Developing and Implementing a Strategic Trade Policy

Minoru Makihara Vice Chairman, Nippon Keidanren Chairman of the Board of Directors, Mitsubishi Corporation

The unfortunate collapse of negotiations at the Cancún WTO Ministerial Conference held in September 2003 highlighted the divide between developing and developed countries not only on agricultural but also investment and other issues. The WTO should, however, continue to be the foundation of the international trade system, and Japan, which has benefited from trade liberalization under the GATT/ WTO system in the past fifty years, should take the initiative to strengthen its framework. Accordingly, I would like to make two proposals for Japan's trade strategy; first, the creation of a central headquarters for trade policy, and second, a strategy to enhance and promote further cooperation between the government and private sector.

The lack of central headquarters for promoting trade strategy impairs Japan's ability to concentrate on broader international issues instead of domestic matters, whether in bilateral or multilateral negotiations. Evidence of this was also seen in Cancún, where there was a marked difference in the approach to the negotiations between the Japanese government delegation, with its weak presence, and that of the USTR-led United States and EU delegation uniting the different interests of its fifteen members. Japan should immediately establish a national framework for executing leadership in international negotiations. We must find a way to prevent bureaucratic divisions from tying our delegates' hands during international talks, and adjust domestic interests based on a comprehensive strategy. If Japan is unable to do this, we will face the risk of losing the respect of both developed and developing countries.

The other issue that must be addressed promptly is the need for Japan's government and private sector to work together. Although it was not highlighted by the Japanese media, in the case of the United States and Europe, the government and private sector worked together very effectively at the Cancún talks. Private-sector leaders participated in government delegations and at critical points during the negotiations, government and private-sector representatives consulted with each other to ensure that their various interests were accurately reflected. There is much that Japan could learn from the U.S and EU in terms of enhancing communication between the government and the private sector.

As a major trading nation, Japan should reflect carefully on the fact that our response has consistently tended to be a step behind many others at both the recent WTO talks and at FTA negotiations with individual countries. Also, the business community should not simply shift the blame on to the government, but improve its ability to gather and analyze information, make policy proposals, and play a constructive role in negotiations.