product）but GNI（gross national income），the plan endorsed the idea of a sangyo toshi rikkoku（lit．industrial investment nation）．Due to progressive globalization，instead of discussing economic policies only in view of GDP，the plan aimed at not a single-engined trading nation but a twin-engined industrial nation inclusive of investment．

The Trans-Pacific Partnership（TPP）－designed to lower international barriers pertaining to people，goods，currency and information in all areas of the economy as if in the same country－was just the kind of mechanism needed for any“industrial investment nation”to be viable．It was against the above backdrop that the Abe government came into being，and entered TPP negotiations．

TPP negotiations commenced in March 2010，participated in by the eight countries of New Zealand，Singapore，Chili，Brunei，the United States，Australia，Peru and Vietnam．Japan announced its intention to enter into talks in March 2013．A general agreement was reached in Atlanta in October 2015，and a signing ceremony held in February 2016 in Auckland, New Zealand．

The TPP Agreement enters into force when all of the twelve participating countries sign it，and complete respective domestic ratification procedures．However，if that fails to happen within two years of signing，there is also a provision to put it into effect as soon as domestic ratification procedures are completed by six countries that collectively make up 85% or more of the GDP of all the TPP participating countries．Whichever is going to be the case，the TPP does not take effect unless the U．S．and Japan complete domestic procedures．

2.Rationale，characteristics，and economic benefits of the TPP

Reflecting the needs of an age when business involves much more than the mere transaction of goods，the TPP has as many as 30 chapters，realizing many rules and commitments that would boost overseas business of Japanese firms both large and small in the areas of service and investment．Japan’s tariff elimination ratio on agricultural，forestry and fishery products is a comparatively advantageous 81% compared to 95% on all products，which is largely a fruit won from negotiations in comparison to other countries．

Once it takes effect，the TPP would enable Japan to enter in a large market including countries with growing population and demand－a very significant development for a country where the population is expected to continue shrinking for some time to come．According to a government analysis of the TPP’s macroeconomic effects on the Japanese economy once the TPP takes effect，real GDP was estimated to grow by 2.6％ once Japan shifts to a new growth path（equilibrium），which represents an expansion effect worth approx．14 trillion yen when calculated using the GDP level of fiscal 2014．It is vital that we do not let this become a pie in the sky．

The comprehensive TPP policy outline set out by the government’s TPP Sogo Taisaku Honbu（lit．comprehensive TPP response headquarters）consists of the three pillars of“new era of agricultural policy，”“new major exporter，”and“global（trade and investment）hub．”“New era of agricultural policy”envisages a switch to a more enterprising agriculture，forestry and fisheries sector，as well as measures for business stability and supply stability．“New major exporter”envisages increasing exports by businesses including both small and medium-size enterprises as well as more established ones．“Global hub”envisages Japan as an international trade and investment hub，and explores measures for directly linking the expansion of trade and investment brought by the TPP to the regeneration of the domestic economy，and measures for strengthening local earning power．

3．Significance of Japan’s TPP ratification

The aforementioned plans are based on the premise that the TPP duly takes effect．In the ordinary session of the Japanese Diet，TPP deliberations have stalled in the Lower House．I therefore feel it imperative to give it top priority and get it through the extraordinary session of the Diet that starts in mid to late September．

Japan’s prompt ratification can be significant in two ways．First，it can potentially encourage other countries，particularly the U．S．，to follow suit．Second，approval by the Japanese Diet can discourage the possibility of any partial renegotiation being brought up in the future by，for instance，members of United States Congress．

For Japan，where the population is expected to decrease over the next two or three decades，forming a large economic zone where it can partake in the free movement of people，goods，currency and information is highly significant，not least in terms of competing with China．I believe its political stability，unique among the world’s three blocs，makes Japan ideally positioned to contribute to a positive outcome．

Abstract of the Commemorative lecture："Emerging China and the International Community"

Speaker: Yuji Miyamoto (Former Ambassador of Japan to the People’s Republic of China/Chairman，Miyamoto Institute of Asian Research)

1．What characterizes the 21st century?

First，the deepening global economy and increasing interdependence of economies gave rise to a single world，thereby giving importance to the logic of economy．

Second，advances were made in science and technology，which gave birth to，among other things，nuclear weapons with enormous destructive power，which in turn made wars among major powers practically impossible．

Third，as a result of two devastating world wars，humans reached a new state，where the logic of economy is liberal economy，and the logic of politics is liberal democracy．

Fourth，bipolarization of the world is under way in earnest．One kind of bipolarization is between countries that developed successfully as a result of smoothly adapting to the global economy，and countries that did not．

Another kind of bipolarization is between countries where governance is successful，and countries where it is not．

There are also divisions within industrialized or economically advanced countries between those that managed to successfully ride the waves of economy, and those that did not．

Such bipolarizations are evident in all areas throughout the world．The international order we have attained，based on liberal economy and liberal democracy，is currently being tested whether it can withstand these bipolarizations．It is at such a time when China，once referred to as a “sleeping lion” by Napoleon Bonaparte，finds itself awake and prowling．

2．Issues brought to the fore by an emerging China

In China，there is just one history：that running from the 1840 Opium War to the 1945 defeat of the Japanese in World War II，with the single thread of anti-imperialism，anti-colonialism，and restoration of independence running through it．This historical experience has taught China that if a country is weak，its rights，its pride，and just about everything about it，gets trampled on．A country must therefore be strong．This is their conclusion drawn from history．

China and the rest of the world understand differently the history of humankind，and the ideal course of one’s country．

And before it could establish a new worldview，China has rapidly built up its military capabilities，and has embarked on pursuing narrow national interests．These serious issues are the greatest challenges China poses to the international community．

President Xi Jinping promoted the concept“Chinese Dream，”which is probably synonymous with “the great resurgence of the Chinese races，”and embodies the idea that the Chinese military must be strong in order for the nation to be prosperous and strong．The whole world must now face such China．

3. How should the world and Japan engage with China？

If allowed to become too assertive，the Chinese Dream and its ideal of a strong China risk harming China’s relationship with the United States，or even the whole world．As extremely difficult it may be，there is really no way but to persuade China to adopt alternative views．This requires time，and to gain the time required，we have no other way but to respond to China and its potential military risk-taking with the logic of military affairs and security．

Also，China certainly cannot deny liberal economy，an international order that has supported China’s successful growth to date in the global economy．The logic being that China cannot deny the existing international economic order，though it can modify and improve it．

Then，can China deny liberal democracy，the other major pillar of international order，which is expressed also in the Charter of the United Nations？ Xi Jinping assures China’s compliance with the UN Charter and international law．It is not the case that the Chinese people have anything specific to fault about democracy．I am sure each person has his or her own view，but the Chinese Communist Party does not provide any answer．

Provocative though its attitude may appear to the international community，the truth is that China is not quite ready to act on the challenges it makes．

It is therefore vital－while suppressing China by military might in the short term－to strengthen broad dialogues with China，so as to bring about a transformation to Chinese society as soon as possible．It is without doubt vital from a security point of view that international exchanges at the grassroots and various other levels make themselves felt by Chinese society，and at the same time，the TPP and other international economic systems are propelled smoothly and harmoniously to be conducive to China’s further economic growth and create greater international interdependency．

On top of this，politics and diplomacy have roles to play．Japan must，in all earnest，strengthen its dialogue with China；exercise caution so that trivial misunderstandings do not trigger serious situations；and exchange views openly，especially between leaders，with regards to the next level the two countries should reach．Only then can Japanese policy toward China attain greater solidity and impact．

Abstract of the Commemorative lecture： "The Asia Pacific Economy and the Rise of China：A Historical Perspective"

Speaker: Kaoru Sugihara (Senior Professor，National Graduate Institute for Policy Studies)

1．Asia’s two historical paths of development

The Pacific Ocean had long been a natural barrier to massive long-distance trade，which evolved earlier in the Atlantic．After World War II，an Asia-Pacific economic zone comprising just a handful of coastal economies in the West Pacific came into existence against the backdrop of free trade systems and the manufacturing prowess of the United States．This paved the way for subsequent regional integration movements ranging from ASEAN （Association of Southeast Asian Nations）and the APEC（Asia-Pacific Economic Cooperation）to the TPP（Trans-Pacific Partnership）．This is one of the legacies Asia inherits．

Another significant legacy is the several centuries of intra-Asia trade predating the aforementioned long-distance trade，which saw particularly vigorous growth during the 19th and first half of the 20th centuries，and forms a backdrop to East Asia’s high growth today．

It is necessary to consider two paths for development when we think of free trade systems in Asia of the present day：one is the capital-intensive，resource-intensive path as represented by the United States，and the other is the labor-intensive path of East Asia．

Land- and resource-poor East Asia achieved a labor-intensive type of industrialization，and in the process developed technologies and systems completely unique from those of the United States．With the advent of tankers and other types of merchant ships，the Pacific，previously a natural trade barrier，was all of a sudden transformed into an unprecedented business opportunity in the historical lapse of time，resulting in emersion of Asia’s explosively rapid economic growth．

2．Intra-Asia trade and labor-intensive industrialization

The Himalayan water system includes seven major rivers，including the Yellow River and the Indus River，which form a delta downstream．This fertile land was tilled to grow rice．East Asia by the 16th century saw widespread development of labor-intensive agricultural techniques in the lower Yangtze River basin，which also spread to Japan．Rice agriculture encouraged the development and accumulation of labor-intensive technologies and labor-absorptive systems．Active exploration of resource- and energy-saving technologies for utilizing the kind of labor and resources resulting from the labor-intensive technologies and labor-absorptive systems commenced in the 1920s．

In contrast，decisive to the European model of economic development was the utilization of fossil fuels，especially coal．The land- and resource-rich New World（North America and Australasia）accepted capital and immigrants from West Europe，and developed relatively capital-and resource-intensive technologies and systems．The process gave rise to，among other things，mass production and standardization for pursuing economies of scale，as well as mass marketing and scientific labor management．Such was the Western path of development．
In Asia from the late 19th century onward，coastal areas and islands became centers both in views of the population and the GDP．At the same time，advanced transportation networks，which had developed around the infrastructure，steamships and railroads brought by the West，became linked with conventional junk trade and road networks．As a result，local trade and intra-regional trade developed at a faster pace than long-distance trade．

Maritime trade，river trade，and railroads connected things that were originally environmentally diverse，and helped by the presence of clusters of large populations，resulted in the emergence of an Asian trade zone．

3．A burgeoning Asia-Pacific economic zone

The kind of intra-Asia trade described above largely fell apart with the outbreak of the Second World War in 1939．It began to resume rapidly around 1950 with the rise of Korean War procurement demand．

The correlation between intra-Asia trade and economic growth became apparent from the 1980s onward，when economies with higher proportions of intra-Asia trade began to demonstrate higher growth rates．Japan was in the lead initially，replaced by ASEAN in the 1980s．The NIEs came back to prominence in the 1990s，and China’s prominence became unrivalled from 2000 onward．

The growth of intra-Asia trade has been still sustained，with no sign of stalling．

4．The rise of China and the future of free trade systems

During the 1965 and even up to around 1985，the U．S．and Japan stood out among the economies belonging to the Pacific Rim trade zone，which was an order completely devoid of China．A system formed back in the days when China was outside the range has remained the premise，while the importance of the Asia-Pacific region in the world economy has since increased significantly，and China has grown exponentially．It is this international order that China in recent years is voicing objection to．

The reason of the explosive growth in the Asia-Pacific economic zone is that wide-ranging technologies and systems endowed with depth，which had developed independently from each other，were brought together，not that technologies and systems from developed regions were unilaterally introduced and disseminated in less developed regions．Dissemination at the same pace would not be likely in，for instance，inland areas such as western parts of China and Central Asia，and arid and semi-arid areas of India，the Middle East and Africa，where considerable environmental limitations apply．

I am of the view that Asia’s free trade system，which has the most successful linkage between long-distance trade and intra-regional trade，has the greatest potential to bring further development to the current situation of world trade and world trade systems．