Policy Proposals U.S. and Canada Report on the Keidanren Mission to the United States
July 21, 2015
1. Significance of the Mission
- (1) Japan-US relations constitute Japan's most important bilateral relationship, and the Japan-US alliance plays an essential role in ensuring peace and stability throughout the Asia-Pacific region.
- (2) The two countries also have strong economic ties that are growing ever closer: The US is Japan's second-largest trading partner and top foreign direct investor, while Japan accounted for the largest share in 2013 and the second largest share in 2014 of inward direct investment in the US.
- (3) To maintain and further strengthen this excellent relationship in the future, the business community needs to work actively to broaden and deepen bilateral economic relations through measures including the promotion of the Trans-Pacific Partnership (TPP).
- (4) With these issues in mind, Keidanren dispatched high-level mission to the United States from June 28 to July 3. The mission included three groups made up of about one hundred CEOs and senior executives of leading member companies. This was the first time for Keidanren to dispatch such a high-level as well as large-sized delegation to the United States.
2. Key Policy Topics
- (1) Measures to further strengthen Japan-US economic relations (TPP, expanding investment, improving the business environment in each state, etc.)
- (2) Economic and political circumstances in each state and their expectations toward Japanese companies
- (3) The current Japanese economic situation and future prospects (Abenomics, Keidanren Vision, etc.)
- (4) Responses to global issues (world trade, the global environment, energy, etc.) and Japan-US cooperation
- (1) The three mission groups visited Washington D.C. and a total of 10 states and 14 cities that have a deep relationship with Japan. Through policy dialogue with federal government senior officials, members of Congress, state governors and legislators, executive members of counties and cities, various experts and America-Japan Societies, the mission succeeded in further cementing Japan's relationship with the US, which is the most important partner and a "steadfast ally" of Japan.
- (2) Through a series of opinion exchanges the mission was able to transmit Keidanren's views on the current status of the Japanese economy, including Abenomics, and the strategic importance of the US-Japan relationship. The mission was also able to promote a shared awareness on the importance of an early conclusion of the TPP, further strengthening of US-Japan relations, and a need to continue supporting Japanese companies operating in the US.
|Group A (Leader: Chairman Sakakibara)
|Group B (Leader: Mr Iwasa, Chairman of the Board of Councillors)
|Group C (Leader: Mr. Ishihara, Vice Chair
and Chair of Committee on U.S. Affairs)
II. Summary of the Respective Group Visits
1. Group A (Group Leader: Dr. Sakakibara, Chairman, Keidanren)
(1) Main persons visited
- Washington D.C.
- United States Trade Representative Froman, Secretary of Commerce Pritzker, US Chamber of Commerce, CSIS President & CEO Hamre, Brookings Institution President Talbot
- State of Maryland (Annapolis)
- First Lady Hogan, Lieutenant Governor Rutherford
- State of Virginia (Richmond)
- Governor McAuliffe, Dominion Resources CEO Farrell
- State of South Carolina (Columbia, Charleston)
- President Pro Tempore Leatherman, Secretary of Commerce Hitt, Deputy Secretary of Commerce Noel, Boeing South Carolina
(2) Points of Discussion
i. Washington D.C.
- Chairman Sakakibara addressed the US Chamber of Commerce on the Japanese economy and the US-Japan relationship. Chairman Sakakibara underlined the importance of the economic relationship between the two countries in front of about 170 participants; he explained the achievements of Abenomics and various initiatives undertaken by Keidanren and presented concrete data on job creation and the economic effects brought about by Japanese companies operating in the US.
- On June 29, when the Keidanren mission was visiting Washington D.C., the Trade Promotion Authority (TPA) bill has been enacted at a bill-signing ceremony conducted by President Obama. United States Trade Representative Froman said this will further advance the conclusion of the TPP and the roles that the US-Japan business communities play will become ever more important in the upcoming TPP negotiations. He requested both communities to work harder to expedite the upcoming political process in the respective two countries.
- Secretary of Commerce Pritzker also pointed out that the business communities in Japan and the US need to explain the value of the TPP to legislators and employees in their respective countries ahead of TPP ratification, as the negotiations will come to an end in the near future. She also said the next step is to come up with concrete initiatives that take into account the actual implementation of the TPP.
- Two of America's leading think tanks, CSIS and the Brookings Institution, welcome the enactment of the TPA bill, and said that Japan and the US need to continue exhibiting leadership toward the early conclusion of the TPP negotiations. The Brookings Institution explained that the enactment of the TPA as a result of bipartisan effort has a great significance in view of the deepening gap between the Democrats and the Republicans. Meanwhile, CSIS explained that Japan's reputation has greatly improved thanks to the leadership it demonstrated alongside the US in the TPP negotiations, which also exerted a positive impact on the relationship between the two countries.
- With regard to the upcoming Presidential election in 2016, both CSIS and the Brookings Institute presented a view that the US-Japan relationship will remain robust whoever is elected, since both Democrat and Republican candidates are emphasizing the importance of the US-Japan relationship and aspiring to strengthen the two countries' bond even further.
- Under the slogan of "Open for Business" adopted by Maryland Governor Hogan, the state has worked on improving its business friendly environment to attract more investment. The state is located adjacent to the capital city of Washington D.C. and enjoys a geographical advantage including the Port of Baltimore, which is a top-class port in the US. Furthermore, the state is ranked first in terms of average income per household and the number of doctorates in the physical sciences, showing its richness in economy, high level of education, and presence of highly-skilled human resources.
- Over 40 Japanese firms mainly in the areas of health care and biosciences are operating in Maryland, creating about 6,500 jobs. As LNG will be exported to Japan from Maryland's Cove Point beginning from 2017, the economic relationship between Maryland and Japan is expected to expand. The state is also positive about the introduction of the superconductive linear motor car (Maglev), and Maryland Lieutenant Governor Rutherford expressed a strong will to expand the economic ties between Maryland and Japan.
- Originally a businessman, Virginia Governor McAuliffe underlined that Virginia is a pro-business state, seeking Japanese firms to choose Virginia out of the fifty candidate states when making new investments in America. Currently, about 250 Japanese companies are present in Virginia, creating some 12,000 jobs in the local market.
- The unemployment rate in Virginia stands at 4.9%, which is the lowest level in the US Southeast. The state has superior logistics facilities, including Dulles Airport, which is the largest international airport in the US, and the Port of Hampton Roads, the only port on the East Coast where large Panamax grade vessels can berth. Located in close proximity to Washington D.C., the state has the largest naval base in the country as a point of strategic importance, with cluster districts of military facilities and defense industries. Virginia is also strong in high-tech industry with its data center ranked no. 1 in the country. Local energy prices are low, and construction of a natural gas pipeline across the state is now underway.
iv. South Carolina
- South Carolina boasts the largest tire production volume in the US, with cluster districts of automobile and aviation related industries. As a result of the united efforts of Governor Haley, the state government, and local industries, the state has succeeded in inviting investments totaling over 5 billion US dollars in the past four years, and job creation in the manufacturing sector is growing at a much faster pace compared with neighboring states; exports are likewise expanding. From Japan, about more than 180 companies have come to South Carolina, creating some 17,000 jobs in the local area.
- The tour at Boeing allowed the mission to reconfirm the outcome of strategic cooperation between the US and Japanese industries.
- To commemorate the visit made by the Keidanren mission, a statement proclaiming July 1st, 2015 as "KEIDANREN DAY" was given to Chairman Sakakibara by Secretary of Commerce Hitt.
2. Group B (Group Leader: Mr. Iwasa, Chairman of the Board of Councilors, Keidanren)
(1) Main persons visited
- State of Texas (Austin, San Antonio, Houston)
- Houston Mayor Parker, Congressman Green, Congressman Castro, Texas Secretary of State Cascos, State Representative of Texas Wu
- State of Tennessee (Nashville)
- Governor Haslam, Commissioner Boyd, Metropolitan Government of Nashville Mayor Dean, Mr Schulz, President and CEO of the Nashville Area Chamber of Commerce and Board Chair of the Japan-America Society of Tennessee
- State of California (Los Angeles, San Francisco)
- President and CEO Kimura of the Japanese American National Museum, Mr Ota, Co-Chair of the Board of Governors of the Japanese American Cultural and Community Center, Deputy Chief of Staff Jacobs of the City of Los Angeles, County of Los Angeles Supervisor Antonovich, Chairman Portillo & President Erber, Japan America Society of Southern California, Mr Rossi, Senior Advisor of the State of California, San Francisco Mayor Le
(2) Points of Discussion
- The bipartisan US-Japan Caucus named "Japan Caucus" was formed in the US House of Representatives last year. The Caucus has 65 members from both parties. The mission visited Mr. Castro (Democrat), the Caucus' co-leader, in San Antonio and shared the view that the leadership of the two countries is important to bring about an early conclusion of the TPP. Furthermore, Mr. Castro showed a positive attitude toward providing support to solving the issues that Japanese firms currently face, such as the export of highly efficient coal-fired thermal power, removal of the export ban on crude oil produced in the US, and the training of human resources.
- The mission group exchanged opinions with Texas Secretary of State Cascos on the possibility of industrial collaboration in the area of energy, such as shale gas. Particularly on Japan's request to remove the export ban on crude oil from the US, the state government said it intends to support the request by encouraging the federal government to lift the ban. He also said that he expects to invite more Japanese firms to Texas by improving the local business environment.
- At the reception held by the consulate-general of Japan in Houston and the local Japanese community, Houston Mayor Parker and US Representative Green (Democrat, member of the Japan Caucus) came and exchanged views with the mission group on the initiatives aimed at facilitating human and business exchanges between Texas and Japan.
- With Tennessee's favorable investment environment, 179 companies from Japan operate in the state and the amount of inward direct investment thus far has exceeded 16 billion US dollars. About 45,000 jobs have been created as a result, and Japan is ranked first in job creation by country, playing a major role in the development of the regional economy and society.
- The mission asked Tennessee Governor Haslam and Commissioner Boyd of the Tennessee Department of Economic and Community Development to support an early conclusion of the TPP negotiations and provide more assistance to Japanese companies operating in the state. The two officers first expressed their gratitude to Japan as the largest investing and job creating country in Tennessee, and promised to enhance its already good business environment even further, centered on the automobile and healthcare industries. They also expressed their intent to support the TPP.
- The reception held by the Japan-America Society of Tennessee, Inc. was attended by many local worthies, including Nashville Mayor Dean, Commissioner Boyd, and Mr. Schulz, President of the Nashville Area Chamber of Commerce and Board Chairman of the Japan-America Society of Tennessee. The reception was filled with the friendly atmosphere and warm hospitality indigenous to the American South, and participants from both sides deepened their mutual friendship and exchanged opinions on the importance of strengthening human exchanges between Japan and Tennessee as well as nurturing the next-generation leaders who will be responsible for the US-Japan relationship in the coming decades.
- In California, Japan plays a major role in the local economy as the top country in terms of number of companies operating in the area and job creation, with around 1,500 Japanese firms present in the state, generating over 110,000 jobs.
- The state of California also signed a Memorandum of Cooperation with Japan for further cooperation between Japan and California on such issues as energy, climate change and water. It is expected that California will develop a mutually beneficial and cooperative relationship with Japan, which boasts the world's cutting-edge energy saving and environmental technology.
(a) Los Angeles
- The mission first visited the Japanese American National Museum in Los Angeles (visited by Prime Minister Abe in May), a city with the largest Japanese American community in North America. The mission deepened its understanding on the history and culture of Japanese Americans through the explanation provided by the museum CEO Kimura, and reconfirmed the importance of furthering collaboration with the Japanese American community.
- The mission met with executive members of Los Angeles City and LA County to exchange concrete opinions on how Japan may provide technical assistance to tackle the water shortage problem afflicting the entire state of California and how the state can contribute to the local spread of Japanese cuisine and culture.
- In the meeting with the Japanese American Cultural & Community Center and the Japan America Society of Southern California, which are engaged in grassroots activities to connect the two countries, the mission shared the view on the importance of conveying Japan's appeal through the establishment of "Japan House" in Los Angeles in the near future.
(b) San Francisco
- Senior Adviser Rossi of the California state government expressed his expectations toward Japan's technical assistance on California's high-speed railway and water problem, and exchanged frank opinions on the possibility of US-Japan collaboration in the field of innovation and problems potentially blocking the expansion of US direct investment in Japan.
- The mission met with San Francisco Mayor Lee to specifically discuss the US-Japan partnership in terms of fostering venture firms, developing open innovation initiatives, and possibly collaborating on the building a low-carbon city and developing new industries.
3. Group C (Group Leader: Mr. Ishihara, Vice-Chair and Chair of Committee on U.S. Affairs, Keidanren)
(1) Main persons visited
- State of Illinois (Chicago)
- Governor Rauner, City of Chicago Deputy Mayor Koch, Illinois Department of Commerce and Economic Opportunity Assistant Director Winters, Japan-America Society of Chicago President Grant
- State of Indiana (Indianapolis)
- Governor Pence, Secretary of State Smith, Indiana Economic Development Corporation, Indiana Chamber of Commerce Chairman Easterday, US-Japan Business Council Chair Lechleiter, Japan-America Society of Indiana President Hart
- State of Ohio (Columbus)
- Lieutenant Governor Taylor, Congresswoman Beatty, JobsOhio Senior Managing Director Mustine, Japan-America Society of Central Ohio President Shoji, Central Ohio Japanese Association of Commerce Chairman Hara
- State of New Jersey (Trenton)
- Acting Governor Guadagno, New Jersey Legislature Senate Republican Leader Kean, Office of the Governor Chief of Staff Egea, New Jersey Economic Development Authority CEO Orsen, Choose New Jersey President and CEO Brown
(2) Points of Discussion
- Illinois Governor Rauner (Republican), who just assumed office in January this year, set the target to make the state of Illinois the fastest growing economy in the US. Under the policy of "Illinois Turnaround," he is aggressively tackling issues, with reform of the current tax system and various regulations that hinder firms seeking to operate in the state while working on financial consolidation. The governor stated, "The US and Japan share common values such as freedom, democracy, respect of human rights and the idea of free enterprise, and both the state of Illinois and the US overall cannot find a partner better than Japan."
- The mission met with City of Chicago Deputy Mayor Koch, who has rich business experience, instead of Chicago Mayor Emanuel, who was absent. The Deputy Mayor said the city continues with its efforts to create a better business environment, and he is happy to see large companies starting to come back to central Chicago.
- The Japan America Society of Chicago commemorated its 85th anniversary and continues to develop US-Japan exchange activities. President Grant of the Society expressed the Society's desire to deepen the mutual friendship, not only economically but across broader social and cultural interests, and to that end they would continue to make every effort.
- Indiana Governor Pence (Republican), who is in his second term of office, said that "Indiana and Japan share common values in many aspects, such as history, labor, community and family, craftsmanship and tradition, and this is why over 260 Japanese companies now operate in Indiana." And to strengthen the relationship between Indiana and Japan even further, he plans to dispatch a second mission to Japan, with the governor himself acting as the mission leader, at the timing of the annual general meeting of Japan-Midwest U.S. Association this autumn.
- The Indiana Economic Development Corporation (IEDC) and the Japan-America Society of Indiana (JASI) co-hosted a visit and a luncheon meeting with the local business community and at the Indiana Motor Speedway. Gala reception preceded by a Speaker Program and Panel Discussions were also co-hosted by IECD and JASI in the evening, gathering about 150 participants from all around the state. At the Speaker Program, Chairman Lechleiter of the US-Japan Business Council emphasized the importance of the TPP for the two countries and group leader Ishihara also delivered a keynote speech on the purpose of the mission and the importance of the US-Japan relationship.
- The mission met with Ohio Lieutenant Governor Taylor in place of Ohio Governor Kasich, who is busy preparing for the Presidential campaign. Lt. Governor Taylor said she highly evaluates the investments made in the state by Japanese companies, and she expects to see the development of the shale gas project, on which the state of Ohio is now focusing, to further increase investment opportunities for Japan. She added that the state will support not only businesses that make inward investments in Ohio but also those making investments outside the state while promoting economic reform.
- JobsOhio was founded under the initiative of Governor Kasich. When he assumed his office, he decided to privatize the operations related to economic development that were undertaken by the state government in the past. JobsOhio has achieved great success in inviting more investment and expanding employment in the state as a result of creating a comprehensive network that stretches throughout the state to facilitate speedy business support.
- Congresswoman Beatty said the US and Japan are the important allies and voiced the opinion that a good opportunity has arrived to fortify their relationship under the Obama administration. Although she opposed the TPA bill based on the need to respond to domestic issues arising from trade, Beatty said she does not oppose the idea of trade itself. She is scheduled to visit Japan as a member of the federal congressional representatives' study group in February 2016.
iv. New Jersey
- As New Jersey Governor Christie was out of state, Acting Governor Guadagno attended the luncheon meeting hosted by Keidanren and delivered a speech that underlined the importance of Japan for the New Jersey economy and as New Jersey's partner today and tomorrow in all areas.
- The meeting was attended by executive members of the state legislature and representatives of the New Jersey business community, and opinions were exchanged on the topics such as the attractiveness of New Jersey as an investment destination, available incentives, existence of a skilled labor force, and its advantageous proximity to a giant market.
- In addition, Ms. Egea, Chief of Staff to the Governor of New Jersey, CEO Orsen of the New Jersey Economic Development Authority, and the President/CEO Brown of Choose New Jersey explained the attractiveness of New Jersey as an investment destination and outlined its favorable tax treatment and subsidy system to solicit more investment. Japanese companies already operating in New Jersey commented that the state government's support has made a great contribution to the maintenance of operation bases and retention of employment in the area.