Proposals for Japan’s Trade Strategy—Outline
April 19, 2011
Nippon Keidanren

1. Basic Approach to Trade Strategy(1) Current Situation and Challenges: The Urgent Need to Reformulate Japan’s Trade Strategy

Foreign countries: Strategically tackling trade issues in pursuit of sources of growth and employment
Japan: Concerned about widening gap with South Korea in competitive conditions. Unable to take initiative in regional economic integration due toslowness in deciding to join TPP negotiations
 Japan urgently needs to clearly define the foundations of trade policy and implement it proactively and strategically with all due speed.

(2) The Focus of Trade Policy:
Creation of Smooth Global Supply Chains(3) The Trade Strategy Japan Should Promote• With the increasing globalization of supply chains, companies
require a trade and investment environment where the same
rules are applied in as many countries and regions as possible.
• To ensure growth of the Japanese economy, it is essential for
Japanese companies to develop global supply chains while
keeping core bases for production and development in Japanto maintain their domestic technologies and employment.
 Japan should promote a trade strategy of creating smoothglobal supply chains including domestic bases.

[WTO] Promote the expansion of various rules, incorporate the disciplinesof diverse FTAs and regional agreements, and aim to harmonize andintegrate them.
 Avoid problems arising from coexistence of different rules
 Expand scope for application of higher level disciplines[EPA/Regional Economic Integration]
Proactively introduce new rules. Apply rules stipulated in agreements over awider area.
 Ensure conformity with WTO
 Link with efforts to expand and improve WTO rules

Specific Measures2. Expansion and Improvement of WTO Rules
Basic Approach[Main Point] The best way of creating smooth global supply chains is toexpand and improve the WTO rules applied in all its member countries,
which total over 150.
[Challenge] The most important challenge is to conclude within this year
the Doha Round, now in its 10th year since the beginning of negotiations,and expand and improve WTO rules on this basis.
In doing so, it will be necessary to pursue the following objectives:• Maintain and strengthen the WTO’s dispute settlement system (quasi‐judicial function) and mutual monitoring of agreement observance(administrative function)• Refer other countries' measures that are inconsistent with WTO rules
to the dispute settlement procedures• Review the decision‐making system of the WTO such as the consensus
principle to enable the rapid establishment of rules

Specific Measures(1) Conclusion of the Doha Round Within This Year(2) Expansion and Improvement of Rules (Post‐Doha Round Issues)
1) Disciplines concerning export restrictions on resources and foods
2) Investment
3) Electronic commerce4) Others(3) Promoting Membership (China) of the Agreement on Government
Procurement(4) Promotion of WTO Membership (Russia, etc.)

4. Improvement of the Systemic Framework toSupplement the WTO and EPAs
(1) Improvement of Legal Framework for Investment
1) Expansion and improvement of investment treaties
2) Expansion of the tax treaty network and improvement ofexisting tax treaties
3) Promotion of conclusion of social security agreements(2) Expansion of International Rules and Cooperation onMeasures Against Counterfeit and Pirated Goods(3) Restructuring the Export Control System(4) Reconciling Facilitation of Trade with Security(5) Achieving Compatibility of Corporate Social
Responsibility with Smooth Supply Chains

3. Extending the Reach of EPA Rules
Basic approach: Establishment of an ideal businessenvironment putting Japanese companies on an equal footingwith those of other countries
Promotion based the following frameworks including the USA, China,and EU, which account for the highest percentages of Japan’s trade:[Trans‐Pacific Partnership (TPP)][ASEAN+6] As important as the TPP as a pathway to the FTAAP. By
serving as a bridge between China and the USA, Japan can also meetthe expectations of ASEAN countries.
[Japan‐EU Economic Integration Agreement (EIA)] In order that theEU‐South Korea FTA does not place Japanese companies in adisadvantageous position in the EU market for a long period, it willbe essential to agree to launch negotiations at the Summit in May.

Need for early participation in the TPP negotiations• TPP, together with ASEAN+3 and ASEAN+6, is positioned as a basis
for building the Free Trade Area of the Asia‐Pacific (FTAAP)(Yokohama APEC Leaders’ Declaration 2010)• Of these three, only the TPP is at the negotiation stage and close torealization. The USA has joined negotiations, and the TPP accounts
for 25% of Japan’s total trade and 41% of its direct investment
balance.
 If Japan does not join: Sales of Japanese companies in TPP
member countries would decrease, and domestic production bases
for finished p
products and essential componentspwould betransferred to TPP member countries.
 If Japan joins: Japan’s point of view can be reflected in thecreation of new rules for the 21st century and, through the FTAAP,
these rules may become the global rules of the Asia‐Pacific region
and the WTO. This will increase business opportunities and help tomaintain domestic production bases.

5. Promotion of Domestic Reforms to WithstandGrowing Global Competition
Basic Approach
To respond to increasingly fierce global competition resulting from theliberalization of trade and investment, Japan must rapidly implement
radical domestic reforms.
 Vigorous efforts toward realization of a strong agricultural sector
 Fostering and securing of wide‐ranging human resources to enhancecompetitiveness Development of business environment that places Japan on an equal
footing with other countries through reforms of regulations and systems