ISS Discussion Paper Series F-172

Building an “East Asian Community” in vain:
Japan's Power Shift and Regionalism in the New Millennium

Hiroyuki Hoshiro 1

1 Institute of Social Science, The University of Tokyo (hoshiro@iss.u-tokyo.ac.jp)

1Abstract
In August 2009, as a result of the “historical” general election of Japan, theDemocratic Party of Japan (DPJ) gained legislative majority and took over the Liberal
Democratic Party (LDP) government, which had been in power for more than 16 years.
One of the most noteworthy foreign policies launched by the new Japanese government
was aimed at building an “East Asian Community;” however, little progress was observedwith regards to the promotion of economic regionalism, during the DPJ era (2009-2012).
Why was this policy not as actively pursued by the DPJ cabinet as originally intended? Thisis puzzling, given the fact that economic regionalism was one of the Prime Minister’s mostfavored policies; and that there was an absence of significant objections from opposition
parties with regards to this policy. This paper addresses this question by elucidating factorsthat promoted or impeded the building of an “East Asian Community” from the perspectiveof Japanese domestic politics. In particular, this paper sheds light on the preferences of theexisting societal organizations of land, capital, and labor, on the one hand, and theirrelationships with the ruling government, on the other. This paper shows that the previous
DPJ government, having been an advocate of economic regionalism in East Asia, has, infact, experienced strong dissent among its supporters. Groups that had strong ties with the
DPJ reacted negatively against economic regionalism as opposed to those closely linked to
the LDP. Thus, conditions for promoting East Asian regionalism were relatively weaker
under the DPJ government, than under the preceding LDP government. Even though thePrime Minister was a strong advocate of East Asian regionalism, his efforts to promote itremained largely constrained, due to the opposition of his party’s supporters. Such was thereality that the DPJ government faced.

Keywords
Japan’s foreign policy; East Asian economic regionalism; Economic partnershipagreements (EPAs); Free trade agreements (FTAs); Japanese interest groups2Introduction
In August 2009, as a result of the “historical” general election of Japan, theDemocratic Party of Japan (DPJ) gained legislative majority and took over the Liberal
Democratic Party (LDP) government, which had been in power for more than 16 years.
Many Japanese hoped that the DPJ government would change the old-fashioned andineffective political system that the LDP had previously constructed. This expectation was
one of the factors accounting for DPJ’s landslide victory.
One of the most noteworthy foreign policies launched by the new DPJ
government was concerned with building an “East Asian Community.” Together withanother slogan of constructing an “equal Japan–US relationship,” this policy was headlined
as one of “the two distinctive features”2 of DPJ’s diplomacy and played a symbolic role as a
new foreign policy set forth by the incoming government. The policy of building an East
Asian Community was, however, nothing new in itself. The LDP governments had, in fact,
proposed it since 2002, when the then Prime Minister Jun'ichirō Koizumi visited Southeast
Asian countries. In the following year, the Japanese government adapted the Tokyo
Declaration with member countries of the Association of Southeast Asian Nations (ASEAN),
showing its support for establishing a community in East Asia.3 Since then, Japan has
made continued efforts ever since then, to promote East Asian regionalism. Signing
Economy Partnership Agreements (EPAs)/Free Trade Agreements (FTAs) with other East
Asian states was one of such measures.4 Not only the LDP but also the second largest
opposition party, the New Komeito supported the creation of an “East Asian Community.” 5
However, it was the DPJ that first proposed the idea of an “East Asian Community” in their
manifesto as a policy goal. 6 Moreover, DPJ’s first Prime Minister, Yukio Hatoyama,

2 Mainichi Shimbun, December 24, 2009.
3 Tokyo Declaration for the Dynamic and Enduring ASEAN-Japan Partnership in the New Millennium,

December 2003, <http://www.mofa.go.jp/region/asia-paci/asean/year2003/summit/tokyo_dec.pdf>,
accessed June 5, 2013.
4 Since FTAs are included in EPAs, hereafter FTAs are also called EPAs unless otherwise noted. I will later
explain this in more detail.
5 NEW KOMEITO, Manifesto 2010 (Complete version available only in Japanese).
6 DPJ, Democratic Party of Japan Manifesto for the 2005 House of Representatives Election: Nippon

3

advocated this idea every time he visited foreign countries. 7 As a result, building an “EastAsian Community” became a prominent theme in Hatoyama’s diplomacy.
Yet, as I will highlight in the next section, little progress was made in reality, on
the construction of an “East Asian Community” during the DPJ’s administration. Prime
Minister Naoto Kan, taking over Hatoyama for example, did not mention an “East Asian
Community” in his January 2011 speech on administrative policies. Clearly, the DPJ’s
enthusiasm for building an “East Asian Community” had cooled down even before the
Tōhoku earthquake of March 2011 hit the country and drastically changed the course ofvarious government plans. Eventually, the last Prime Minister of the DPJ era, Yoshihiko
Noda (who succeeded Kan), declared openly his lack of enthusiasm for the policy goal, by
saying that “it [was] not necessary to launch a big vision such as the East Asian
Community” 8.
Why was this policy not more actively pursued by the DPJ cabinet, despite being
one of Hatoyama’s favored policies and despite the absence of significant objections from
opposition parties (such as the LDP and the New Komeito)? Several years have passed,
ever since the DPJ lost to the LDP in the 2012 general elections, putting an end to the DPJ
era. With this in hindsight, the current point in time seems to be an appropriate one to givethe above question some serious thought. This paper addresses this question by
elucidating factors that promote or constrain the building of an “East Asian Community”
from the perspective of Japanese domestic politics. In particular, this paper sheds light on
the preferences the existing societal organizations of land, capital, and labor on one hand
and their relationships with the ruling government on the other. This paper proves that the
DPJ government, having been an advocate of economic regionalism in East Asia, had, infact, dissenters among its supporters who oppose it.

Sasshin: Toward a Change of Government Manifesto, 2005; Change of Government: The Democratic
Party of Japan's Platform for Government Putting People's Lives First, 2009.
7 For instance, Hatoyama raised this issue when he met leaders of China in New York (September 21),
South Korea in Soul (October 9), and ASEAN countries in Hua Hin (October 24) in 2009.
8 Noda, Yoshihiko, “Waga Seiji Tetsugaku” [my political philosophy], Voisu [Voice], No.406, 2011, p.52.

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1 East Asian Community and Japan’s EPAs: An overview“Building an East Asian Community” is an ambiguous slogan. Regionalism,
defined as a political will to cooperate with, or sometimes to create a formal arrangement
among states on a geographically restricted basis can take different functional forms inareas such as trade, finance, environment, or security. Issues concerning membership—
which countries are included in or excluded from the arrangement—are often controversial.
DPJ’s regionalism is no exception; it has not defined an “East Asian Community” clearly interms of its function and membership.
Given this problem, this paper focuses on economic regionalism. 9 Japan’s
EPAs policy, in particular, is mentioned as a way of achieving an “East Asian Community” in
DPJ’s Manifesto.10 Moreover, Japan’s EPA is unique in that it covers broader economic
agreements including not only typical FTA—liberalizing goods and services—but also what
are called “new issues”: liberalization of labor turnover, cooperation in technology transfer
and intellectual property, and Bilateral Investment Treaties (BITs). All the economic
agreements that Japan has signed to date have been EPAs. Therefore, it is valid to
examine Japan’s EPA policy if we want to measure the degree of success that the DPJ
government had achieved in building economic regionalism. In addition, I define “East Asia”
as “ASEAN + 6.” That is, it contains, in addition to the 10 ASEAN members and thePeople’s Republic of China (hereafter China), Japan, and the Republic of Korea (hereafter
South Korea)—which are collectively called “ASEAN plus three”—the three nations ofAustralia, India, and New Zealand. This is consistent with the definition of “East Asia”
understood by the Japanese government, which has tried to reduce China’s influence byinviting these three powers. Moreover, my definition of “East Asia” -which is comprised of
9

Therefore, throughout this paper, “regionalism” and “regional (economic) cooperation” are usedinterchangeably. “Regional integration” refers to a process toward establishing a regional framework suchas an “East Asian Community.”
10 DPJ, Change of Government.

5the 16 countries mentioned above is also in accordance with the membership of theRegional Comprehensive Economic Partnership (RCEP), which started negotiation in May
2013.
In short, creating an East Asian Community in the economic realm means
reducing tariffs and other trade barriers, liberalizing mobility of capital and workers, andimproving investment opportunities among the abovementioned 16 countries11. A networkof bilateral EPAs would eventually lead to regional EPAs. 12 Table 1 shows the chronologicalprogress of Japan’s bilateral EPAs with East Asia countries.

Table 1 appears here

This table outlines the following facts. First, EPAs with seven Southeast countries
and ASEAN were already signed by August 2008 under the LDP administration. Second,
hardly any progress was made during the DPJ era, with respects to EPA negotiations with
Australia and South Korea. Third, negotiations with China and New Zealand nevercommenced during this phase of time. Fourth, although EPA with Singapore was amended
in 2007 and Japan’s tariffs on some products such as mining, manufacturing, andagriculture were reduced, this was an only exception. Renegotiation with other East Asian
countries such as Thailand did not progress remarkably despite the Thailand government’s
persistent request. Fifth, the only case the DPJ government developed was with India, but
the negotiations started in 2007, and the DPJ government only had to carry out the laid-out
plan.

11

Complete Regional economic integration is achieved if common external tariff, fiscal, and monetary
policies are implemented among member states. Balassa, Bela A. The Theory of Economic Integration,(Homewood, Ill.: Richaed D. Irwin, 1961).
12 Stallings and Katada doubted whether increasing the number of bilateral EPAs/FTAs worldwide would
contribute to regional economic integration. Their argument, however, is based on inter-continental
bilateral FTAs, not limited to intra-regional ones. No one would disagree that had all East Asian countries
concluded EAPs with one another, it would have led to regional economic integration, that is, the East
Asian Community. Stallings, Barbara and Saori N. Katada “Conclusion: FTAs in a Competitive World”, inSolís, Mireya, Barbara Stallings and Katada N. Saori eds., Competitive Regionalism: FTA Diffusion in the
Pacific Rim, (Basingstoke: Palgrave Macmillan, 2009).

6

In summary, we can conclude that despite strong advocacy on the part of its
leaders, the DPJ’s proposal to build an “East Asian Community” was never effectively put
into practice.The DPJ government did not take any notable initiatives at all. At the time of
Hatoyama’s resignation ten months after the new government came into power, aJapanese newspaper understandably criticized the DPJ for failing to promote the buildingof an “East Asian Community”, as the party had initially proposed 13. The only defender ofthe situation might be Hatoyama, who praised himself on the issue, stating that “theproposal of an East Asian Community was well done”. 14 But nobody knows what thebenchmark of his self-esteem is.

2 Japan’s economic regionalism and domestic interest groups

What, then, are the main factors impeding substantial regional economic
cooperation in the face of a country’s leader strongly in favor of enhancing it? Numerous
studies have tried to shed light on the factors that promote economic regionalism. In
economics, for example, Richard Baldwin theorized the domino movement of regionalism,
which is by nature defensive action on the part of states. 15 He argues that the main driving
force in creating regional trade arrangements is a defensive response to the risk and threatof trade diversion from regional trade arrangements in other parts of the world. In thediscipline of international relations, social constructivists insist that the convergence ofregional “norm” and/or “identity” matters for a region to create and maintain formal
arrangements. 16 Constructivists observe that an increase in economical, political, and13

Asahi Shimbun, June 24 2010.
Asahi Shimbun, June 19 2010.
15 Boldwin, Richard E, “A Domino Theory of Regionalism”, National Bureau of Economic Research(NBER) Working Paper no.4465, 1993, Boldwin, “Multilateralising Regionalism: Spaghetti Bowls as
Building Blocs on the Path to Global Free Trade”, The World Economy, Vol.29, No.11, 2006, pp. 14511518.
16 Acharya, Amitav, Whose ideas matter?: agency and power in Asian regionalism, (Ithaca : Cornell
University Press, 2009); Hemmer, Christopher and Peter Katzenstein, “Why Is There no NATO in Asia:
147social interaction and common inclinations for economic development among East Asianstates have contributed to the emergence of a collective understanding, leading eventuallyto “East Asian Regionalism”. 17 They would agree that the critical juncture for developing
regional identity was the period of Asian Financial Crisis of 1997. East Asian countries
criticized the International Monetary Fund (IMF) as well as the United States for forcing
damaged countries to undertake domestic structural reform. Since then, financial
cooperation has developed among East Asian countries, such as currency swap
agreements (known as the Chiang Mai Initiative). Thus, according to the social
constructivists, their views can be relevant even in the economic realm, which has been
dominated by neoliberal institutionalists.
However, missing from arguments advanced by the domino theory and the social
constructivists is a discussion of factors that hinder regional economic cooperation. Thus,
they were unable to explain Tokyo’s hesitation to develop economic regionalism, eventhough the movement of economic regionalism in other parts of the world has been
proliferating and the Prime Minister was ostensibly highly eager to follow the global trend.
Because their arguments were based on teleology—regionalism progresses as time
passes—they failed to present causal relationships in the reversed direction. If social
constructivists argued that the lack of regionalism could be attributed to a lack of a regionalnorm, their argument would not be falsifiable. In this regard, critics of constructivist
arguments insist that East Asian economic cooperation/integration has not progressedmuch and that what exists in actuality is inconsistent with political rhetoric and constructivist
bias.18
In order to explain Japan’s hesitation to promote the forging of EPAs during theCollective Identity, Regionalism, and the Origins of Multilateralism”, International Organization, Vol.56,
No.3, 2002.
17 Nabers, Dirk, “The Social Construction of International Institutions: The Case of ASEAN+3”,
International Relations of the Asia-Pacific, Vol.3, No.1, 2003; Lee, Yong Woo “Japan and the AsianMonetary Fund: An Identity–Intention Approach”, International Studies Quarterly, Vol.50, 2006.
18 Jones, David Martin and Michael L. R. Smith “Construction Communities: The Curious Case of East
Asian Regionalism,” Review of International Studies, Vol.33, No.1, 2007; Webber, Douglas, “The regional
integration that didn't happen: cooperation without integration in early twenty-first century East Asia,”
Pacific Review, Vol.23, No.3, 2010.

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DPJ’s administration, I shall narrow the scope of my focus to the events which took place inJapan’s domestic political scene. The influence of domestic social organizations onregionalism has been modeled and theorized by some distinguished scholars. 19 In a similarvein, I illuminate the preferences of Japan’s influential interest groups with regard toregional economic cooperation and their relationships with the ruling government. Moreover,I analyze the extent to which the policy shift occurred as a result of partisan control of thegovernment. In the United States, for example, Democrats as well as Republicans cansometimes set into motion big policy shifts over trade. 20 Thus, in democratic countries, achange in the government can conceivably change a state’s basic foreign policy. Given thatsocietal interests are hard to change, if a general election brings about a change in thegovernment while the existing economic organizations’ support for parties remains
unchanged, a big foreign economic policy change could occur. Since the new government
need not pay attention to groups that support previously implemented policies and theerstwhile ruling parties, it is able to shape the new nation’s basic policies while going alongwith its traditional supporters. On the contrary, if certain social groups shift their support
from a ruling party to an opposition party and a change in the government follows, the new
government cannot easily change foreign economic policies that the former government
had implemented. The new government has to consider the interests of its new supporters,
who support old policies. Thus, as Figure 1 shows below, whether a change in thegovernment will also bring about a shift in basic foreign economic policies depends on how
many existing social organizations shift their support to different parties.

Figure 1 appears here

19

Grossman, Gene M. and Elhanan Helpman, “The Politics of Free-Trade Agreement”, American
Economic Review, Vol. 85, No. 4, 1995; Milner, Helen V., “Industries, Governments, and Regional Trade
Blocs”, in Mansfield, Edward D., and Helen V. Milner eds, The Political Economy of Regionalism (NewYork: Columbia University Press, 1997); Chase, Kerry A., “Economic Interests and Regional Trading
Arrangements: The Case of NAFTA”, International Organization, Vol. 57, No.1, 2003.
20 Keech, William R and Kyoungsan Pak, “Partisanship, Institutions, and Change in American Trade
Politics”, The Journal of Politics, Vol. 57, No.4, 1995; Hiscox, Michael J., International Trade and Political
Conflict: Commerce, Coalitions, and Mobility (Princeton: Princeton University Press, 2002).

9

Recent studies have asserted that foreign policies in democratic countries tend
to be consistent and credible for other democracies even if government changes occur.
Various reasons for this have been explored by scholars of international relations, such as
the existence of veto players, which makes policy change difficult, the necessity for a new
government to acquire broader electoral supports, and the existence of domestic audience
cost, which prevents leaders from backing down from their previous pledge.21 Are thesearguments appropriate for explaining Japan’s government change and its economic
regionalism? The answer is both yes and no. Some interest groups who switched from the
LDP to the DPJ in fact contributed to policy continuity. Furthermore, groups that supported
the DPJ in the 2009 general elections were mainly those that had opposed signing EPAs
with East Asian countries, whereas groups that did not support the DPJ had been in favorof it. Japan’s economic regionalism during the DPJ’s administration was influenced to alarge extent, by the interests of these existing organizations; as well as their ties with the
new administration. I will explore those points in greater detail later.
Theoretically, societal interests can influence regional economic integration either
positively, that is, by expressing views in favor of it, or negatively, that is, by expressing
views against it. First of all, export industries that have markets in East Asia will demand
the government to build a trade liberation framework. This sector wants other countries toreduce their tariffs and other trade barriers by creating a formal regional economic
arrangement, namely an “East Asian Community.” Nippon Keidanren (Japan Business
Federation, hereafter Keidanren) represents this interest. Keidanren’s membershipcomprises approximately 1,300 leading firms and 130 major industrial organizations.
Keidanren in fact has advocated to conclude EPAs with other East Asian states and to21

Fearon, James, “Domestic Political Audiences and the Escalation of International Disputes”, The
American Political Science Review, Vol.88, No.3, 1994; Gaubatz, Kurt Taylor, “Democratic States andCommitment in International Relations”, International Organization, Vol. 50, No. 1, 1996; Mansfield,
Edward D,. Helen V. Milner and B. Peter Rosendorff, “Why Democracies Cooperate More: Electoral
Control and International Trade Agreements”, International Organization, Vol. 56, No. 3, 2002; McGillivray,
Fiona and Alastair Smith, “The Impact of Leadership Turnover on Trading Relations Between States”,
International Organization, Vol. 58, No.3, 2004.

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open Japan’s labor market. 22
On the other hand, domestic firms, which have to compete with foreign firms, arepredictably opposed to regional economic integration. Firms in developed countries areless cost competitive than their rivals located in developing countries. Therefore, they often
have a strong incentive to demand the government to keep tariffs high, in order to protect
their own profits. Japan’s textile and apparel industries should be a typical case because
exceptionally high tariffs have been maintained for non-agricultural products. However,textile products were included in EPAs with Southeast Asian countries. Therefore, contrary
to speculation, Japanese textile and apparel industries have already made concession to
reduce tariffs on products imported from developing countries in Southeast Asia. The
largest textile industry group, the Japan Textile Federation, for example, states that“constructive utilization of FTA/EPA and reinforcing collaboration with Asia” is one of theirmain objectives. 23 The Japanese textile industry appears to have already shifted from aprotection policy to a more aggressive one in order to survive in the global economy.
However, the Japanese textile industry has never compromised in one area: the“two-process” rule of origin. This rule stipulates that for a textile product to be recognized ashaving been made in one of the EPA countries, both the fabric and threads of the productshould be made in the same country 24 . Thanks to this rule, textile products made in
Vietnam but using Chinese threads are not admitted as goods made in Vietnam, and hence,
tariffs on those products are not reduced. Since a division of labor between China andSoutheast Asia has been pervasive in the textile industry, it is a wise policy for theJapanese textile industry not to import cheap products blindly. Furthermore, this fact also
implies that the Japanese textile and apparel industries would surely oppose signing an
EPA with China.
Keidanren, Higashi Ajia Keizai Tōgō no Arikata ni Kansuru Kangae Kata [Our View on Economic
Integration in East Asia], 2009, <http://www.keidanren.or.jp/japanese/policy/2009/006/honbun.pdf>,
accessed June 5, 2013.
23 Japan Textile Federation, Action Policy for fiscal 2011, January 18, 2011, p. iv, <http://www.jtfnet.com/english/annai/2011ActionPolicy.pdf>, accessed March 8, 2011.
24 Interview with an official of Ministry of Economy, Trade and Industry (METI), conducted on June 14,
2011.
22

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Nevertheless, the situation of the Japanese textile industry is a rather rare
exception. The Japan Chamber of Commerce and Industry, comprising Japan’s small- to
medium-size firms, is in fact officially in favor of promoting EPAs. 25 Except the textile
industry, Japanese firms as a whole—whether big, medium, or small—basically support
East Asian economic regionalism.
In contrast, domestic groups that have opposed regional economic integration
come from agriculture and organized labor. Because Japan is less endowed with land, theagriculture sector is predictably opposed to the liberalization of its market. Indeed, wellorganized Japanese agriculture groups have a notorious history of negatively influencing
Japan’s trade policy in the post-war history. Because one of the LDP’s main supporters has
traditionally come from rural areas, the LDP government continued to protect agricultural
products. 26 This policy did not change in the case of EPAs with East Asian countries, themajority of which export a number of agricultural products. Negotiations with Australia, forexample, did not progress smoothly because Japan failed to concede to any terms ofnegotiation which required bringing about a heightened level of openness for its agriculture
market. 27 In regard to EPAs with other East Asian countries, the largest farmers’ group,Japan Agricultural Cooperatives (JA or Nokyo), and its directive organization, Central Unionof Agricultural Co-operative (JA Zenchu), have requested to establish an “exceptional
measure,” so that the Japanese agriculture sector can “avoid being sacrificed onesidedly”. 28 Their persistence succeeded in securing exemption of sensitive products suchas rice, wheat, and dairy products from trade agreements. Moreover, JA strongly opposes

Japan Chamber of Commerce and Industry, Keizai Renkei Kyōtei no Suishin ni Kansuru Yōbō [Ourdemand for promoting EPAs], October 28, 2010, <http://www.jcci.or.jp/international/request/20101028.pdf>,
accessed June 5, 2013.
26
Davis, Christina L., Food fights over free trade: how international institutions promote agricultural tradeliberalization (Princeton NJ: Princeton University Press, 2003); George Mulgan, Aurelia, Japan's
agricultural policy regime (London: Routledge, 2006).
27 Capling, Ann, “Preferential Trade Agreements as Instruments of Foreign Policy: An Australia-Japan Free
Trade Agreement and Its Implications for the Asia Pacific Region”, The Pacific Review, Vol.21, No.1, 2008.
pp. 27-43.
28 JA Zenchu, Kankoku, Tai, Firipin, Mareshia, Indoneshia tono Jiyuu Boueki Kyoutei ni Kansuru JA
Guruupu no Kihonteki Kangaekata [Our basic viewpoint on FTAs with South Korea, Thailand, thePhilippines, Malaysia, and Indonesia], February, 2004, pp.2-4, <http://www.zenchu-ja.or.jp/food/wto/162.pdf>, accessed March 10, 2011.
25

12

participation in the Trans-Pacific Strategic Economic Partnership Agreement (TPP), which
includes Australia, New Zealand, and the United States. 29 Thus, the Japanese governmenthas been facing strong opposition from the agricultural sector in its efforts to achieve East
Asian economic integration.
Organized labor may also oppose EPAs with East Asian countries. The
preferences of this sector can be derived theoretically. First, an increase in foreign direct
investment (FDI) into East Asian countries by Japanese firms would reduce domestic
employment. Therefore, organized labor will oppose agreements that make FDI easier—namely BITs. Moreover, various factors including labor cost, currency rate, and country risk,
influence the volume of FDI. Among them, eliminating a country’s tariffs will constrain FDI
because FDI is an alternative for multinational firms to selling their products to high-tariffcountries. Therefore, if tariffs among consenting countries are reduced to zero, FDI may
slow down. Consequently, organized labor may favor FTAs, which will increase domestic
employment by reducing FDI, but they may oppose BITs, which will increase FDI.
Nevertheless, this contradiction is not a source of apprehension for Japanese organizedlabor probably because it is highly technical. For Japanese organized labor, liberalizing
labor mobility is most critical because cheap labor from labor-rich countries will reduce
employment of Japanese workers. For example, Japan’s biggest labor union, the JapaneseTrade Union Confederation (Rengo in Japanese), has officially objected to increasing thenumber of foreign workers through EPAs. 30 As organized labor’s inclination to protect the
weak and the poor is well known 31, its concerns about job loss of low-paid workers areunderstandable.

29

JA Zenchu, TPP Koushou eno Sanka ni Hantai shi Nihon no Shoku wo Mamoru Kinkyuu Zenkoku
Shukai: Mogi Mamoru JA Zenchu Kaicho Kaikai Aisatsu (Youshi) [A nationwide meeting to raise objections
to TPP negotiations and protect Japanese foods: President Mamoru Mogi’s opening speech (summary)],
2011, <http://www.zenchu-ja.or.jp/food/pdf/1289547455.pdf>, accessed March 10, 2011. Formal decision
to participate in TPP was indeed made by the new Abe (LDP) government on March 15, 2013.
30 Rengo, Seisaku, Seido Yokyu to Teigen [Some reform demands and suggestions made with regard topolicies and institutions from July 2009 to June 2011], 2009, p.63 <http://www.jtucrengo.or.jp/kurashi/seisaku/yokyu_teigen2009.pdf>, accessed June 10, 2013.
31 Kume, Ikuo, Roudo Seiji: Sengo Seiji no Nakano Roudo Kumiai [Labor Politics: Labor Unions in postwar Japan], (Tokyo: Chuo Koron sha, 2005), p.123.

13

Thus far, I have examined the preferences of Japanese societal actors.
Businesses are generally in favor of EPAs whether they are multinational or domestic, thetextile industry being the rare exception. On the other hand, both the agriculture sector andthe organized labor publicly oppose EPAs. How have these actors influenced Japan’s
economic regionalism? The next section examines these societal organizations’relationships with the DPJ and the LDP governments.

3 Japan’s government change and tree type of societal organizations

Agriculture
It is widely known that the so-called “agricultural iron triangle,” which consists of
LDP’s zoku giin (tribe Diet members); the Ministry of Agriculture, Forestry, and Fisheries(MAFF); and an agricultural organization (namely JA), had played a crucial role inprotecting Japan’s agricultural market. 32 Traditionally, farmers and the LDP government
depended on each other: the former had voted for the LDP, and the latter protected theagriculture market in return. The MAFF also played an important role in upholding thevested interests of the agricultural sector. Did the power shift that followed the 2009 generalelections change this tie and Japan’s agricultural policy by destroying the triangle?
The answer is “no.” The DPJ government has continued the same agricultural
policy that it inherited from the previous government. Moreover, there was little possibility
that this trend would change during the DPJ’s era. The reason is that a certain number offarmers’ votes flowed from the LDP toward the DPJ during the 2009 election. 33 The LDP nolonger enjoyed total support from the agriculture sector and the DPJ had to consider
agricultural interests in order to remain in power.
32

George Mulgan, Japan's agricultural policy regime, chap. 5.
Taniguchi, Naoko, “2009 Nen Seiken Kotai no Chokiteki, Tankiteki Haikei” [The Short-and Long-TermContexts of the Japanese Power Shift in 2009], Senkyo Kenkyu [Japanese Journal of Electoral Studies],
Vol. 26. No. 2, 2010.
33

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First of all, as Figure 2 shows, votes for the LDP by farmers who had traditionallybeen LDP’s fixed supporters reduced greatly in the 2005 election. The leader of the LDP in
the election was Jun'ichirō Koizumi, who was not popular within the agriculture sector
owing to his “structural reform” policy and its violation of vested interests of the agricultural
sector. Although farmer votes increased again in the 2009 election, they did not reach levelof the 2003 election because a certain number went to the DPJ. Second, we see that in
non-urban areas, where many people engage in primary industries and where LDP finds its
traditional source of supporters the DPJ also expanded its supporter base and went aheadof the LDP in the 2009 election (Figure 3). Third, some agriculture groups shifted their
exclusive support from the LDP to the DPJ. For example, one of JA’s political organizations
Noseiren in Aomori prefecture decided not to vote exclusively for the LDP in the 2009
general election. Similar movements were seen in Oita, Nagano, Yamagata, and Saga
prefectures, all of which are regarded as a rural area. 34 The shift in agricultural support was
accelerated after the change in the government. For instance, the JA decided in October
2009 that they would approach not only the LDP, but also the DPJ government in order topursue agriculture interests. At the same time, one of leaders of the JA Zenchu suggested
that they might support the ruling party rather than the LDP.35 This shift in farmer support
from the LDP to the DPJ was partly explained by the DPJ’s proposal on the creation of“Individual (household) income support for the agriculture system”36 According to the DPJ
Manifest, this measure would provide individual (household) income support for commercial
farming households on the basis of the difference between production costs and market
prices for agricultural and livestock products. This strategy on the part of the DPJ
succeeded in gaining a certain number of farmer votes.

34

Asahi Shimbun, August 20, 25 (evening edition), 2009; Yomiuri Shimbun, August 16, 2009.
Asahi Shimbun, October 9, 2009.
36 Kawamura, Kazunori, “2009 Nen Sousenkyo ni okeru Inasaku Nouka no Seiji Ishiki to Tohyo Koudou:
Jimintou Nosei no Ninaitetachi ni taisuru Kanjou ni Chumoku Shite” [Political Attitudes and Voting Behaviorof Farmers in the 2009 Japanese General Election], Senkyo Kenkyu [Japanese Journal of Electoral
Studies], Vol. 26. No. 2, 2010.
35

15

Figure2 appears here

Figure3 appears here

Therefore, nationwide, this shift led the DPJ to protect the vested interests of the
agriculture sector. In the 2005 Manifesto, the DPJ stated that in order to build an “EastAsian Community,” they would promote the conclusion of EPAs, “thereby strengthening ties
and cooperation with each country and region of Asia… in agricultural trade and other tradeareas”. 37 This implies that the DPJ recognized the necessity of liberalizing Japan’s
agriculture market as of 2005. It is understandable that agriculture votes did not go to the
DPJ in the 2005 general election, in which the LDP lost agriculture support to a great extent(Figure 2). DPJ’s above policy changed in the 2009 Manifesto, which stated that it would
take “positive measures to promote the conclusion of EPAs and FTAs with countries of the
Asia-Pacific region,” but also mentions a change in the terms of the policy:“The measures will not include any which are detrimental to the safety and stablesupply of food, increasing Japan’s food self-sufficiency ratio, and thedevelopment of Japan’s agricultural industry and its farming villages.”

This is the first time the DPJ took into consideration agricultural trade interests in their
Manifesto. 38 In fact, the initial draft of the Manifesto included a sentence stating the need to“conclude FTAs with the United States.” However, right after the DPJ released the draft, thissentence repelled agriculture groups, and the DPJ was forced to modify its policy terms
and add the sentence cited above. 39 Thus, after depriving the LDP of a large number ofagriculture votes, the DPJ was forced to consider the interests of the agriculture sector in

37

DPJ, Manifesto for the 2005, p.23.
DPJ, Change of Government, p.28.
39 Asahi Shimbun, August 8, 200938

16

order to secure its position in power. This fact predicts that DPJ’s trade policy will not be
different from the one that previous governments had implemented: namely, protection ofagricultural products. Kan cabinet’s Minister of the MAFF, Masahiko Yamada, accepted aninterview with a newspaper in August 2010 and stated that “although EPAs should bepromoted, liberalizing the agriculture market should be done with careful deliberation. We
have to be careful not to compromise the interests of farming and fishing villages”. 40 This
statement indicates that the “agricultural iron triangle” has been maintained even under the
DPJ government. In fact, when Prime Minister Noda suggested joining the TPP, a numberof DPJ members strongly opposed his suggestion. This objection resulted, eventually, in
eleven party members leaving the party, just before the general elections of 2012. 41

Therefore, we can easily conjecture that EPA negotiation with China did not startunder the DPJ governments because of strong opposition from the agriculture sector. EPA
with New Zealand was also a remarkable example. Since New Zealand’s Prime Minister,John Key, visited Japan in October 2009, he had requested EPA negotiation with theJapanese government (Hatoyama was the Prime Minister of Japan when Key came toTokyo for the first time). But the DPJ government had refused to even sit down at thebargaining table.42 Likewise, problems with the agriculture sector had decelerated the paceof EPA negotiations with Australia. At the time when the DPJ government was replaced by
the LDP in December 2012, almost four years had passed since negotiations concerning
the EPA began. It is notable that during this phase of time, as many as eleven formal
meetings were held. This was the third longest negotiation after those with South Korea
and the Philippines and one with the second largest number of meeting after that with
India 43. This slow pace of negotiation clearly reflected the strong opposition shown by
agriculture groups against liberalizing four products: beef, wheat, dairy products, and sugar,
40

Nihon Keizai Shimbun, August 25, 2010.
Yomiuri Shimbun, November 20, 2012.
42 Asahi Shimbun, October 31, 2009, November 12, 2010.
43 Negotiation with South Korea has been deadlocked since 2004 primarily owing to Korean domestic
problems. EPA with the Philippines took a long time because of the Philippines’ delayed ratification.
41

17

all of which the Australian government has requested. Concluding EPAs with agriculturalcountries such as Australia, China, and New Zealand was not acceptable by agriculturalgroups. 44

Labor
Japanese Labor Unions have traditionally been main supporters of opposition parties,
including the DPJ, under the LDP administrations. As Figure 2 indicates, the DPJ had
always received more labor union votes than has the LDP, with the 2005 election being theonly exception (see figure 2). This trend became evident in 2009. Individual labor unions
such as the General Federation of Private Railway & Bus Workers’ Union Japan shifted
support from the Social Democratic Party (SDP) to the DPJ at this time. 45 Moreover, three
Ministers (Minister of Education, Culture, Sports, Science and Technology, METI, and Chief
Cabinet Secretary) out of 18 were originally from labor unions and seven were officially
supported by labor unions in the first Hatoyama cabinet (Table 2). This was unprecedented
in Japan’s history.

Table2 appears here

In the past, Japan’s labor unions implemented indirect strategies such asappealing to public sentiments through mass media and had more time to contact with
opposition parties. 46 But it is reasonable to infer that this tendency changed after the
regime shift of 2009. In fact, a “long honeymoon” between the DPJ government and Rengo
was often reported.47 No direct evidence has been found so far to prove that labor unions
such as Rengo interrupted Japan’s trade policy-making and negotiation. But the DPJ

44

EPA with Australia eventually entered in force in June 2015 under the LDP government.
Yomiuri Shimbun, September 10, 2009.
46 Yamamoto, Hidehiro, “Rieki Dantai no Robiingu” [Interest Groups’ Lobbing], in Tsujinaka, Yutaka andHiroki Mori eds., Gendai Shakai Shudan no Seiji Kinou [Political Functions of Social Organizations inContemporary Japan: Faces of Interest Group and those of Civil Society], (Tokyo: Bokutakusha, 2010).
47 Nihon Keizai Shimbun, October 10, November 11, 2009, and February 18, 2010.
45

18

government’s hesitation to accept foreign labors may be explained by the strong link
between the DPJ and labor unions. For example, Thailand had demanded from Japan torenegotiate admission of nurses and careworkers, which was granted to Indonesia and thePhilippines. The DPJ government, however, did not make any concessions. Negotiation on
this issue was suspended 48 and never actualized during the DPJ’s administration. India
also requested Japan to accept a certain number of nurses and careworkers; however, DPJ
government did not compromise on either. 49 Thus the DPJ government made no moreconcession than the previous LDP government did with regard to acceptance of foreignlabors.
In fact, any agreement that would lead to the influx of cheap labor to Japan was
met with fierce resistance from organized labor groups. This served as a major obstacle to
the DPJ administration, in terms of its EPA negotiations with China. As mentioned in thefirst section, the Japanese government adapted unique FTAs—namely EPAs—which
include not only normal FTAs but also “new issues” such as BITs, cooperation in technology
and transfer, and liberalization of labor mobility. One of the main reasons behind this policy
is to improve domestic institutional problems of ASEAN countries by utilizing EPAs asleverage for domestic reforms so that their economic ties with Japan can be strengthened
and deepened. 50Nonetheless, another motive also exists, which the Japanese government
cannot acknowledge officially or publicly: Japan can cover the fact of not liberalizing
agricultural market by offering various economic cooperation options 51. It is ironic, however,that it was precisely the Japanese government’s reliance on such a strategy, which
undermined the likelihood of any form of EPAs being concluded under the previous DPJ
government.

48

Ministry of Foreign Affairs, Nichi Tai Keizai Renkei Kyotei ni Motozuku Shizenjin no Idou ni Kansuru
Tsuikateki na Koushou (Dai 5 Kai Kaigou Gaiyou) [An additional negotiation on entry/exit of a natural
person based on Japan–Thailand EPA (summery of the 5th meeting)], December 22, 2009,<http://www.mofa.go.jp/mofaj/gaiko/fta/j_asean/thailand/shizen_kaigo5.html>, accessed June 6, 2013.
49 Asahi Shimbun, September 10, 2010.
50 Aoki, Maki, “New Issues in FTAs:The Case of Economic Partnership Agreements between Japan and
ASEAN Countries”, IDE APEC Study Center Working Paper Series, 03/04 -No.8, 2004.
51 Interview with a METI official conducted on June 14, 201119

Business
Traditionally, business federations such as Keidanren and individual large firms
have kept close ties with the LDP. They have become more vocal and active since around2000, making recommendations to the government on where the nation should go. 52 EPAs
with Mexico are a case in point: due to pressure from automobile and electronics firms thatwere afraid of being left behind vis-à-vis the EU and the United States, the Japanese
government had to open its beef market. 53This indicates the business groups’ strong
influence. 54
The voice of business groups, however, diminished as a result of the regime shift.
One of the main reasons is DPJ’s decision to “ban political donations by corporations andother organizations” in order to “end public distrust of politics”. 55 This is to say that because
the DPJ has tried to escape dependency on political donations from big businesses orbusiness federations, the link between the DPJ government and business groups became
weak after 2009. Table 3 below shows the amount of political donations contributed by big
firms and business organizations in 2010. Although some firms have made political
donations to the DPJ, they are not comparable to what the LDP has received. Exporting
corporations and federations, such as Toyota, Panasonic, and the Japan Iron and SteelFederation continued to make political donations to the LDP even when the LDP was an
52

Muramatsu, Michio, Seikan Sukuramu Gata no Ridashippu no Hokai [Collapse of Leadership in a
Scrum of Politicians and Bureaucrats], (TokyoToyo Keizai Shinposha, 2010), pp.148, 156-157.
53 For detail of Japan’s EPA with Mexico, see Solís, Mireya and Saori N. Katada, “The Japan-Mexico FTA:a Cross-Regional Step in the Path towards Asian Regionalism,” Pacific Affairs, Vol. 80, No. 2, 2007. For
the role of Keidanren on EPAs negotiations, see Yoshimatsu, Hidetaka, “Japan's Keidanren and Free
Trade Agreements: Societal Interests and Trade Policy,” Asian Survey, Vol. 45, No.2, 2005.
54 On the other hand, METI official Yoichi Sekizawa, who participated in an EPA negotiation, points out thatbusiness lobby to the METI was very week. His argument is very interesting in terms of which model ismore appropriate for accounting Japan’s EPA policy: an interest group model or the developmental statemodel. More empirical investigations are needed to reach a conclusion. Sekizawa, however, did not
mention the link between industrial groups and politicians. Interest groups usually lobby bureaucrats suchas the METI or the MAFF, but where big trade policy decisions such as the one concerned with the Japan–
Mexico EPA are at stake, industrial groups may lobby political leaders directly. Hence, we cannot reject thepossibility that political leaders exert pressure on the agriculture lobby to make concessions. As I will
mention below, this government–business link became tenuous after the DPJ came into power. Sekizawa,
Yoichi, “Nihon no FTA Sisaku: Sono Seiji Katei no Bunseki“ [Japan’s FTA Policy: An Analysis of its Political
Process], ISS Research Series, No. 26, Tokyo: University of Tokyo Institute of Social Science, 2008.
55 DPJ, Change of Government, detailed policies 3.

20

opposition party.

Table 3 appears here

In addition, the disconnection between the Hatoyama cabinet and businessfederations and the latter’s complaint was frequently reported. 56 For example, it took twomonths for Prime Minister Hatoyama and the Chair of the Keidanren to meet for the firsttime, and it took another five months for them to meet the second time. 57 It was reported
that a meeting between METI Minister Naoshima and the then Keidanren Chair Fujio
Mitarai (ex-CEO of Canon) was canceled because of opposition from some DPJ leaders. 58
These relationships contrast remarkably to the ones between Rengo and the government:
Rengo’s President Nobuaki Koga and Hatoyama agreed to meet three or four times a year
immediately after the 2009 election.
Weakening links between the government and business interests implies that it
will be hard for business interests to influence Japan’s EPA policy. If exporting firms andagriculture sectors have a clash of interests, as observed in the EPA with Mexico, the DPJ
government is likely to protect the letter’s interests 59. Figure 4 illustrates the relationships
among the three social actors under both the LDP and the DPJ governments. It clearly
indicates that groups having strong ties with the DPJ tend to have negative reactions
against EPAs. Thus, conditions for promoting East Asian regionalism by the DPJ
government were weaker compared to those experienced by the preceding LDP
government. Borrowing from the terminology of Robert Putnam, the size of “win sets”

56

Nihon Keizai Shimbun, 11 November, 2009, January 6, 2010, and February 18, 2010.
Mainichi Shimbun, March 16, 2010.
58 Yomiuri Shimbun, January 28, 2010.
59 However, it should be noted that the Kan government, which organized a cabinet after Hatoyama
resigned in June 2010, tried to connect with business interests. In addition to the fact that the DPJ
decided to resume accepting political donation in October 2010 (Nihon Keizai Shimbun, October 27,2010), Prime Minister Kan himself expressed his will to restore the relationship with industry sectors(Nihon Keizai Shimbun, June 19, July 6, 2010). Ironically, the conditions for promoting EPAs were much
more favorable and satisfied under the Kan cabinet, which nonetheless lost its zeal for East Asian
regionalism.
57

21

shrunk significantly --and almost became negligible with respects to the government’s
capacity to conduct negotiations-- after the change in government in 2009. This severely
limited the extent by which Tokyo was able to advance offers at EPA negotiations.60 Even
though the Prime Minister strongly advocates the building of East Asian regionalism, aslong as DPJ’s supporters oppose it, the efforts made by the ruling party remain constrained.
This is the reality that the DPJ government had been facing.

Figure 4 appears here

Conclusion
On June 2, 2009, Prime Minister Hatoyama resigned after accepting blame forhis personal monetary problems and the deterioration of the US–Japan relationship. As
mentioned in the introduction, his two successors, Prime Minister Kan and Prime Minister
Noda did not take any initiative to further promote the building of an “East Asian
Community”. While Hatoyama later criticized Kan’s lack of initiative with regards to thepromotion of EPAs, --in saying that “the message of [building an] East Asian Community
has disappeared”61 --it is in fact he himself, who ought to bear the brunt of responsibility forhaving failed to take any concrete measures with resects to this initiative.
The phrase “One Asia” seems to sound attractive to some segments of theJapanese population. Even after WWII, after the dream of building the so-called “Greater
East Asian Co-Prosperity Sphere” had failed, Japanese leaders sought to create regionalarrangements in Asia including Japan and Southeast Asia. 62 Hatoyama might have tried to
attract more support by reviving the romanticism of advocating an “East Asian Community.”
Nonetheless, as I have argued, the DPJ government had no substantial support base forthis policy. As Walter Mattli pointed out, the supply of as well as the demand for integration
60

Putnum, Robert D., “Diplomacy and Domestic Politics: The Logic of Two-Level Games”, International
Organization, Vol. 42, No.3, 1988.
61 Mainichi Shimbun, January 21, 2011.
62 Hoshiro, Hiroyuki, “Co-Prosperity Sphere Again?: United States Foreign Policy and Japan’s ‘First’
Regionalism in the 1950s”, Pacific Affairs, Vol. 82, No.3, 2009.

22

is a condition necessary for creating and maintaining regional arrangements. 63 The
Hatoyama cabinet and its supporters clearly lacked both the will (demand) for and thereadiness to concede (supply) to create a regional economic framework. This is why no
initiative was taken by Japan toward building an “East Asian Community” under the DPJ
administration.

This work was supported by the JSPS Grant-in-Aid for Young Scientists (B) Number
25780111.

63

Mattli, Walter, The Logic of Regional Integration: Europe and Beyond, Cambridge (UK: New York, US:
Cambridge University Press, 1999).

23

Figure 1: the relations between policy shift, government shift, and societal economic organizations support shift
Foreign Economic
Policy B

Governmentshift

Party X

Party YWith

(opposition party)(new ruling party)

Policyshift

Foreign Economic
Policy A

Party X

Party Y(ruling party)(opposition party)societal economic organizations

Foreign Economic
Policy A

Governmentshiftsocial economic organizations

Without

Party X

Party Y

(opposition party)(new ruling party)

Policyshiftsocietal economic organizations

70
60

Vote %

50
40

agriculture→LDP

30

agriculture→DPJ
Labor Union→LDP

20

Labor Union→DPJ

10
0

1996

2000

2003

Year

2005

2009

Figure2: Vote % to the LDP and the DPJ by Farmers and Labor Unions
Source: Taniguchi(2010)

60
50

Vote %

40
urban areas→LDP

30

urban areas→DPJ
non-urban→LDP

20

non-urban→DPJ

10
0

1996

2000

2003

Year

2005

2009

Figure3: Vote % to LDP and DPJ by people from urban and non-urban areas“urban area” is defined as a city that has more than 100,000 people
Source: Taniguchi(2010)

Farmers

LDP
Business

DPJ
Labor

CON

EPAs

PRO

Figure4: Preferences of Japan’s societal actors over EPA with East Asia and theirrelations with the two parties

LDP
Year

2001

DPJ
2002

2003

2004

2005

2006

Singapore

2007

2008

2009

2009

-Aug

Sep-

LDP
2010

2011

2012

2013

2014

AmendedMalaysia
ThailandIndonesia
Brunei
Philippines
ASEAN
Vietnam
India
Australia
South Korea
New Zealand
China (PRC)

Table 1 Current States of Japan’s EPA with the East Asia Countries(The start dates are the time negotiations begin)
Source: Ministry of Foreign Affairs of Japan (MOFA) website

cont.

Ministers

Labor Unions

Tatsuo Kawabata

UI Zensen (Japanese Federation of Textile, Chemical, Food,(Ministry of Education, Culture, Sports, Science and Technology)

Commercial, Service and General Workers' Unions)

Hirotaka Akamatsu

All Japan Federation of Transport Workers' Unions(Ministry of Agriculture, Forestry and Fisheries)

Japan Postal Group Union

Masayuki Naoshima

Confederation of Japan Automobile Workers' Unions(Ministry of Economy, Trade and Industry)
Sakihito Ozawa

Japan Postal Group Union(Ministry of the Environment)
Hirofumi Hirano

Japanese Electrical Electronic & Information Union(Chief Cabinet Secretary)
Hiroshi Nakai

Japan Postal Group Union(National Public Safety Commission)
Yoshito Sengoku

JICHIRO (All-Japan Prefectural and Municipal Workers Union)(Government Revitalization Unit)
Table2: Ministers and their supporter labor unions in the first Hatoyama Cabinet
Source: Yomiuri Shinbun 2 November 2009.

TotalAmountof

To DPJ

To LDP

Political Donations
Firms
Toyota

6,440

0

6,440

Canon

5,000

0

5,000

Panasonic

3,850

0

3,850

Toshiba

3,850

0

3,850

Hitachi

3,850

0

3,850

Sumitomo Chemical

3,700

100

3,600

Nissan

2,900

0

2,900

Takeda Pharmaceutical Company

2,781

481

2,300

Mitsubishi Electric

2,520

0

2,520

Honda

2,500

0

2,500

Daiwa Securities

2,300

100

2,200

Japan Automobile Manufactures Association

8,470

430

8,040

Japan Iron and Steel Federation

8,000

0

8,000

Japan Electrical Manufacturers’ Association

8,000

500

7,500

Petroleum Association of Japan

8,000

0

8,000

The Real Estate Companies Association of Japan

3,700

0

3,700

Japan Mining Industry Association

2,130

30

2,100

Industry Organizations

Table3: The amount of political donations made more than ¥20 million by Business firms and organizations in 2010 (Unit ¥10,000).
Source: Nihon Keizai Shinbun 1 December 2010.