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Executives' Comments  Press Conferences Chairman Sakakibara's Statements and Comments
at His Press Conference

April 9, 2018

Trade Issues

The US and China have both announced trade measures to be taken against one another. It is no surprise that China will take countermeasures to increased tariffs imposed by the US based on Section 301 of the US Trade Act, since this was expected, but I am concerned that the effects could extend beyond the US and China to impact on the entire global economy. I believe the US and China both understand this risk, so I hope that they will resolve the matter through dialogue. We will continue to monitor developments, without becoming too pessimistic or assertive about the current situation.

Trade issues were discussed at the B7 Summit held in Canada last week, and the B7 also expressed its concerns about the impact on the global economy. A joint declaration was prepared and presented to Canada's Minister of International Trade, the Honourable François-Phillipe Champagne.

Tariffs on steel and aluminum based on Section 232 of the US Trade Expansion Act will not fundamentally resolve the situation. The essence of the problem lies in excess production capacity, the conduct of state-owned enterprises, and state subsidies. It is important to ensure rule-based action and fair competition through discussion of such fundamental problems in international frameworks such as the OECD, WTO, G7, and G20. The question of whether Japan will be exempted from tariff measures is of course important too, but the vital thing is to call for rule-based problem-solving through international cooperation rather than unilateral measures.

A Japan-US summit is scheduled for mid-April. I hope that Prime Minister Abe will speak directly to President Trump about the concerns that Japan and other countries have about trade issues, the importance of free, open, and rule-based international economic order, and US responsibilities as a major power.

Expectations for BoJ Governor Kuroda's Second Term

Since Governor Kuroda's appointment in 2013, he has consistently adopted and implemented monetary policies aimed at achieving a 2% inflation target. These have resulted in a non-deflationary environment, in the sense that prices are not persistently falling. I have welcomed this achievement and supported the monetary policies pursued by the Bank of Japan (BoJ). Governor Kuroda's reappointment for a second term is desirable from the perspective of monetary policy continuity.

The biggest challenges for his second term will be ending deflation and revitalizing the economy. Five years on from Governor Kuroda's initial appointment the environment is not deflationary, but Japan cannot yet declare an end to deflation. I hope he will continue to implement appropriate monetary policies to achieve this goal.

Exit strategies are also important, but this is not yet the time to discuss them, and the most important challenge is achieving the 2% inflation target. As Governor Kuroda has mentioned, the BoJ is internally discussing various scenarios. However, it has not yet reached the stage of discussing specifics such as timing. Realistically, the BoJ should continue its current monetary policies and aim to end deflation and revitalize the economy.

Current monetary policies do have some secondary effects, including looser fiscal discipline and impacts on banking business due to negative interest rates. Alongside ending deflation and revitalizing the economy, fiscal reconstruction is also crucial for Japan, but ending deflation is the top priority. Secondary effects notwithstanding, the BoJ has focused on ending deflation and pursued monetary policies to this end. I support this course.

Working Style Reform

Working style reform needs to address four policy issues: expanding discretionary working hours systems, establishing a new system for advanced professionals that values performance instead of hours worked, equal pay for equal work, and placing an upper limit on overtime. Regrettably, the bill on working style reform has excluded expanding the scope of discretionary working hours systems, but I urge the current Diet session to swiftly and steadily address the other three issues. Since various questions have been raised regarding expansion in the scope of discretionary working hours systems, I would like to see this matter promptly re-submitted to the Diet once a proper survey has been conducted.

The submission of the bill on working style reform to the Diet is the first step toward moving ahead with such reform, and I hope that ruling and opposition parties will debate it promptly and constructively. Establishing and steadily implementing a new system for white collar workers that values performance instead of hours worked will be particularly important in promoting working style reform.

Government Scandals

The scandals surrounding Moritomo Gakuen and Japan Self Defense Force (SDF) troop logs are serious problems that must not be ignored. The latter, in particular, relates to civilian control of the SDF and cannot be disregarded. I urge Prime Minister Abe, as commander in chief of the SDF, to take the lead in rigorously investigating the facts and taking strict measures to preventing recurrence.

Recent problems surrounding the Ministry of Finance, the Ministry of Defense, the Ministry of Education, Culture, Sports, Science, and Technology, and the Ministry of Health, Labour and Welfare force people to question whether national government officials work with the fundamental disposition and dignity required of them. Japan's economic development has been underpinned by a diligent population and honest, high-caliber government officials, but recent circumstances have departed from this model. The fundamental stance of government officials needs to be rectified. I urge the government to quickly resolve the various problems it faces in a way that regains public trust, and to devote its energies to addressing the many important policy issues awaiting solutions.

Corporate Advisers

Recently there has been a tendency to question the practice of former presidents and chairmen remaining in companies as corporate advisers, but in Japan such skilled corporate executives use their experience to contribute to society in various ways. For example, corporate advisers have played important roles in business association activities. Rather than indiscriminately judging people based solely on the title "corporate adviser," we need to verify their contribution to society. Most importantly, companies should ensure transparency as a matter of course by clearly disclosing the number of corporate advisers they have and the roles they play.

North Korean Situation

Over the past couple of months, close attention has been paid to North Korea's initiation of dialogue with other countries. The key point will be whether North Korea is actually and certainly moving towards denuclearization, and whether the international community can monitor that process and verify outcomes. Simple conjecture should be avoided. The leaders of North and South Korea will meet on April 27, and a US-North Korea summit is scheduled to take place by the end of May. The Japan-US summit in mid-April comes at a crucial time. I hope the Japanese government will collaborate with the US and other interested countries to do its utmost for North Korean denuclearization and a resolution to the abduction issue. Close cooperation between Japan and the US is especially important for stability in Northeast Asia. Japan is part of the diplomatic process, and dialogue with other interested countries is under way at various levels. I expect that Prime Minister Abe will continue to play an important role in diplomatic forums, beginning with the Japan-US summit.

Executives' Comments