Prime Minister Naoto Kan faces the huge task of forging consensus among the 21 economies of the Asia-Pacific Economic Cooperation forum and paving the way for a regionwide free-trade zone as chair of the summit that kicks off Saturday in Yokohama.
However, the chances of the summit succeeding under Japan’s stewardship appear gloomy as Tokyo has deferred its own decision on whether to join the U.S.-backed Trans-Pacific Partnership Agreement, a regional free-trade pact, and serious diplomatic rows with China and Russia show little sign of easing.
APEC reaches a watershed this year, as 2010 is the deadline for the 1994 Bogor Goals on trade and investment liberalization to be realized by five industrialized nations — Japan, the U.S., Canada, Australia and New Zealand — and eight developing economies — South Korea, Singapore, Hong Kong, Mexico, Chile, Peru, Malaysia and Taiwan. The deadline set for the rest of APEC’s developing countries to meet these goals is 2020.
Shujiro Urata, a professor of economics at Waseda University’s Graduate School of Asia-Pacific Studies, said APEC needs to find a new focus, which is likely to be the U.S.-proposed Free Trade Area of the Asia-Pacific involving all 21 economies.
“Until now, achieving the Bogor Goals was the aim for APEC, but the members need a new vision, and that is likely to be the FTAAP,” Urata said. “A key objective of APEC is to create an environment for free and open trade in the Asia-Pacific region and the FTAAP is considered the most promising means to achieve that goal.”
The leaders are expected to adopt the “Yokohama Vision” declaration, in which they will affirm the need to realize a regionwide FTA and pursue growth strategies promoting innovation and balanced and sustainable growth. Another key issue is human security, including food safety, antiterrorism steps and disaster-prevention measures.
Before the summit, foreign and trade ministers agreed on the need to forge the FTAAP, conclude the stalled World Trade Organization talks on the Doha Round by 2011 and prevent protectionism.
Although China was not directly mentioned, concern spread among APEC economies when Beijing, which controls 97 percent of the global supply of rare earth materials, allegedly halted exports to Japan amid a diplomatic row over the Senkaku Islands in the East China Sea.
“I think (APEC) is trying to establish a framework in which China will take responsible action,” Urata said. “Until now, China had not been paying too much attention to international rules. But it has become a major power and other economies want China to contribute to the world in an (orderly) fashion.”
A major task for the leaders is to map out “possible pathways” to eventually establish the FTAAP, including existing frameworks such as the TPP, ASEAN Plus Three and ASEAN Plus Six.
ASEAN Plus Three groups the 10 members of the Association of Southeast Asian Nations with Japan, China and South Korea, while ASEAN Plus Six adds Australia, India and New Zealand.
The government failed to reach a consensus on whether to join the TPP, foiling Kan’s hopes of making a declaration at the APEC summit, due to strong concerns among both ruling and opposition party lawmakers over the harmful effect it could have on the domestic farm market.
Last week, the government only said it would begin “consultations” on the TPP with the countries involved and try to reach a decision by June. But the TPP negotiations began in March and Japan is already considered to be lagging.
Urata, a former World Bank economist, said June would be too late for a decision. “There are seven or eight months until June and most of the negotiations will be over by then,” Urata said. “The TPP negotiations are trying to create new rules and a new system not only for trade but for the economy in the Asia-Pacific region . . . and without participating, Japan’s views will not be reflected at all.”
In addition to handling such APEC-related issues and making the summit a success, Kan must also deal with ongoing diplomatic conflicts.
The media have been focused more on whether Kan will be able to hold bilateral meetings with Chinese President Hu Jintao and Russian President Dmitry Medvedev amid recent tensions.
While Kan is scheduled to meet with Medvedev Saturday, a summit with Hu is “still being coordinated,” Foreign Minister Seiji Maehara said Friday
“The current situation is not normal, but the Japanese government’s diplomacy is overly focused on setting up bilateral talks,” said Fumiaki Kubo, a political science professor at the University of Tokyo.
“What is important is not the talks themselves but the statements that Japan makes and the action it takes to persuade (the other countries) over the territorial disputes.”
Relations between Tokyo and Beijing are at their lowest ebb in recent years following a Chinese trawler’s run-in with Japan Coast Guard patrol vessels near the Senkaku Islands and the subsequent arrest of the fishing boat’s skipper. Japan has control over the uninhabited islets, but they are also claimed by China and Taiwan.
China has taken a hardline stance against Japan over the skipper’s arrest and no official meetings have taken place following his release.
Amid the row with Beijing, Medvedev made a historic visit to Kunashiri Island, one of four Russian-held isles off Hokkaido that Japan wants back.
“Japan needs to communicate to China and Russia its fundamental principles over the territories and not worry about trying to mend ties on the surface,” Kubo said.
On a more positive note, Japan-U.S. relations, which were strained over the relocation of U.S. Marine Corps Air Station Futenma in Okinawa, have improved lately.
Kan is set to meet with President Barack Obama on the sidelines of APEC to reaffirm the bilateral security alliance, which is celebrating its 50th anniversary this year.
According to the Foreign Ministry, the two leaders are also expected to discuss a wide range of issues, including economic cooperation and cultural and human exchanges.
“Hopefully, Japan and the U.S. will be able to send out a positive message that the bilateral security alliance will become even stronger in the future,” Kubo said. “And that would be a strong message to China as well.”