Japan's Role in the Asia-Pacific Economic Cooperation

Proposal for the 1995 APEC Osaka Meeting

Keidanren
Japan Federation of Economic Organizations

Purpose

This proposal summarizes views of the Japanese business community in regard to how Japan should approach its duties as host of the APEC (Asia-Pacific Economic Cooperation) Meeting in Osaka this November. Hopes are high throughout the APEC region that Japan will present important initiatives at the Osaka Meeting.

Keidanren released its "Basic Thinking on Intraregional Cooperation in the Asia-Pacific Region: Proposal to the 1994 APEC Ministerial Meeting and Informal Economic Leaders' Meeting" last November. That paper called for promoting private-sector activities as the key to economic growth in the region. It urged governments to do that by liberalizing trade and investment and by shaping a business environment more conducive to further economic activity.

Keidanren missions to six ASEAN member countries and Vietnam earlier this year gathered a great deal of feedback on those countries' expectations of Japan. Government and business leaders in those countries requested Japan to provide technology transfers through direct investment and to provide other assistance in cultivating human resources, nurturing small and medium sized enterprises, and building industrial infrastructure.

Basic Stance

Urge the APEC members to draft a voluntary plan for economic liberalization that reflects due consideration for the national diversity in the APEC region.

An action agenda for liberalizing trade and investment is expected to be adopted at the APEC Osaka Meeting. Any programs must accommodate the tremendous diversity among the APEC economies in cultural background and levels of economic development. It should accommodate separate and autonomous approaches to liberalizing trade and investment in the different APEC economies while eschewing rigid and universal guidelines for liberalization. It is obvious that a positive approach to liberalization in trade and investment will contribute to stimulating economic vitality and advancing economic development.

Japan should commit itself to becoming a model for economic liberalization.

Industrialized economies of the APEC region, Japan in particular, must take the initiative in economic liberalization. We in Japan should promote imports through deregulation and otherwise open our markets in every way possible.

Japan should work to promote consistency with the principles of the General Agreement on Tariffs and Trade and its successor, the World Trade Organization.

APEC should supplement and strengthen the GATT and WTO framework. Any outcomes of liberalization in the APEC region should apply unconditionally to nations outside the region.

How Japan should approach the APEC Osaka Meeting

Push ahead with deregulation and lower tariff rates to expand imports and investment from abroad.

Japan, the second largest economy in the world, must work to increase imports and investment from abroad. We must be an example to the rest of the Asia-Pacific region in regard to structuring open, transparent markets.
Deregulation is especially important. The Japanese government should press ahead with deregulation in line with a policy of making unregulated commerce the rule and regulations the exception. Its deregulation program, which has been condensed to three years, from five, should be accelerated further. And it should broaden the program to include items that were left out when the program was drafted.
Japan should implement the tariff reductions it agreed to in the Uruguay Round ahead of schedule. And it should lower tariffs on additional items.

Step up development cooperation.

1. Japanese official development assistance has contributed greatly to economic development in several Asia-Pacific countries. Japan should increase that assistance to developing economies further. At the APEC Osaka Meeting, Japan should work to ensure that development cooperation occupies an important place on the agenda, alongside measures for liberalizing and facilitating trade and investment.
   The industrialized economies need to better coordinate their development assistance programs. They also should coordinate their development assistance activities with those of emerging donors, such as the Republic of Korea, Chinese Taipei and Singapore.
   Assistance should include expanded activity which contributes to developing more-sophisticated industrial structures of recipients. That means sharing technology and know-how and lending a helping hand in training technicians and engineers, in fostering business managers, in nurturing small and medium-sized enterprises in the materials and parts industries, and in building infrastructure. Japan and other aid donors also should provide wide-ranging assistance in environmental protection and in social development programs.

2. The Japanese government should solicit private-sector views from both within Japan and the country receiving aid about programs for technical cooperation, training, and small-business promotion. It should incorporate those views in presenting a flexible and comprehensive program for technical assistance at the Osaka Meeting by avoiding bureaucratic rivalry among ministries and agencies concerned.

3. Demand is mounting for direct foreign investment by the private sector in projects related to infrastructural development including electric power, transport, and tele-communications. That investment can take place in such formats as "build, operate, and transfer" and "build, own, and operate" schemes.
   The Japanese government should encourage private-sector participation in infrastructure projects in developing economies. The government can do that by taking measures to lessen the risk of participation in those projects. For that purpose, it should provide increased equity funding through the Overseas Economic Cooperation Fund; increased equity funding, and loan guarantees through the Export-Import Bank of Japan; and increased trade and investment insurance facilities extended by Ministry of International Trade and Industry.

4. Technological cooperation programs and infrastructure cooperation programs are borderless. The governments, participating in the APEC, should respect the ideas of the private sector, which engages in international business. At the same time it should develop a cooperative system between private sector representatives and government officials who will design and carry out those programs. Moreover, APEC must review and reshuffle the working groups that operate under it to avoid overlap and omission. It also is important to use the Internet and other communication methods to disclose and publicize the results achieved by each group for the benefit of the private sector.

Facilitating trade and investment

Governments in all APEC economies must take measures to smooth trade and investment. Those measures should include heightening transparency in government regulations and systems, simplifying customs procedures, unifying tariff codes, easing restrictions on obtaining visas, harmonizing standards and certificates guidelines and recognizing each other's authorizations, protecting intellectual property, and establishing frameworks for settling disputes. The Japanese government should furnish developing economies with administrative and legal assistance and advice to support their efforts.

Private-sector participation in APEC planning

The private sector's voice must be reflected at the APEC forum since the private sector is the wellspring of economic development in the Asia-Pacific region. And the APEC machinery should include a permanent advisory panel to convey the views of the private sector. That group should have some autonomy from APEC itself and be able to monitor progress in implementing APEC's liberalization program.

Members of the panel should work to strengthen ties with business organizations in their home economies. They should gather private-sector opinions and present them to the advisory panel.