Awaji Conference Statement 2016

The Awaji Conference is a project focused on recovery from the Great Hanshin-Awaji Earthquake that occurred 21 years ago．The conference venue，Awaji Yumebutai，was once a borrow area generated after soil was removed from a hill in order to construct an artificial island in Osaka Bay．This borrow area has now developed into a semi-national park that serves as a place of harmony between people and nature，as well as a place for interaction and harmony between people in Japan and the rest of the world．Awaji Yumebutai has been constructed as a tangible recovery project，followed by the launch of the Awaji Conference as an intangible recovery project．The 20th century witnessed fierce battles in the Pacific region．The Awaji Conference strives to prevent the reoccurrence of such history in the 21st century，and to develop the region into a place of peaceful interaction and harmony．

Vice Governor Kanazawa previously indicated that there was strong concern about the lack of appropriate human resources today，and harshly commented on the roles of universities，which were supposed to generate such resources．The reality，however，is that there are big differences depending on young people．Prof．Kubota said that some students had eyes full of fire．Of such young people，those who are especially on the cutting edge of the era are the winners of our Asia Pacific Research Prize．This year，the prize was awarded to four persons who had completed high-level doctoral dissertations based on their own field research conducted globally．Although it is not so easy today for universities in Japan to produce proper human resources who can lead the next generation，we are proud that our project commends those engaged in such splendid research．The best way for young people to develop themselves is for them to place themselves in global competitions and experience global standards．The authors of the award-winning doctoral dissertations are Japanese students and international students who are willing to do this．This has made us realize once again the significance of the Asia Pacific Research Prize．

Looking back at the 17 years since establishment of the Awaji Conference，we find it to be a period of the world suffering many difficulties and heading toward a state of chaos．With this background，we set this year’s theme as “Asia-Pacific in the Era of Mega-Competition Triggered by the TPP，”thereby aiming to find answers to the following questions：Where can we can find breakthroughs？；Is it possible to explore new horizons by utilizing the TPP？；and What will become of China’s actions，including the AIIB，in the future？At the end of the Cold War，Japan occupied 15％ of global GDP，leading others in those days to call the country an economic superpower．After the collapse of the so-called bubble economy，however，Japan suffered first its “Lost 10 Years ”and the ongoing “Lost 20+ Years．”The Awaji Conference was launched in this environment．The end of the Cold War was followed not by the achievement of peace in the world，but by a flurry of ethnic and religious conflicts，which have been continuously disrupting the world．However，one thing can be noted，and this is the establishment of the WTO in 1995 after the Uruguay Round．This saw the development of the General Agreement on Tariffs and Trade（GATT）, which once covered only trade related to secondary industries，into a comprehensive global trading system covering services and agriculture．In the breakdown of order that occurred after the end of the Cold War，the establishment of the WTO can be described as exceptional in that it helped to reinforce order．

People’s expectation that the 21st century would become a period of stability was bitterly betrayed by the coordinated simultaneous terror attacks in the U．S．on September 11，2001．The Awaji Conference held in those days examined the U．S．war with Iraq and the country’s foolish occupation in Iraq．Actually，compared with the occupation of Japan，that of Iraq was very rough．The Bush administration acted based on the careless idea that democracy would be achieved in Iraq as long as the country was overthrown militarily．Conversely，during the Second World War，the U．S．spent three and a half years fully preparing for its occupation of Japan．At first, mainstream opinion in the U．S．government was that Japan should abolish its emperor system and bureaucracy as a way of taking responsibility as a defeated nation．However，some people began asserting that such a move was foolhardy．Eventually，a decision whether to abolish the emperor system was put off in order to identify the effects the system would have in Japan after the end of the war，and the roles the system could play in the country’s reform．For the bureaucracy，it was decided that while war leaders in top positions should take responsibility for their acts，many of the remaining bureaucrats should continue working as before．This was because such bureaucrats were essentially neutral and had the skills needed to realize the U．S．military’s administrative and occupational goals in Japan．This stance was not taken in case of Iraq，however．Almost all bureaucrats of the Baath Party，military personnel，and police officers were purged based on the assertion that they had helped Saddam Hussein tyrannize the country．This consequently deprived the U．S．of its most practical workforce in Iraq，causing intense frustration among many people now out of work and antagonizing those with capable skills．Today，many such capable people who lost opportunities to demonstrate their abilities belong to the Islamic State．Accordingly，although the Iraq War itself was problematic，how the occupation of Iraq was implemented was also riddled with problems．

Today，Islamic extremists are paralyzing the world．In addition，the rise of China has also become a serious problem that needs to be handled immediately．In 2008，the success of the Beijing Olympics gave China much confidence．Moreover，when the U．S．，Europe，and Japan were swayed economically due to the effects of the Lehman Brothers’collapse，China underpinned the global economy through its 4-trillion-yuan economic stimulus package．Like the giant Atlas，China lifted up the world economically，significantly boosting the country’s confidence and pride．Deng Xiaoping once asserted that China should hide its talents and bide its time for the right opportunity，meaning that it should not act big before obtaining sufficient capabilities，should learn modestly，and should avoid conflicts．Around 2009，however，calls for the country to move beyond these assertions began growing，followed in 2010 by the Senkaku boat collision incident．Since 2012，when Xi Jinping became president，China has been taking a firmer stance，subsequently leading to the country’s aggressive actions in the South China Sea．In short，their success in the Olympics and the outstanding role they played after the Lehman Brothers bankruptcy have made China overconfident，and in some ways encouraging the country to act rather violently and unilaterally．

The world is thus experiencing two major problems of the rise of Islamic extremists，such as ISIS，and the rise of China．With this as the backdrop，this year’s Awaji Conference explored the rise of China and the establishment of the TPP，which the U．S．and other advanced countries trying to maintain order are striving to achieve．

First，what is an appropriate response to the rise of China？As commented by Former Ambassador Miyamoto, it is necessary to establish a group that will consider together with China its ideal state and role in global society．It is also necessary to prevent China from taking straightforward military action in the field of security，and to clarify the minimum lines that the country must not cross．For example，in its operations to construct many artificial islands in the South China Sea and establish military facilities，China has so far focused on advancing southward．If China tries to construct a base even on the Scarborough Shoal，which faces the Bashi Channel，China would stress that almost the entire South China Sea would be under its control．The U．S．disseminates the message that the country will never accept this，but how will China respond to this message？

The world is at a delicate juncture．The problem lies in whether China will take action based on its belief that it has power strong enough to cross the line，or judge that it will still need cooperation with global society in order to continue its development．

Over the quarter century after the end of the Cold War，the amount of Chinese military and national defense expenditures has increased 40-fold．In addition，with the progress of the times，Chinese confidence that it can cross the line by force is becoming stronger．The only thing that can still stop it is actually the power of the U．S．In this regard，to ensure that China understands that such an act would cause everyone harm，it is necessary to take advantage of U．S．power，and to ensure global cooperation．Not only do the Philippines and Vietnam need to raise their voices，but also entire ASEAN and the ASEAN Regional Forum（ARF）must cooperate in responding．Since Southeast Asia consists of many small and medium countries，it is impossible for one country alone to go up against China．Even for Japan this is difficult to do. In that sense，it is good that the recent Ise-Shima Summit served as an opportunity to call for China to comply with international law，and strongly announce among all the nations concerned－including the U．S．European countries－that force is not an appropriate way to change the current status of the South China Sea．

China is dissatisfied with the decision of the International Court of Arbitration．Former Ambassador Miyamoto indicated that China did not experience two World Wars as its own matters．European countries and the U．S．formulated the United Nations Charter based on their experiences of the two world wars，thereby striving to avoid moves to resolve conflicts by force．Subsequently，free trade systems were established at the end of the Second World War，symbolized by the GATT，the International Monetary Fund（IMF），and the World Bank，all of which were discussed at the Bretton Woods Conference．Germany and Japan got involved in the Second World War based on the logic that countries without resources or markets had“justice for the have-nots．”Dissatisfied that large established countries maintained their spheres of influence by establishing colonies，Germany and Japan insisted that they had neither resources nor markets despite their power and willingness，and thus there was no option but to use force to extend their spheres of influence．Holding aloft this notion of “justice for the have-nots，”they plunged into war，though they were eventually defeated by the U．S．and the UK．If the current systems have not been changed in the years ahead，a new Germany and Japan will surely appear someday in the future．In that sense，it is truly praiseworthy that the Bretton Woods Conference led to the achievement of economic free trade systems to enable countries to maintain economic independence even without resources or markets．These systems indicate not only that no country is allowed to take territories or resources by force，but also that countries can obtain resources only through trade．China needs to understand this point．

With its high-rate economic growth lasting more than 30 years，China is now experiencing a transition to an era of stable growth．In Japan’s era of high-rate economic growth in the 1960s，everything proceeded very rapidly and recklessly，and there were many problems including pollution．On the other hand，during the stable growth period of the 1980s，Japan addressed its pollution problems，enhanced its official development assistance（ODA） for developing countries，and achieved many favorable results．Although it is hoped that China will pursue a similar transition，it seems that the country has not taken that path yet．According to global financial regulations，authority is granted to a country depending on its economic scale．China is dissatisfied that despite its huge economic power，the country is not treated properly at the IMF and other organizations．This might have been behind the establishment of the AIIB．However，now that China has established the international financial institution，the only option left for them is to comply with international standards．

The overall funding for global development is totally insufficient．On the other hand，the AIIB can play a positive and proactive role to some extent，and many European countries have become members．Actually，some insist that Japan and the U．S．should also join the AIIB．Regarding the“One Belt，One Road”initiative，many unclear points remain，making it difficult to comment on it．However，it is necessary to note that the area extending from Central Asia to the Middle East is where Islamic extremists are on the rampage，and global society is too slack in efforts to take care of the area．If China does it instead，it might not be bad for Japan to adopt an easygoing approach and say to China，“Thank you for doing that！ Good luck！”Although we do not mean to say that Japan should join the AIIB or stay away from it，we feel that it is commendable to some extent that the AIIB will take care of a part of the world in this age of chaos．We assume that the U．S．will begin getting involved in the AIIB before long．There was discussion in Japan that the country should get involved in the organization，rather than simply refusing it just because it was organized by China，and we feel that such discussion was meaningful．

Together with these issues involving China，another major point of discussion at the Awaji Conference this year was the reinforcement of a liberal economy．Although it was good to establish the WTO in the 1990s，expectations are now placed on the TPP in that it is expected to contribute significantly to reinforcing order．As indicated by Prof．Sugihara，behind the great development of Asia is a combination of the two frameworks of intra-Asia trade and long-distance trade，namely the internal economic networks established within Asia and the international trade systems established by the West．Regarding the TPP，although Vietnam is a signatory，China has been excluded，suggesting that there is a political purpose of making a crack in the intra-Asia trade．Viewed historically，however，Asia features an uncountable number of networks that constitute multilayered regional systems．It is not certain to what extent the TPP will exert its influence，but considering that the TPP is one of these systems，we feel that the TPP will not prevent progress in intra-Asia trade，but would rather serve as an axis for the region．

Now some 50 years after the Cold War，the world is in utter turmoil．To turn the world around，it is necessary to realize the TPP at full scale．As indicated by Former Minister Hayashi，it would be good if the TPP ratification were realized in the Obama administration’s lame-duck session．Even if this is impossible，it is hoped that under the next president，the TPP will fulfill its function as an important platform for the global economy and a cornerstone for liberal democracy．Fortunately，it is less likely that Donald Trump will win the election，so Hillary Clinton will probably replace President Obama．The U．S．itself has many serious problems，including the widening gap within the country．Overall，however，the best solution is to invigorate the major parts of the global economy，and accordingly，we would like the U．S．to stay with the TPP．Former Minister Hayashi also indicated that in order to encourage the U．S．to do this，Japan should get the TPP bills though the House of Representatives by November 8，and we feel that this is truly important．If six or more of the 12 signatories，including the U．S． and Japan，ratify the agreement by 2018，two years from now，the TPP will come into effect．We hope that the TPP will serve as a major foundation for the progress of Japanese competitive industries and agriculture．

Regarding the keynote proposals at this year’s Awaji Conference，Prof．Nakazawa focused on competitive industries，and explored the surface and depth of the competitiveness．He emphasized the importance of innovation in hidden processes，and indicated that Japanese components played major roles in a wide variety of products manufactured around the world．Meanwhile，Mr．Kimura，an apple farmer who employs a natural cultivation method，presented an interesting proposal of enhancing the brand value of produce by realizing an agricultural revolution，namely，to employ a natural growth method without using any chemical fertilizers， agricultural chemicals，or herbicides．An offensive attitude in agriculture is an important theme for the TPP．Such a cultivation method would spur the export of agricultural produce，and contribute toward ensuring food safety and preserving the global environment．It is expected that the FTA would increase the coverage percentage of free trade from 22.3% to 37.2%．The strategy of tourism promotion areas with unique farming and food features to attract foreign customers also generated interest．

Today，the world is experiencing confusion in identity politics against globalization．If the key country for maintaining order works hard to resolve the current confusion，and if Japan provides appropriate support for the country，the future of Japan and the rest of the world could become somewhat brighter．At the same time，it would lead to an increase in the energy of Japan，which is facing population decline．A population decrease leads to the triple distress of drops in the numbers of human resources，workers，and consumers．Some people might feel that one solution is for Japan to accept many immigrants，but this is not very easy，as indicated by many cases in Europe，and the introduction of foreign workers is not so active in Japan．At parallel session 1 at the Awaji Conference this year，there was a proposal that the number of guest workers should be increased by issuing many more working visas in various fields．

What constitutes an ideal state of Japanese society generated active discussions，especially at parallel sessions 2 and 3．The focus at both was on management taking advantage of diversity，as well as the ideal state of a society where diversity is accepted as it is in order to survive an era of globalization and multi-cultures．In addition，Associate Professor Shiose proposed that society should provide opportunities for adults to learn again， and that rulemaking training should be included in education．These proposals are also very interesting．

He also indicated that while Japan is in a very difficult situation，the country could present a new business model as an advanced country with various problems．If Japan takes a leading role in addressing problems including those on an aging society and nuclear power generation，the country would be better able to generate business opportunities throughout the world．

Basically，we support the establishment of the TPP in accordance with the principles of a global liberal democracy or a liberal economy．Actually，however，a liberal economy can take a wide variety of forms．In the 1960s，when the U．S．enjoyed prosperity，the country worked hard to realize a fair society and redistribute wealth，indicated by the Great Society programs．On the other hand，during the days of Reagan and Thatcher in the 1980s，prosperity was based more on neoliberalism．The U．S．believed that social prosperity would be achieved not by adjusting various things or redistributing wealth，but by realizing deregulation，which would enable people with capabilities to move forward，thus ensuring that the success realized by such people would be shared equally in society，and eventually resulting in prosperity for all of society．Namely，the U．S．adopted the principle of not providing sufficient care for the weak．Using momentum gained during the 1980s，the U．S．won the victory of the Cold War yet continued to rush ahead toward globalization based on the idea that people with capabilities should keep on pushing forward．The country did not care as much about realizing a fair society or redistributing wealth．As a result，the U．S．is now suffering from an economic gap，which continues widening to unprecedented levels．In addition，the world is witnessing the formation of groups like ISIS，whose members are ready to throw away their lives due to resentment against the unreasonableness and unfairness of society．

With this in mind，we feel that what will be needed from now on is a compassionate economy，or a long-term sustainable economic system that features not only the aspects of a free economy but also compassion so that the entire world can enjoy prosperity．As indicated by Representative Director Iue，even international finance rules are not fully binding．Speculative activities to earn profits by exploiting currency exchange continue to torment producers and end up harming the entire global economy．As commented by Prof．Mieno，this is too large a theme to discuss completely at this year’s conference alone，so we need to tackle the theme again sometime in the future．

One of the ways that Japan can contribute to resolving the current confusion is to rebuild its society and economy appropriately．Abenomics has helped Japan regain its motivation to break out of the spiral of deflation that the country has continued to suffer from for 20-plus years，and to make a new start once again．Actually，stock prices have increased．However，if Japan tries to maintain and accelerate this trend，the country needs to step forward toward sustainable growth with consideration given to a wide variety of themes，including those discussed in this year’s two-day Awaji Conference．In addition，national defense and security are important themes，especially in this age of chaos，and there are big challenges around the Japanese archipelago．To support the global order and promote security，Japan needs to ensure global efforts and cooperation to prevent emerging countries from changing the current status by force．Moreover，Japan needs to reinforce something like the TPP，which will serve as a platform for recovery of the Japanese economy and cornerstone of liberal democracy．Will the U．S． presidential election stay away from errors made in the UK’s“Brexit”national referendum？Will a wide variety of efforts，including those based on the proposals presented at this year’s conference，bear fruit？The world is now at a critical turning point．