[ Nippon Keidanren ] [ Policy ]

Towards Broader and Deeper Economic Partnership Agreements

17 October 2006

Nippon Keidanren
( Japan Business Federation )


Nippon Keidanren (Japan Business Federation) has thus far actively worked to sustain and strengthen the multilateral free trade system centred on the World Trade Organization (WTO) and also to conclude economic partnership agreements (EPAs) and free trade agreements (FTAs) with countries and regions with which Japan has close and vital economic relations, seeing these efforts as the twin wheels of a cart. In the course of this endeavour, Nippon Keidanren in March 2004 released the policy statement "Urgent Proposals for Strengthening Economic Partnerships." Ever since then it has urged people in all concerned quarters, including the government and the ruling parties, to strategically promote EPAs.

During this time, the government concluded EPAs with Singapore, Mexico, Malaysia, and the Philippines, and in line with "Strategy in the Globalizing Economy" (which the Council on Economic and Fiscal Policy adopted on 18 May 2006), it is taking steps to accelerate EPA negotiations according to a timetable.

In the meantime, the suspension in July this year of the WTO's new round of negotiations has caused concern about an erosion of confidence in the multilateral free trade system centred on the WTO. Furthermore, China, Korea (Republic of Korea), and other countries have stepped up their efforts to conclude EPAs and FTAs, turning them into arenas of international competition.

It will continue to be crucial for Japan to adhere to a stance of pursuing global trade liberalisation and rule improvement and also of pushing forcefully for the early resumption and settlement of the new-round negotiations, with its sights set on strengthening the WTO setup, which offers procedures for dispute settlement. At the same time, action aimed at broadening and deepening EPAs is complementary to the strengthening of the multilateral free trade system, not inconsistent with it. It has become more urgent than ever before to strengthen economic ties by expeditiously concluding EPAs in particular with strategically important countries and regions and facilitating the free movement of people, goods, money, services, and information.

Nippon Keidanren's Committee on Promotion of Economic Partnerships, which was created last May, is engaged in studies of ways to promote EPAs henceforth, and it has conducted a questionnaire survey of the committee members and other companies. Many members made their wishes and other concerns known in response to this questionnaire. The present proposal, which is based on these responses, sums up the fundamental thinking of the business community at the present point in time. We strongly urge the government, the ruling parties, and other concerned organisations to work towards the realisation of this proposal by engaging in necessary negotiations and implementing appropriate domestic measures expeditiously and steadily.

I. Strategic Significance of Promoting Economic Partnership Agreements

In the context of globalisation and an aging population, it is necessary to promote the construction of a global business setup transcending national borders in order to enable the Japanese economy to maintain its vitality and achieve sustained growth. EPAs provide important economic infrastructure towards that end.

The conclusion of mutually beneficial EPAs particularly with East Asian neighbours, which are closely tied with Japan geographically and economically and are enjoying spectacular growth, constitutes an indispensable condition for Japan as well as other Asian countries to develop together as the growth centre of the world.

Within this context of Asian dynamism, Japan needs to join in the common pursuit of material and spiritual affluence as a regional member, assuming a basic stance of moving forward in step with Asia. For this purpose, Japan must act to further broaden and deepen mutually beneficial EPAs with other countries, making East Asia its focus.

EPAs lead to progress in the liberalisation of trade in goods and services and of investment. This will bring merits for citizens and consumers through the supply of inexpensive, high-quality products to the marketplace. In the area of care-giving services, where Japan is projected to encounter a labour shortage, it should be possible to maintain and upgrade service standards by, for instance, relying on the smooth entry of these people to alleviate mismatches in labour supply and demand.

In the context of globally increasing demand for natural resources, energy, and food, it is also extremely critical to develop close ties with the countries supplying them. Towards this end, there is a need to ensure smooth transactional relationships over the medium to long term by EPAs.

Furthermore, when there is concern that the conclusion of EPAs or other agreements by other countries could place Japanese firms at a disadvantage in terms of competitive conditions, action is required to nullify a trade diversion effect. In such cases, needless to say, countermeasures must be quickly taken by concluding EPAs with the concerned countries.

In the course of promoting EPAs, which are strategically significant in ways like these, Japan should offer concessions it needs to make since EPAs come into being through negotiations with partner countries and regions. Although Japan should naturally defend things it needs to protect, it should also make use of the EPAs to promote domestic structural reforms and strengthen its economic and social foundations.

The questionnaire survey, it should be noted, elicited a high response rate to the following three aspects of the strategic significance of EPAs, both to the business community at large and to individual companies: (1) expansion of the scope of Japanese companies' business activities (broad-range business activities, including distribution and services); (2) strengthened relations with Asian countries with which Japan already has close economic and geographical ties; and (3) expansion of export markets (reduced tariffs, improved customs procedures, etc.).

II. Promoting Economic Partnerships with an Emphasis on East Asia

Keeping the foregoing strategic significance in mind, Japan needs to put effort into broadening and deepening EPAs. Placing its emphasis on East Asia for the time being, Japan should aim to conclude comprehensive, high-quality multilateral and bilateral EPAs, as described below. Through such efforts, it should seek to widely construct networks of economic partnerships in East Asia, and it should pursue studies of how best to approach regional economic integration, based on such networks.

1. Broadening EPAs

In order to broaden economic partnerships with an emphasis on East Asia, bilateral and multilateral EPAs should be promoted simultaneously and expeditiously. Under the "Strategy in the Globalizing Economy", the Japanese government is moving forward on EPA and other negotiations according to a timetable drawn up for a period of about one year with various objectives. It is now important to formulate a detailed roadmap to steadily realise the objectives, monitor the status of progress, and make revisions as necessary.

With respect to multilateral EPAs, a very crucial task is the conclusion of a comprehensive economic partnership agreement with ASEAN (Association of Southeast Asian Nations), which is becoming a hub of EPAs in Asia. While such an agreement cannot be simply compared with others that have different contents, there can be no denying of the perception that Japan has fallen behind both China, which has already concluded an FTA with ASEAN, and Korea, which has completed negotiations for an FTA with ASEAN. In this light, the talks need to be accelerated to meet the deadline of completing them by the spring of 2007.

In the area of bilateral EPAs, it will be essential to make steady progress in talks on agreements (including FTAs) with countries and regions that are strategically important to Japan. In its talks with ASEAN's leading members, Japan should attach special importance to reaching an agreement in principle quickly in the negotiations with Indonesia, which are moving into the final stages, and to starting up negotiations with Vietnam at an early date.

In addition, there is the question of what should be done about not just resuming talks with Korea, which have been broken off for some time, but also moving forward on an EPA with China, which has even closer economic connections to Japan than other Asian nations. For Japan's part, the first priority is to strengthen relations of mutual trust with these next-door neighbours. On top of that, we strongly hope that the suspended talks with Korea will be restarted at an early date. Furthermore, the construction of stable relations of cooperation between China, which has risen rapidly to become an economic power, and Japan, which as the world's second largest economy has the most economic influence of any country in East Asia, is a task of paramount importance not only for the two countries but also for regional peace and stability. It bears noting that in the questionnaire survey, an overwhelming majority of the respondents expressed views favouring the conclusion of an EPA with China. Keeping in mind the desires voiced, it will be meaningful to initiate joint research on the issue of a Japan-China EPA, including an examination of its merits and drawbacks.

India is another of the so-called BRIC (Brazil, Russia, India, and China) countries, a group of large emerging economies. It has a population of more than 1 billion, second only to China's, and its brisk economic growth has the potential to continue. This makes it important to add India to the East Asian neighbours with which Japan should launch EPA negotiations at an early date.

Elsewhere, since Australia is a key supplier of natural resources, energy, and food, we wish to call again for the early start of EPA negotiations with it. The members of the Gulf Cooperation Council (GCC) are also strategically important in the supply of natural resources and energy, and talks on an FTA with the GCC have finally begun. These talks deserve to be accelerated, lest disadvantages be encountered from leaving an FTA unsigned.

With regard to the United States and other countries and regions of importance to Japan, there is a need to investigate EPAs and other agreements to strengthen economic partnerships.

For the prompt realisation of an expanded area of EPA coverage based on the above multilateral and bilateral talks, it will be effective to take a "ready-made" approach by preparing and applying basic models covering common points in all the negotiations. Japan has thus far concluded four EPAs (with Singapore, Mexico, Malaysia, and the Philippines) and reached an agreement in principle on two more (with Thailand and Chile), so it presumably has acquired sufficient know-how to compose the text of an agreement. The Liberal Democratic Party (LDP) also took note of this point in a policy statement on promoting economic partnership negotiations (released on 21 February 2006). The LDP stressed the efficiency and speed that can be realised in future negotiations if they proceed on the basis of model agreements drafted to match the partner country, drawing on past experience. For the common parts of EPA texts, effective use should be made of basic forms to shorten the time needed for drafting and concluding agreements.

2. Deepening EPAs

In promoting economic partnerships with an emphasis on East Asia, it will naturally be necessary to ensure compatibility with the provisions of Article 24 of the General Agreement on Tariffs and Trade (which require that levels of tariffs and other regulations not be made more restrictive and that substantially all regional trade be liberalised) as well as with the provisions of Article 5 of the General Agreement on Trade in Services (which recognises compatibility with GATS only if the agreement eliminates substantially all discrimination between the parties engaged in economic integration). At the same time, when we look more closely at economic partnerships in the context of their depth, we find that in order to enhance the necessary environment for global business activities, it is important to go beyond the liberalisation of goods and services. Economic partnerships have to be comprehensively promoted with attention to such points as improving investment rules, effectively protecting intellectual property rights, and facilitating the movement of natural persons.

When priority is placed on improving and harmonising the various rules involved in economic activities, the deployment of business operations becomes more predictable, competitive conditions become fair, and further development of economic activities can be anticipated. Even in the case of EPAs that have already been concluded or put into effect, it is important to conduct an ongoing review of the content of the agreements from this viewpoint.

As the accompanying table shows, the biggest benefits the questionnaire respondents anticipated from an EPA with ASEAN as a whole were "liberalisation of trade in goods (reduction or elimination of tariffs)," followed by "liberalisation of investment, establishment of investment rules" and "improvement of intellectual property systems." In the case of China, the respondents looked forward to "liberalisation of trade in goods (reduction or elimination of tariffs)," "liberalisation of investment, establishment of investment rules" "improvement of intellectual property systems," and "improvement of the business environment." And in the case of India, the first choice of the respondents was "liberalisation of investment, establishment of investment rules."

Benefits Anticipated from EPA Negotiations: Results of the Questionnaire Survey
ASEANLiberalisation of trade in goodsLiberalisation of investmentImprovement of intellectual property systems
KoreaLiberalisation of trade in goodsImprovement of intellectual property systemsLiberalisation of trade in services; liberalisation of investment
ChinaLiberalisation of trade in goodsLiberalisation of investment; improvement of intellectual property systemsImprovement of the business environment
IndonesiaLiberalisation of investment; improvement of the business environmentLiberalisation of trade in goodsMovement of natural persons
VietnamLiberalisation of investment; improvement of the business environmentLiberalisation of trade in goodsMovement of natural persons
IndiaLiberalisation of investmentLiberalisation of trade in goodsLiberalisation of trade in services

To further explore this question of what is anticipated of economic partnerships with an emphasis on East Asia, below we comment on the most commonly mentioned wishes expressed for the respective countries and regions. We urge the Japanese government to pursue negotiations while taking into consideration these practical views of the business community towards each country and region.

(1) Liberalisation of trade in goods

When trade in goods is liberalised, one effect that can be anticipated is an increase in the exports to Japan of the partner's products. Local firms in East Asian neighbours and Japanese firms that have moved there will enjoy a reduction in tariff costs, and they will also reap major benefits from a broader choice of sales channels and procurement sources for materials and parts. East Asian neighbours become more attractive as bases for production and exports, thereby strengthening their international competitiveness. For such reasons, we hope that high-level tariff reduction will be realised at an early date in a way compatible with WTO rules (GATT Article 24) for high-value-added products in such industries as steel, automobiles, electronics, electrical machinery, and chemicals and that progress can be made towards liberalising bilateral trade.

(2) Liberalisation of trade in services

In EPAs that have already gone into effect, areas of insufficient liberalisation are to be seen in manufacturing-related services, distribution and financial services, and other parts of the service sector. Services give form to basic infrastructure that is requisite for economic development, and they play an extremely vital role in the construction of integrated supply chains. In order to gain the maximum benefits from the liberalisation of trade in goods and of investment, desired is further liberalisation of trade in services, including improvement of market access, national treatment, and transparency of domestic regulations.

(3) Liberalisation of investment

An indispensable part of the work of preparing an attractive investment environment is the loosening or removal of regulations on foreign capital. For companies making the investments, cross-border investment flows increase business opportunities. For the receiving countries, the flows not only generate jobs but also present opportunities for the introduction of such managerial resources as foreign capital, new business models, technologies, materials, and management know-how. At the stage of investment approval, it is best to put in place high-level investment rules that, in principle, provide for national treatment and most-favoured-nation treatment while generally banning performance requirements, such as stipulations mandating the employment of local nationals.

An important point is to incorporate a requirement to maintain the status quo (a standstill provision) in the investment chapter of any EPA. Whether a company has already moved into the partner country or is making investment plans, it is indispensable that regulatory stability will be ensured without any deterioration in the future.

Many Japanese companies have already invested in East Asian neighbours and are engaged in business operations there. As good partners of the industries in these countries, they are contributing to local economic and social development. From the perspective of reinforcing a foundation for yet closer ties, investment liberalisation needs to be further promoted in a broad range of areas, observing the ideal of "liberalisation in principle" and "regulations as exceptions."

(4) Effective protection of intellectual property rights

In the case of countries where EPAs have already been concluded or agreements have been reached in principle, many questionnaire respondents cited measures to combat pirated products as an area in which sufficient results have not yet been attained. A profusion of counterfeit and pirated products will distort competition among companies and also reduce incentives for innovative activities. Furthermore, for the development of new domestic industries and the support of small and medium-sized companies within Asian countries, there is a need to place greater emphasis on intellectual property rights. In EPAs with East Asian and other countries, negotiations should aim at promoting the development of a foundation for intellectual property systems in partner countries and inserting provisions for securing effective enforcement (through tougher surveillance of and penalties for counterfeit and pirated products). At the same time, it is important to monitor the status of enforcement after EPAs go into effect.

(5) Improvement of the business environment

In order for a country to improve its attractiveness as an investment target and draw in greater investment from Japan, it needs to enhance fairness, strictness, and predictability in the implementation of laws and regulations, and it should also streamline administrative procedures and enhance their efficiency so that foreign firms can make investments and deploy business operations with assurance. In this regard, we hope that steps will be taken not only to establish but also to implement arrangements in EPAs for business environment improvement committees, in which ongoing consultations can take place among representatives of the public and private sectors of the partner countries.

For the promotion of economic partnerships with an emphasis on East Asia, it is extremely important to facilitate trade through steps to simplify import, export, and port procedures and make them more efficient. In view of this, Japan will be required to link up with an ASEAN "single window system" and in other ways to strengthen the information technology foundation for open global trade.

(6) Establishment of convenient rules of origin

It is hoped that the Japan-Mexico EPA will substantially strengthen an effective bilateral economic partnership and prevent Japanese businesses from being placed at an economic disadvantage through the trade diversion effect of agreements Mexico has entered with other countries. There are still some major problems, though, one of which is that certificates of origin involves complex application procedures and requires the submission of numerous documents. As a result, even though the EPA has gone into effect, not much use is being made of EPA preferential tariffs. In general, not just with respect to Mexico, it is vital to simplify and facilitate documentation procedures for certificates of origin to improve such situations as promptly as possible. In fact, this is absolutely essential in multilateral agreements in East Asia, where intraregional trade has risen to more than half of total trade. In the EPAs Japan concludes in the future, it is desirable to have a selection of criteria (such as a change in tariff classification, specified process rule, and value-added criteria) to apply as necessary when judging the country of origin of a product.

(7) Securing of stable supplies of natural resources, energy, and food

Japan relies on the Asia-Pacific region and Gulf countries for much of its natural resources and energy supplies. When concluding EPAs or FTAs with these suppliers of natural resources and energy, it is important to secure institutional guarantees of smooth transactional relationships over the medium to long term by means of provisions that prohibit the restraint of natural resource and energy exports, require advance notice of changes in policies, and improve the investment environment by Japanese firms in natural resource and energy areas.

In the case of the GCC and other countries and regions that are of extreme importance from the viewpoint of safeguarding energy security and precluding disadvantages (trade diversion effects) from the absence of FTAs, negotiations should be pursued on the basis of an FTA framework tailored for each agreement's objectives to expedite the agreement's conclusion.

In the area of food, while Japan acts to maintain and improve self-sufficiency rates through structural reforms in agriculture, it must address the important task of securing stable food supplies from overseas for the portion it is unable to supply on its own. As in the case of natural resources and energy, we can look forward to a contribution to Japan's food security from the use of EPAs by prohibiting the restraint of food exports and improving the investment environment in food production.

III. Promoting EPAs through Domestic Structural Reform

East Asian neighbours engaged in EPA negotiations with Japan are expecting above all that direct investment from Japan will transfer technology to them and create jobs, but in talks on individual agenda items, they also look forward to Japan opening its markets for agriculture, forestry, and fishery products and accepting more of their human resources. Because these issues are closely connected to Japan's own future plans for using its land and shaping its economy and society, Japan needs to handle each of them with careful consideration while devising sufficient domestic measures.

In addition, in order for Japan to win the trust and respect of its East Asian neighbours and jointly pursue affluence as a member of Asia, it should look on the requests partner countries make in EPA negotiations as presenting an opportunity for resolutely implementing domestic structural reform, and strive to respond as far as it can.

1. Acceleration of Reform in the Agricultural Sector

In the case of agriculture, Japan needs to strike a balance between the construction of a competitive and healthy domestic agricultural sector and the conclusion of EPAs. When steps are taken by means of EPAs to open the markets for agriculture, forestry, and fishery products, it is crucial to prepare a proper foundation for the market opening while securing the public's support. Towards this end, measures should be focused on the sector's core producers, and such tools as direct subsidies should be introduced and promoted to overcome internal-external differentials of production conditions.

In the "Urgent Proposals for Strengthening Economic Partnerships" published in March 2004, Nippon Keidanren called for the acceleration of structural reform in agriculture. We appreciate that the government subsequently enacted a law in June 2006 to stabilise the management of producers (giving legal backing to the October 2005 government policy of providing direct support to designated farming units). The new policy framework, which aims to strengthen the domestic agricultural sector, contains provisions for enhancing the managerial stability of eager and able core producers, and we await its enforcement next spring. Even when the new-round WTO negotiations are suspended, it is important to promptly and steadily implement these measures.

Nippon Keidanren adheres to a stance of engaging in an ongoing exchange of views with agricultural circles. When consideration is being given to such issues as improving the production foundation for large tracts of cultivated land or revising the legal system covering farmland, Nippon Keidanren stands ready to study the issues in depth in its Committee on Agricultural Policy.

In the new "Basic Plan for Food, Agriculture, and Rural Areas" announced in March 2005, the government promised to pursue an aggressive agricultural policy in exports and other areas. More recently, the authorities commented on the need to take a proactive approach to the WTO and EPAs and brought up the concept of an "East Asian Food Industry Community" in an April 2006 document on agricultural policy for the twenty-first century. These developments position the export of farm products to East Asia and other overseas markets as a major pillar for strengthening the competitiveness of Japanese agriculture. If farm exports are to be encouraged, however, reform efforts will be needed to enhance competitiveness in terms of prices.

When giving thought to Japanese agriculture and the promotion of EPAs, we find that Japan can help to create common rules for quarantine systems, and it can also contribute to the amplification of national systems for intellectual property rights in the agricultural sector, including systems for protecting new varieties of crops. We hope the government will make an active response in these areas.

2. Expansion of the Acceptance of Foreign Human Resources

The acceptance of foreign human resources can facilitate the smooth deployment of global operations by corporations, and it can also contribute to revitalising the Japanese economy and strengthening its competitive foundation. In the EPA between Japan and the Philippines, which was signed on 9 September this year, one of the important issues in the area of the movement of natural persons was the acceptance of nurses and care workers. Japan's acceptance of nurses and care workers from East Asia by means of systems with qualitative and quantitative controls will not only offer a realistic response to the aging of society but also has the potential to enhance the vitality of Japan's economy and society through increased labour-market-participation rates among people with a reduced burden of looking after relatives and providing home care.

In the current Japan-Indonesia EPA negotiations, Indonesia has put forward some requests for improvements in Japan's Industrial Training and Technical Internship Programmes (regarding re-entry to Japan and extension of stays after the training and internship and expansion of the programmes' scopes). It is expected that Vietnam will have similar concerns when the anticipated talks begin on an EPA with it.

In order for a nation built on trade like Japan to exert leadership, coexist in Asia, and move forward in step with Asia, it must conclude mutually beneficial EPAs offering a win-win solution for itself and the partner countries and regions. In negotiations on the movement of natural persons, Japan needs to make forward-looking responses, taking into careful consideration the requests of its partners regarding fields and numbers of people.

When dealing with the acceptance of foreign human resources, Japan will be called upon to quickly improve the domestic schemes for receiving these people. Measures must be promptly considered and implemented to review residence and employment supervision, promote enrolment in social insurance programmes, and upgrade Japanese-language education.

In this proposal, we present below what is to be desired of acceptance in fields where partner countries have made strong requests and where a labour shortage is anticipated in Japan.

Acceptance of human resources in the nursing and care-giving fields

The Japan-Philippines EPA provides for the entry into Japan of Philippine candidates for nurses and care workers satisfying certain conditions, and it allows them to work after the completion of their Japanese-language and other training while they prepare to obtain national licenses and certification in Japan. If they succeed in acquiring national certification after taking the state examination, moreover, they are allowed to continue working as nurses or care workers.

Nippon Keidanren has been calling to date for the acceptance of foreign human resources in the fields of nursing and care-giving, where a labour shortage is expected. For this reason, it warmly welcomes the creation within the Japan-Philippine EPA of a basic framework for the acceptance of nurses and care workers.
This basic framework should pave the way for an orderly inflow of workers by clearly placing the responsibility for candidate selection and other such matters in the hands of the sending country. In future EPA talks with other East Asian neighbours as well, Japan will need to accommodate the requests of the partners to the best of its ability.

Expanding the scope of specialised and technical fields and revising the industrial training and technical internship programmes

All sorts of measures are being prepared to make active use of young workers, women, senior citizens, and others to cope with the declining number of children, the aging of the population, and the retirement of the post-war baby-boom generation that will begin in earnest in 2007. There is concern, however, that experienced engineers, skilled labourers, and other highly qualified human resources will be in short supply on the front lines of some manufacturing and service industries. In this situation, even in occupations not currently recognised as being specialised or technical fields in which residence status is not granted, there is a need for giving broad employment approval to foreign human resources under appropriate supervision, provided that they are qualified, have a certain level of skills, and have an adequate command of Japanese for work and daily life.

In EPAs and other bilateral agreements, accordingly, consideration should be given to providing citizens of the partner country with a residence status permitting entry and work in specified areas, such as certain fields of manufacturing, with the precondition that they pass technical skill tests and acquire certification attesting to their attainment of a sufficient specialised or technical level. At present, in the EPA talks between Japan and Indonesia, the Indonesian side has put forward a request of this sort, and it deserves to be thoughtfully considered with a view to its realisation.

At the same time, many calls for improvements have been heard from the countries sending applicants into Japan's Industrial Training and Technical Internship Programmes, as well as from the trainees enrolled in these programmes. Lest Japan invite unnecessary international criticism, it needs to strengthen the surveillance system for the accepting organisations of the collective supervision type, which have been the target of numerous complaints. With a view to improving the existing programmes, thought should be given not only to broadening the occupations for acceptance but also to creating a system for further training. This system would provide for the re-entry into Japan of applicants with a desire for additional industrial training or technical internship experience to acquire more sophisticated skills.

IV. Negotiation Setup and Other Issues

When asked what measures should be taken to accelerate the process of EPA negotiations, the questionnaire respondents frequently picked the choices, "Strengthened collaboration between the government and the private sector in the EPA negotiation process" and "Establishment of a cross-ministerial EPA headquarters within the government."

For some time, the need has been pointed out for an arrangement under which private-sector views are continuously incorporated in EPA negotiations to create a business environment in which the managerial efforts of companies are duly rewarded. One measure that deserves study as a means of strengthening public-private collaboration is the creation of a Council on External Economic Strategy (provisional name), which would apply functions like those of the existing Council on Economic and Fiscal Policy to the sphere of external economic policy.

In its aforementioned policy statement on promoting economic partnership negotiations, the LDP proposed a review of the cabinet's Ministerial Conference on the Promotion of Economic Partnerships. It recommended a substantial strengthening of the administration's command and coordination functions along with the taking of other appropriate measures, including staffing increases and budget appropriations required for reinforcing this setup.

In order to formulate and implement a comprehensive EPA strategy, particularly for East Asia, while moving forward on necessary domestic structural reforms, it is important for the government under the prime minister's leadership to reach and implement integrated decisions that, transcending the narrow interests of individual ministries, truly benefit the nation as a whole. To accomplish this, it will be absolutely essential to establish a cross-ministerial headquarters within the cabinet.

Towards this end, we call for the creation within the cabinet of an External Economic Strategy Promotion Headquarters (provisional name), which would be headed by the prime minister and have as its acting general manager a "minister of state for external economic strategy" (provisional title), who would be responsible for EPA, WTO, and other such negotiations. Our wish is that such a headquarters enables the Prime Minister's Office to assume unified control over external negotiations and domestic coordination. At the same time, in order to facilitate strategic promotion of economic partnerships, we call for the preparation of a detailed roadmap for goal realisation in EPA negotiations so that progress can be properly supervised.

Strategic utilisation of official development assistance (ODA) is another important consideration. For example, in order to actively promote the acceptance of foreign human resources, efforts should be directed at using ODA and other means to develop human resources through an expansion of Japanese-language education and support for the acquisition of certification in partner countries. In this regard, Japan has much to learn from what China has been doing to promote the spread of Chinese language abroad, specifically its energetic push to establish "Confucius Institutes." (These are schools set up in foreign countries by the Chinese government to teach the Chinese language. In Japan, China has signed agreements with Ritsumeikan, Obirin, Hokuriku, and Aichi Universities, and schools have now been opened.) In addition, technical assistance and other forms of support should be provided to foster markets and facilitate liberalisation in partner countries, and Japan's business community should constructively cooperate in this endeavour.

In Summary

Nippon Keidanren intends to further step up its appeals to the government, the ruling parties, and other concerned organisations for the promotion of EPAs with an emphasis on East Asia. We will also engage in necessary public relations activities, seeking to persuade the Japanese people of the importance of promoting EPAs for the attainment of a more affluent life, both for themselves and for other East Asians.

At the same time, we intend to extend economic and technical cooperation, including the transfer of environmental technology, to businesses in East Asian partner countries and economies, cooperating with them to the best of our ability.

Finally, on a question about the role that should be played by the Japanese business community, questionnaire respondents picked as their top choice, "Promotion of private-sector economic diplomacy in order to deepen dialogue with governments and business communities in partner countries." In order to meet such expectations, Nippon Keidanren will make an energetic push in the sphere of private-sector economic diplomacy to broaden and deepen economic partnerships.

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