March 2015

12

CSR White Paper
2014
Issues and Prospects
for CSR in JapanThe State of
Global Corporate
Sustainability

Views on China
Post-Summit
Prognosis forJapan-China
Relations
New Directions for
Chinese Diplomacy?

NF-JLEP
The World’s
Southernmost“Koisuru Fortune
Cookie Project”

Japan’s Thorny Path to
Fiscal Consolidation
Snap Election 2014
Gaming the Parliamentary System

Partnering with NATO
Would Ease Japan’s
Regional Security
Cooperation Dilemma
Governance andHuman Security in the
Asia-PacificJapan Perspectives
Japan Perspectives is an English-language journal published by the Tokyo Foundation containing articles from the Foundation’s website. In addition to translationsof the public policy research recommendations made by the Foundation, Japan
Perspectives offers timely insights into and analyses of Japanese politics, economy,society, and culture written specifically for overseas readers.
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Recent Articles from the Tokyo Foundation Website
No. 12, March 2015

Contents
Politics & Government
Japan’s Thorny Path to Fiscal Consolidation ...................................................... 3
Sota Kato
Snap Election 2014: Gaming the Parliamentary System ...................................... 7
Katsuyuki Yakushiji

Security Cooperation
A NATO-Asia Partnership Would Ease Japan’s Regional Security
Cooperation Dilemma ...................................................................................... 12
Tsuneo Watanabe
Governance and Human Security in the Asia-Pacific ........................................ 29
Akiko Fukushima

CSR White Paper 2014
Issues and Prospects for CSR in Japan: Analysis of Japan’s CSR
Corporate Survey ............................................................................................. 34
Zentaro Kamei & Taku Hirano
The State of Global Corporate Sustainability ................................................... 68
Georg Kell
Demanding Social Responsibility from All Organizations ................................ 76
Masao Seki

Views on China
New Directions for Chinese Diplomacy? .......................................................... 84
Kazuyuki Suwa

Post-Summit Prognosis for Japan-China Relations ........................................... 91
Takashi Suzuki
Rain, Soil Erosion, and Desertification in Datong ........................................... 100
Kunio Takami

Nippon Foundation Fund for Japanese Language Education Program
The World’s Southernmost “Koisuru Fortune Cookie Project” ....................... 106
Naomi Collins

International Affairs
A New Direction for America’s Cuba Policy ................................................... 110
Paul J. Saunders

Voices from the Sylff Community
Arbitration in Europe: Article 2 of the European Convention on International
Commercial Arbitration ................................................................................. 113
Nērika Lizinska

Politics & Government
December 25, 2014

Japan’s Thorny Path to Fiscal Consolidation
Sota Kato

Although Prime Minister Abe’s decision to postpone the planned hike in the consumption
tax was popular with voters, resulting in a commanding majority for his coalition government in the December 2014 lower house election, it could spell trouble further down theroad for the nation’s public finances. Prescriptions for fiscal consolidation are quite simple,
but politics, argues Senior Fellow Sota Kato, will likely get in the way of any serious attempts to restore fiscal health.
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I

n his November 18, 2014, press conference, Prime Minister Shinzo Abe announced he was postponing a hike in the consumption tax from 8% to 10%—scheduled for October 2015—for 18 months, given the fragile state of theeconomy. He then told the nation that he was dissolving the lower house of the
National Diet to seek a mandate on his decision.
Not surprisingly, the December 14, 2014, snap election for the House of Representatives resulted in a landslide victory for Abe’s Liberal Democratic Party, giving the LDP and its coalition partner Komeito more than a two-thirds majority inthe lower house.
Although the postponement was popular with the public, it risks exacerbating
Japan’s overly strained finances. Without additional revenues, Japan’s already abnormally high government debt will continue to balloon out of control. Many
economists, both in Japan and abroad, have contended that debt levels are not yet
dangerous enough to cause alarm. But budget figures paint a rather scary picture.
Japan’s outstanding public debt already exceeds 200% of gross domestic productand is approaching 240%—by far the worst of any Group of Seven country.
The future looks even bleaker. A fiscal projection by a group of Japanese economists and announced by Keidanren in 2012 shows that Japan’s public debt could

Sota Kato   Senior Fellow and Project Manager, Tokyo Foundation.
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Politics & Government
skyrocket to nearly 600% of GDP in 2050—and this forecast was made on theassumption that the consumption tax would be raised to 10% in 2015, as scheduled. This is a level that no advanced democracy in the world has ever experienced.
The economists then calculated the consumption tax rate that would be necessary
to keep debt at the current level (that is, 240% of GDP). The figure they came up
was 24.7%, which is much higher than the 10% that Prime Minister Abe postponed.
Three Paths
What would Japan need to do to embark on the path of fiscal consolidation? The
answer is actually quite simple, for there are only a handful of possible scenarios.
The first path would be to just grow the economy, the second to hike taxes, and thethird to cut spending. I will examine these three paths one by one.
The first path of simply growing the economy is what economists and politicians close to Prime Minister Abe have been advising. This is a simple idea of allowing economic growth to solve the debt problem by itself, with stronger profits
leading to increased tax revenues. Advocates of this view believe that if Japan
managed to grow like it did in the 1980s, the public debt problem would disappear.
This would be a wonderful scenario for everyone if it were possible, but it could
turn out to be very difficult to achieve.
The first and most obvious question is, how can Japan return to high-paced
growth after decades of stagnancy? Paul Krugman of the New York Times showsthat Japan’s economic performance, adjusted to its demographics, is surprisingly
strong, compared to the United States. While Japan lagged behind the United Statesand European countries in terms of real GDP growth, it was roughly even in termsof per capita GDP and even outperformed them in figures for per working-age
adult. So Japan might actually have done pretty well if it managed to control its
demographics.
The flip side of this finding is that given the rapid aging of the population, there
might be very little room for growth in Japan. Unless the Japanese population cansuddenly start growing again—or unless the economy’s productivity can be radically improved—achieving success on the first path will be more difficult than one
might imagine.
What are the major obstacles to path-one growth? The first is insufficiency; along-term estimate published in 2014 by the Japanese government’s fiscal councilshows that even if we optimistically assume a 3% annual growth rate for nominal
GDP, this will not be enough for fiscal consolidation. There will also be a need to4Politics & Government
increase taxes and cut spending. Another is uncertainty, meaning that no one hasa clear idea of what it would take to achieve strong growth. Sticking with this pathin the hope that the Japanese economy will grow—and refraining from increasing
taxes or cutting spending—would be very risky. The third obstacle is politics andthe tendency of politicians to avoid structural reforms that are resisted by vested
interests.
Higher Taxes
The second of the three paths to fiscal consolidation is to increase taxes, which
Prime Minister Abe just postponed. It is important to note that Japan’s consumption tax rate and tax burden are some of the lowest among countries belonging to
the Organization for Economic Cooperation and Development. So there would
appear to be room for substantial increases in the tax rate. Economic simulations
have shown that Japan needs to jack up the consumption tax to 20% or even 40%
in order to lower the fiscal deficit. American economists R. Anton Braun and Douglas Joines report that it would take nearly a century to consolidate Japan’s fiscal
situation.
The chief obstacle here, as the election results clearly demonstrate, is politics.
Japan’s Population Pyramid, 1950, 2000, and 2050

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Politics & Government
Would a 20% to 40% consumption tax rate be a realistic political option in Japan,
where 67% of the electorate are opposed to even a 10% rate? The political problem is a very difficult one, for several prime ministers who proposed raising theconsumption tax have been driven out of power.
What are the prospects of the third path—cutting spending? Currently, 30% of
the national budget is allocated to social security payments. As the aging of society
proceeds, this percentage will steadily continue to rise. This suggests that spending
cuts should be focused on social security payments.
Japan’s demographics have changed drastically over the past half century. In
the 1950s, the population pyramid was really a pyramid. But by 2000, the base of
the pyramid shrank, reflecting the lowering of the birthrate. In 2050, the pyramidis projected to appear upside down. The social security system has not absorbed
this change, however, so there is a great mismatch between demographics and thesocial security payment system.
A balance must be struck between social security benefits and burdens. The
obstacle, again, is politics. Japanese politicians will tell you that cutting social welfare spending is even more difficult than increasing taxes. So expecting politicians
to fix the fiscal debt problem could prove to be asking for the impossible.
The landslide election victory was a vote of confidence for the prime minister
to vigorously advance his Abenomics agenda. We would hope that Abe uses the
mandate to achieve breakthroughs on such politically difficult problems as the needfor structural reforms, higher taxes, and a lowering of social benefits.

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Politics & Government
December 11, 2014

Snap Election 2014
Gaming the Parliamentary System
Katsuyuki Yakushiji

Prime Minister Abe’s decision to hold a general election on December 14, at a time when
the government has little to gain from a new mandate, has left observers perplexed.
Katsuyuki Yakushiji illuminates the political calculus behind Abe’s timing.
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O

n November 21, 2014, Prime Minister Shinzo Abe dissolved the Houseof Representatives, as announced at a press conference three days earlier.
On December 14, a mere two years after Abe’s Liberal Democratic Party
ousted the Democratic Party of Japan in a landslide, the people will once again
head to the polls. The question is, why?
Terms for members of the House of Representatives will not expire for anothertwo years. In addition, the next House of Councillors election is not scheduled
until the summer of 2016. With the ruling coalition in control of both chambers of
the Diet, most observers felt the Abe cabinet was in a strong position to pursue
decisive policies oriented to the medium and long term without immediate concerns over an electoral backlash.
Meanwhile, April’s consumption tax hike has taken its toll on economic
growth, and the prime minister’s signature policies for economic revitalization—
known as “Abenomics”—have lost much of their former luster. So, why risk a
general election now? This is what foreign correspondents have been asking me
since Abe’s surprise announcement. Indeed, many Japanese observers have been
puzzling over the same question.

Katsuyuki Yakushiji   Senior Associate, Tokyo Foundation; Professor, Toyo University.
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Politics & Government
Preemptive Strike
The media have offered a range of theories concerning Abe’s rationale for dissolving the lower house. But the explanation I have received from top officers in theruling Liberal Democratic Party is really quite simple. The LDP’s leaders havecalculated that, over the next two years, the party will never be in a better position
to wage a general election campaign.
In Japan’s parliamentary democracy, the ability to dissolve the lower house andcall a general election is one of the key powers of the prime minister, and the timingof such an election is one of the most important political decisions the prime minister can make. Abe and his advisors surely looked long and hard at key issues on
the foreign and domestic front as well as trends in Japanese party politics before
arriving at their decision. Accordingly, the best way to understand that decision is
to do as Abe did: Review the political agenda for the next two years and ask
whether the ruling coalition will be better positioned farther down the road.
With regard to economic policy, which Abe has made the centerpiece of his
government since taking office in December 2012, gross domestic product plunged
in response to a consumption tax hike implemented in April 2014, and while a
temporary jolt was expected, the continued decline in the July–September 2014
quarter was disappointing. So far, prospects for a strong rebound are not yet insight.
In 2015, the Abe government plans to resume operations at many of the nation’s nuclear plants. It also hopes to push through a package of bills reflecting thecabinet’s new interpretation of the Constitution opening the door to Japan’s limited
participation in collective self-defense arrangements. Neither of these measures ispopular with the public, and both are expected to be targets of vigorous criticism
from the opposition when the next ordinary session of the Diet convenes in January.
Cognizant of these challenges ahead, Abe sought to shore up support for his
government last September by reshuffling his cabinet. With its three new female
appointees, the new lineup initially drew favorable reviews. Then two of the women
were forced to resign over claims they misused political funds, leaving Abe in aworse position than before.
In the face of these headwinds, the cabinet and the LDP will be hard-pressed
to avoid a further decline in popular support over the next two years. The prime
minister must have been anxious to avert a repeat of the debacle he presided overduring his first cabinet, when the government’s approval ratings plummeted in the
run-up to the 2007 House of Councillors election; the LDP went down to a historic
electoral defeat in the upper house then, and Abe was forced to step down.
8Politics & Government
This time, the prime minister has taken a good hard look at his medium-term
political agenda and other factors—including the battle-readiness of the opposition—and made the shrewd decision to dissolve the House of Representatives while
the ruling coalition still enjoyed a solid advantage.
Unfair Advantage?
At the press conference where he announced the snap election, Abe offered a somewhat different explanation, citing his cabinet’s decision to delay the next phase of
the consumption tax increase. “The tax system is at the heart of parliamentarydemocracy,” he said. “No major change in the tax system should be carried out
without a popular mandate.” But given that none of the opposition parties oppose
the delay, this seems a flimsy pretext for calling a general election. Strategic partisan
considerations, not policy issues, then, drove Abe’s decision to dissolve the lower
house. Small wonder that voters found it somewhat mystifying.
In 2011, Britain rejected this kind of ploy when it passed the Fixed-term Parliaments Act. The law provides for five-year fixed terms for the House of Commons(the British equivalent of Japan’s House of Representatives) and sharply circumscribes the prime minister’s power to call snap elections. The rationale for the reform was that the prime minister’s ability to dissolve the House of Commons put
the opposition at an unfair electoral disadvantage.
In Japan, dissolution of the lower house is considered the prerogative of theprime minister by convention under Article 7 of the Constitution, and no one canprotest that decision. Even so, Japanese prime ministers have rarely exercised thatpower without some compelling justification, such as a political or policy crisis.
The last two snap elections, called in 2012 and 2009 by Prime Ministers Yoshihiko
Noda and Taro Aso, respectively, came amid plummeting approval ratings andintense pressure from the opposition, and both resulted in a change of government.
But Abe was under no such pressure last month, when he dissolved the lower houseon his own initiative.
The Opposition in Disarray
Be that as it may, the strategy seems likely to pay off. As noted above, the cabinet’s
decision to put off the next phase of the consumption tax increase is not an election
issue, since all the parties are in agreement on this point. The main target of the
opposition is the current administration’s policies for rebuilding the economy.
The prime minister, of course, is playing up the successes of Abenomics, citing
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Politics & Government
a surge in stock prices, growth in exports thanks to the falling yen, job creation,
and wage increases. The opposition counters that only big business has benefited
from the prime minister’s policies. Wage increases have been limited to a handfulof major corporations, and most new jobs are temporary or contract positions withminimal job security. The gap between rich and poor, opponents say, continues towiden.
The problem is that none of the opposition parties—including the DPJ, which
held power from 2009 to 2012—have offered any viable alternatives to Abenomics. As a result, their criticisms smack of negativism and have failed to generate
voter support. According to most opinion polls, support for the LDP has held moreor less steady at around 40%, roughly three times the second-ranking DPJ’s support rate. Since the DPJ’s fall from grace, the LDP has been a unified giant among
factious pygmies.
Part of Abe’s intent was doubtless to catch the opposition off balance, and in
this he has succeeded. Since none of the opposition parties has the capacity to fieldcandidates in every constituency, electoral cooperation among the smaller parties
is vital to counter the powerful LDP. But the snap election has left insufficient time
for conciliation and coordination.
The LDP-Komeito coalition is running candidates in almost all 295 of the single-member lower-house districts. The DPJ, meanwhile, has too few candidates toseize a majority even in the best of circumstances. In some 60 districts, moreover,multiple opposition candidates will be vying against one another, splitting the anti-LDP vote and giving the ruling coalition an overwhelming advantage.
Voter Apathy
In short, there is precious little at stake in the coming election. The outcome isunlikely to have an effect on basic policy, and a change of government is outside
the realm of possibility. Small wonder that voter interest is so low.
The contrast with the previous three general elections is striking. The 2005,
2009, and 2012 campaigns were all replete with political drama. In 2005, Prime
Minister Jun’ichiro Koizumi called a snap election to secure a mandate for postal
reforms opposed by senior members of his own party. In 2009 the DPJ broke the
LDP’s long postwar monopoly on power, and in 2012 the LDP came surging back.
In each case media coverage continued at a fever pitch, and voter interest was at
an all-time high. This time the mood is closer to apathy. The question “Why now?”
has given way to a sense of “Why bother?”
Naturally, this apathy is expected to translate into low voter turnout, which
10Politics & Government
will favor the LDP and the Komeito, so Abe could not have planned it better. If theruling coalition does score another landslide, as media polls are predicting, the nextquestion is what policies Abe will seek to advance. Will he focus on pushing forward with his Abenomics agenda of economic growth, or will he seek closer ties
with Japan’s neighbors? The rhetoric of his campaign thus far offers few clues tothe tenor of his next term.

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Security Cooperation
January 28, 2015

A NATO-Asia Partnership Would Ease Japan’s
Regional Security Cooperation Dilemma
Tsuneo Watanabe

Japan and NATO have been referred to as natural partners sharing fundamental values,
and they are being drawn closer together by what they can offer each other in terms of legitimacy and enhanced capabilities. In this paper originally prepared for the “Euro-Atlantic
Meets Asia-Pacific” conference in Vancouver, organized by NATO Defense College and Simon Fraser University in November 2014, Senior Fellow Tsuneo Watanabe outlines themutual benefits of a closer security partnership for regional stability.
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n a personal conversation with a European diplomat who has been closely
associated with NATO, I was told that what NATO looks for in partneringwith Asian countries is legitimacy and capability.1 These overlap with US expectations in working with its NATO and other allies in counterinsurgency operations.2 And they are also precisely what Japan hopes for in advancing its partnership with NATO, although in the short term, Japan is more interested in legitimacy
than capability. In the long term, though, Japan-NATO cooperation could be mutually beneficial in developing capabilities in such areas as conflict management,
reconstruction assistance, cybersecurity and other transnational threats, and humanitarian assistance and disaster relief (HA/DR).
On 6 May 2014, Japanese Prime Minister Shinzo Abe gave his second speechat the North Atlantic Council, stating “Japan will commit even more strongly than

Tsuneo Watanabe   Senior Fellow and Director of Foreign and Security Policy Research,
Tokyo Foundation.
The conversation with the former NATO official was held in September 2014.
US expectations of NATO and such other allies as Japan and South Korea in counterinsurgency operations are also legitimacy and capability, as noted in David C. Gompert andJohn Gordon IV, War by Other Means: Building Complete and Balanced Capability forCounterinsurgency (Santa Monica, CA: RAND Corporation, 2008), pp. 264–66.

1
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Security Cooperation
ever before to fostering global peace and prosperity” and explaining that one objective of his “proactive contribution to peace” policy is for Japan to play a bigger
role in defending the freedom of overflight, freedom of navigation, and other global
commons.3 To this, NATO Secretary General Anders Fogh Rasmussen remarked,“Our partnership is based on shared values, a shared commitment to international
peace and security and to the principles of the United Nations and internationallaw.”4 Abe echoed the sentiment, noting that Japan and NATO are natural partners
who share such fundamental values as individual freedom, democracy, humanrights, and the rule of law.
Abe concluded his speech at the North Atlantic Council by rhetorically asking,“Why Japan and NATO?” His answer was, “We are more than simply ‘natural
partners’ that share fundamental values. We are also ‘reliable partners’ corroborated by concrete actions.”5
Why is sharing fundamental values with NATO important for Japan’s security
policy? In short, it lends legitimacy to Japan’s efforts to play a larger role in regional and world security. In the same speech, Abe explained his intention tochange the interpretation of the Constitution to enable Japan to exercise its rightof collective self-defense and contribute to regional stability.
This proactive posture may be welcomed by NATO member countries, but
Japan’s neighbors have reacted quite differently. China still points to Japan’s aggressions in the 1930s, and South Korea has negative memories of Imperial Japan’scolonial rule of the Korean Peninsula from 1910 to 1945. For Japan, therefore,
NATO is an attractive partner that has been providing a reliable framework for
military cooperation among European nations like Germany, France, and Britainthat were enemies during the two world wars.
In May 2014, Japan and NATO confirmed an “Individual Partnership andCooperation Programme” covering seven areas of closer security cooperation, including cyber defense, HA/DR, maritime security and counter-piracy operations,and a comprehensive approach to conflict management.6
Speech by Prime Minster Shinzo Abe at the North Atlantic Council, “Japan and NATO as‘Natural Partners,’” 6 May 2014, http://www.mofa.go.jp/mofaj/files/000037774.pdf (accessed 5 October 2014).
4
NATO Newsroom, “NATO and Japan Sign Cooperation Accord to Deepen Partnership,
Discuss Ukraine Crisis,” 6 May 2014, http://www.nato.int/cps/en/natolive/news_109508.
htm (accessed 5 October 2014).
5
Abe’s speech at the North Atlantic Council, see note 3.
6
Individual Partnership and Cooperation Programme between Japan and NATO, 6 May
2014, http://www.nato.int/nato_static_fl2014/assets/pdf/pdf_2014_05/20140507_
140507-IPCP_Japan.pdf (accessed 5 October 2014).
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Japan hopes NATO will share its knowhow in tackling these policy agendas
and is especially eager to learn from NATO’s experience in implementing a comprehensive approach to conflict management.
The National Security Strategy issued by the Japanese government in December
2013 is centered on a policy of making a “proactive contribution to peace” basedon the principle of international cooperation.7 This entails strengthening cooperation with countries sharing universal values to resolve global issues. One suchpotential area of cooperation would be participation in a multilateral nation-building effort for fragile or failed states, such as NATO’s role in Iraq and Afghanistan
under its comprehensive approach.
In this context, NATO is a great mentor and partner for Japan, which can learnmuch from the reconstruction assistance NATO has undertaken to date. NATO’s
cooperation with Asian partners, furthermore, could set the stage for the buildingof a regional security architecture in the future.
1. Why Does Japan Seek Legitimacy from NATO?
Addressing Chinese and South Korean Suspicions
Prime Minister Abe’s vow to make proactive contributions to peace was welcomedby NATO Secretary General Rasmussen, who stated, “In this time of crisis our
dialogue with like-minded partners like Japan is key to address global security
challenges” in both the Euro-Atlantic and Asia-Pacific regions.8 US President Barack
Obama also thanked Abe for his “exceptional commitment to our alliance,” telling
Abe, “Under your leadership, Japan is also looking to make even greater contributions to peace and security around the world, which the United States very much
welcomes”.9 And at the Japan-ASEAN Commemorative Summit on 14 December 2013,
ASEAN leaders said in their joint statement that they looked forward to Japan’s“proactive contribution to peace” for the stability and development of the region.10
Government of Japan, National Security Strategy (Provisional Translation), 17 December
2013, http://www.cas.go.jp/jp/siryou/131217anzenhoshou/nss-e.pdf (accessed 5 October2014).
8
NATO Newsroom, op. cit.
9
US White House Press Brief, “Joint Press Conference with President Obama and Prime
Minister Abe of Japan,” 24 April 2014, http://www.whitehouse.gov/the-press-office/2014/04/24/joint-press-conference-president-obama-and-prime-minister-abe-japan (accessed 5
October 2014).
10
Joint Statement of the ASEAN-Japan Commemorative Summit, “Hand in Hand, Facing
Regional and Global Challenges,” 14 December 2013, http://www.mofa.go.jp/mofaj/
714Security Cooperation
By contrast, China questioned the new security policy. In its 18 December 2013
editorial, the China Daily warned against Abe’s “proactive pacifism,” asserting that“the catchy but vague expression” is “Abe’s camouflage to woo international understanding of Japan’s move to become a military power.”11 The China Daily also
pointed out that Abe’s doctrine seeks to turn Japan’s Self-Defense Forces into “ordinary armed forces.” In reality, though, the Self Defense Forces (SDF) are far from“ordinary armed forces” able to take necessary actions to counter potential aggressive military actions by its neighbors.
China’s concerns are shared by South Korea, another major ally of the UnitedStates in East Asia, which openly expressed its misgivings about Japan’s possible
return to prewar militarism. The Abe cabinet’s decision to change the interpretationof the Constitution’s was controversial, since Article 9 explicitly states that the“Japanese people forever renounce war as a sovereign right of the nation and thethreat or use of force as means of settling international disputes.” The 1 July 2014
cabinet decision expanded the scope of Japan’s right of self-defense to incorporate
actions that are often seen as an exercise of the right of collective self-defense,
which has been the target of a self-imposed ban over the past four decades.
The decision worried the South Korean people, since the new interpretation
theoretically could enable the Japanese government to send troops to the Korean
Peninsula in a contingency. The day following the cabinet’s decision, the Korea
Joongang Daily published an editorial stating, “Neighboring countries increasingly
worry about the alarming development,” although it also noted, “Japan’s exerciseof collective self-defense will raise the level of the Washington-Tokyo alliance further.”12
South Korean anxiety will affect the nature of Japan-US-ROK security cooperation. At a trilateral meeting of defense ministers on 31 May 2014, Japanese Defense Minister Itsunori Onodera and South Korean National Defense Minister Kim
Kwan-jin agreed with US Secretary of Defense Chuck Hagel to cooperate in addressing the threat of North Korean missile and nuclear development. Out of consideration for South Korean anxieties about Japan’s “proactive contribution topeace” and reinterpretation of the Constitution, Onodera explained to his South
Korean counterpart before the meeting that Japan’s SDF will not operate in South
Korean territory without Seoul’s request or permission—even after Tokyo changes
its constitutional interpretation.
files/000022451.pdf (accessed 5 October 2014).
11“Abe’s Three Shots at Pacifism,” editorial, China Daily, 18 December 2013, http://www.
chinadailyasia.com/opinion/2013-12/18/content_15106729.html (accessed 27 July 2014).
12“Japan at a Crossroads,” editorial, Korea Joongang Daily, July 2, 2014, http://koreajoong
angdaily.joins.com/news/article/article.aspx?aid=2991448 (accessed 12 October 2014).
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Japan’s Rationale for a Larger Regional Security Role
While claims of Japan’s “resurgent militarism” are exaggerated, Japan should notunderestimate the influence of public perception in neighboring countries. In fact,
Japan’s disconnect with its neighbors could become an obstacle to implementing
its policy of making a “proactive contribution to peace,” particularly in the Asia-Pacific region.
Abe’s views of history and World War II have been criticized not only by China
and South Korea but also by the US and European media. In December 2013 Abemade a surprise visit to Yasukuni Shrine, where Japanese war dead, including
Class-A war criminals, are enshrined, prompting the US embassy in Tokyo to immediately release an unusual statement calling his shrine visit “disappointing.”13
Even the conservative Wall Street Journal criticized Abe’s visit in its editorial as an
offense against East Asian history and a strategic liability, hurting the ability oflike-minded states to promote a peaceful, liberal regional order and giving Chinese
leaders an opportunity to use the supposed specter of Japanese military resurgenceas an excuse to expand their own power.14
Despite the image encouraged by China and South Korea, the Abe administration is marked more by realism than nationalism. University of Tokyo Professor
Emeritus Shinichi Kitaoka, who is deputy chairman of Prime Minister Abe’s advisory panel on reconstructing the legal basis for national security, is a self-restrained
realist, not a conservative nationalist. And as the leader of a Tokyo Foundation
project that produced a policy proposal on “Redefining Japan’s Global Strategy,”
Kitaoka recommended restraining emotionalism and taking pragmatic steps to findcommon ground with China and South Korea.15
The Abe administration’s current security policy initiatives are not the result ofan emotionally charged nationalism but represent a rational and incremental development of democratic governance in Japan’s postwar security and defense policy. That said, it would not be easy to wipe away anxieties about Japan’s proactive
contributions to regional security unless it engages in actual peaceful practices.
US Department of State, “Statement on Prime Minister Abe’s December 26 Visit to Yasukuni Shrine,” 26 December 2013, http://japan.usembassy.gov/e/p/tp-20131226-01.html(accessed 13 October 2014).
14“Shinzo Abe’s Yasukuni Offense: Japan’s Whitewashing of History Is a Strategic Liability,” Wall Street Journal, 26 December 2013.
15
Tokyo Foundation, Abe gaiko e no 15 no shiten (Redefining Japan’s Global Strategy),
August 2013, pp. 4–5, http://www.tkfd.or.jp/files/doc/2013-02.pdf (accessed 12 October2014).
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While the Obama administration has repeatedly reaffirmed America’s militarycommitment to the Asia-Pacific region as part of its rebalancing policy, the resources the United States can direct to the region are limited due to serious budgetary constraints and security commitments to the Middle East, North Africa, andelsewhere. US allies in Asia are well aware that they will need to take on a bigger
share of the burden of protecting the global commons for the region’s security andstability—and Japan is no exception. Japan’s security community has thus been
proposing that the government play a more active role for Asia-Pacific security.
Even before the conservative Abe returned to office, an advisory panel for Prime
Minister Yoshihiko Noda of the Democratic Party of Japan proposed that Japan
play a more active role in regional security.
Noda’s panel called on Japan to deepen security cooperation with the UnitedStates and other countries espousing common values and to establish stronger
networks with them. Enhancing security cooperation, though, first requires a fuller
recognition of Japan as a valuable partner in Asia. The panel’s report also recommended that Japan expand channels of security cooperation by revising outdated
institutions and practices, including the interpretation of the right of collective
self-defense. It stated that Japan should seek to fulfill a leading role in “international rule-making processes that involve developed and emerging countries,” particularly in Asia and the Pacific, in such diverse fields as security, the environment,
economy, space, and the sea.16 The document represents the consensus opinion of
the Japanese foreign and security policy community, and its recommendations havemuch in common with those being made by those supporting and advising theconservative Abe cabinet.
The center-left Noda administration did not need to worry about Chinese andKorean reactions to these recommendations, since cabinet members did not makecontroversial remarks on the history issue. This implies that the perception of Chinese and Korean leaders, as well as of the public, has an influence on the government’s stance. Once they take root, perceptions are not easy to change. Japan
therefore needs to tackle the conflicting objectives of playing a larger role in providing the international public goods for regional security and reducing the anxiety
of worried neighbors.

Frontier Subcommittee, “Toward a ‘Country of Co-Creation’ which Generates New
Value by Manifesting and Creatively Linking Various Strengths” (Tentative Translation), 6
July 2012, p. 4, http://www.cas.go.jp/jp/seisaku/npu/policy04/pdf/20120706/en_hokoku_
gaiyo1.pdf (accessed 13 October 2014).
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ASEAN’s Concerns
Anxiety over Japan’s military resurgence was not widely shared by other Asian
nations, however. In fact, ASEAN leaders welcomed Abe’s “proactive contribution
to peace” in a Japan-ASEAN summit meeting in Tokyo in December 2013. Most
Asian players were more worried about China’s recent assertiveness on territorialand security issues. This worry was compounded by the lack of certainty in US
security commitments to and presence in the Asia-Pacific region. Despite Obama’s
repeated assurances, regional players still harbor anxieties about American detachment from the region, especially in Southeast Asia.
The Obama administration’s former National Security Advisor Tom Donilon
reconfirmed the rebalancing policy in an April 2014 op-ed piece in the Washington
Post after the president’s visit to Asian countries. Donilon insisted that “the rebalancing of U.S. priorities and resources toward Asia remains the right strategy”
despite the costly cancellation of President Obama’s trip to the region during the
US government shutdown in 2013. He added that the rebalancing policy representsa shift of resources away from the war efforts in the Middle East and Afghanistan
toward the Asia-Pacific.17
However, his successor and current National Security Advisor Susan Rice madea speech at Georgetown University that made some regional players nervous, when
she suggested that Washington would accept the concept of new major power ties
proposed by Chinese President Xi Jinping. She stated, “when it comes to China, weseek to operationalize a new model of major power relations.” For America’s regional allies, such acceptance of the Chinese concept implies that the United States
and China would respect each other’s influence over neighboring countries, rather
than uphold the sovereignty of individual countries.18 After sending this misleading
message, the Obama administration has been careful not to use the same terminology as China, but Asian allies remain somewhat skeptical about the US commitment to the region.
That is one reason why ASEAN welcomes Japan’s larger security role. At thesame time, Asian countries do not want to become embroiled in a conflict pitting
China against the Japan-US alliance. In a recently published report by the Pew ReTom Donilon, “Obama Is on the Right Course with the Pivot to Asia,” Washington Post,
20 April 2014.
18
Remarks prepared for delivery by National Security Advisor Susan E. Rice, “America’s
Future in Asia,” Georgetown University, 20 November 2013, http://www.whitehouse.gov/
the-press-office/2013/11/21/remarks-prepared-delivery-national-security-advisor-susan-e-rice (accessed 13 October 2014).
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search Center, respondents in 8 of the 11 Asian countries polled said they were
worried about China’s territorial ambitions triggering a military conflict with its
neighbors. However, there were considerable discrepancies in ASEAN’s perceptionsof China as an ally or threat, depending on the closeness of the country’s ties with
China.
ASEAN countries that have territorial disputes with China tend to see it as athreat, while those that depend on China for trade tend to see it as an ally. For
example, respondents in the Philippines and Vietnam were more likely to see China
as a threat and the United States as an ally, while those in Malaysia see China
slightly more as an ally and the United States as a threat, although the shares weremore or less evenly divided since Malaysians have both anti-US sentiments andterritorial disputes with China. In Indonesia, more people see the United States asboth an ally and a threat. In Thailand, more people see the United States as an ally,
but for many Thais, their number one threat is not China but Cambodia. Thailand
enjoys close economic ties with both the United States and China.19 Cambodia,
Laos, and Myanmar, which are heavily dependent on economic relations with
China, have a more favorable attitude toward China. If there is a consensus among
the ASEAN states, it is that none of them wants a conflict between China and theJapan-US alliance.
Outside of ASEAN, South Korea is one country that is heavily dependent on
the Chinese economy. Since 2010 China has accounted for around 25% of South
Korea’s total trade. Japanese leaders thus need to consider the reluctance of
ASEAN countries and South Korea to provoke China, which could have a negative
impact on their economies. Economic interdependence with China is also a
consideration for some European and NATO countries. In fact, European expectations of the Chinese economy are higher, on average, than in Asia. In the Pew survey, 49% of Europeans identified China as the world’s biggest economy, while
only 37% believed the US economy was the largest. This compares with 55% of
Asians who said the US economy was biggest and 25% who cited China. The
European view regarding the rise of China appears to be more positive than thatin Asia.20

Pew Research Center, “Global Opposition to U.S. Surveillance and Drones, but Limited
Harm to America’s Image: Many in Asia Worry about Conflict with China,” 14 July 2014,
http://www.pewglobal.org/2014/07/14/global-opposition-to-u-s-surveillance-and-drones-but-limited-harm-to-americas-image/ (accessed 13 October 2014).
20
Ibid.
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2. NATO as a Collaborator and Model for Asian Security
Accommodating the Rise of China
The biggest challenge for players in the Asia-Pacific region is accommodating therise of China in a peaceful and mutually beneficial manner. In the immediate future,
there is a need to prevent competing territorial claims in the East and South China
Seas from escalating into a military conflict between China and such neighbors as
Japan, the Philippines, and Vietnam. Prospects for a peaceful resolution are nowhere in sight, though, despite such regional efforts as the issuance of a declaration
at the ASEAN Summit in Naypyidaw, Myanmar, in May 2014, calling on China
and Vietnam to end their confrontation in the South China Sea and resolve theirdispute peacefully.21 China has not shown any serious interest in enacting a binding
code of conduct for the South China Sea with ASEAN countries despite a verbal
agreement to do so.
As matters stand, the US military presence and its alliances with such players
as Australia, Japan, and South Korea are expected to provide stability for the region. No one wants a military confrontation, which would have serious repercussions for the regional and world economy, as the United States, Japan, and China
together account for more than 40% of the world’s GDP and have deeply intertwined ties in trade, investment, and finance.
Accordingly, avoiding a military showdown is of critical importance for the
global political and economic order. It is easy to say, in theory, that the world
should not contain but engage China. But in practice, attaining the two conflicting
goals of encouraging China to respect international rules and laws as a responsible
player in regional order and sending China a message to avoid any accidental military skirmishes is not easy.
At the start of the Obama administration, Deputy Secretary of State James
Steinberg outlined a policy of “strategic reassurance” toward the rise of China. In
a speech on 24 September 2009, he explained the concept as resting on a core bargain between the United States and China: The United States and its allies must
make clear that they are prepared to welcome China’s rise in the global economy,
he wrote, while “China must reassure the rest of the world that its development
and growing global role will not come at the expense of security and well-being ofPhilip Heijmans, “South China Sea Dispute Overshadows ASEAN Summit,” The Diplomat, 12 May 2014, http://thediplomat.com/2014/05/south-china-sea-dispute-overshadows-asean-summit/ (accessed 13 October 2014).

21

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others. Bolstering that bargain”, he added, “must be a priority in the U.S.-China
relationship.”22
This strategic initiative failed to attain its policy goal. China did not show any
respect to other countries’ security and well-being and ignored international laws
and rules. On the contrary, the policy merely encouraged a more assertive attitudein the East and South China Seas in 2010. For example, Chinese law-enforcement
patrol ships arrested many Vietnamese fishermen in disputed waters in the South
China Sea in 2009 and 2010.23 China arrested four Japanese businessmen in China
and halted rare-earth sales to Japan after the Japanese government arrested a Chinese fishing boat captain who rammed his trawler into two Japanese Coast Guard
patrol boats in waters near the Senkaku Islands in the East China Sea in September
2010.24
The failure of the “strategic reassurance” policy hardened the Obama administration’s policy toward China. At the ASEAN Regional Forum meeting in Hanoi,
Vietnam, on 23 July 2010, US Secretary of State Hillary Clinton said, “the UnitedStates has a national interest in freedom of navigation, open access to Asia’s
maritime commons, and respect for international law in the South China Sea.”
She also stated that the United States opposed the use or threat of force by any
claimant in the South China Sea and supported multilateral talks on the issue.25
The speech was regarded as the beginning of the Obama administration’s shift in2011 from a “strategic reassurance” to a “rebalancing” policy toward the rise of
China.
The US rebalance toward Asia, though, has not produced any remarkable results thus far. This policy is still within the engagement paradigm and does not
signal a shift to a potentially more hostile containment strategy. The more the
Obama administration confirms its military presence in the Asia-Pacific region,
James B. Steinberg, “Administration’s Vision of the U.S.-China Relationship,” Keynote
Address at the Center for a New American Security, Washington, DC, 24 September 2009,http://www.state.gov/s/d/former/steinberg/remarks/2009/169332.htm (accessed 14 October2014).
23
Vaudine England, “Why Are South China Sea Tensions Rising?” BBC News, 3 September
2014, http://www.bbc.co.uk/news/world-asia-pacific-11152948 (accessed 14 October2014).
24
Ian Johnson, “China Arrests Four Japanese amid Tensions”, New York Times, 23 September 2010, http://www.nytimes.com/2010/09/24/world/asia/24chinajapan.html (accessed 14 October 2104).
25
Remarks by Secretary of State Hillary Clinton, Hanoi, Vietnam, 23 July 2010,
http://iipdigital.usembassy.gov/st/english/texttrans/2010/07/20100723164658su0.4912989.html#axzz3G4qgQZuv (accessed 14 Oct 2014).
22

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though, the more China senses the hostility of the US rebalancing policy and isinclined to regard the Japan-US alliance as an impediment to the pursuit of its
national interests. The Communist Party of China draws its legitimacy from its
victory against Japanese militarism in the 1940s, and as such, Chinese leaders simply cannot be seen to be compromising toward Japan or the Japan-US alliance infront of their public. The rise of the country’s economy and military is an energizing source of national pride for the Chinese populace, often offsetting the frustration people feel over the socioeconomic contradictions inherent in their one-party
political system.
Policy Options for the US and Its Allies
In general, the Japan-US policymaking community’s strategic consensus toward therise of China is to use a combination of cooperative engagement, balancing, andhedging. “Cooperative engagement” means building and maintaining economic
and diplomatic ties with China. “Balancing” means creating a favorable balance ofpower to influence Chinese behavior. “Hedging” means maintaining a regional
military presence and close alliance management in case China emerges as a challenger to US leadership.26
Engagement would weaken should the United States and Japan enhance theirmilitary capabilities as a hedge against the rapid modernization of Chinese forcesin such areas as A2AD (anti-access and area-denial). In the past, “a cork in thebottle” theory was used as an effective tool to reassure China that the Japan-US
alliance framework would act to contain the resurgence of Japanese militarism. In
October 1971, Henry Kissinger, then national security advisor to President Richard
Nixon, persuaded Chinese Premier Zhou Enlai that US control of Japan within thealliance framework would be more in line with China’s security interests than setting Japan free.27 China could be persuaded with such logic at the time partly because it saw the Soviet Union as a more serious threat. Now, many East Asian security experts are predicting a rivalry between the United States and China forregional dominance.
China can no longer count on the United States to suppress Japan’s regional
Tsuneo Watanabe, “US Engagement Policy toward China: Realism, Liberalism, and Pragmatism,” Journal of Contemporary China Studies, vol. 2, no. 2, 31 January 2014, publishedby the Institute of Contemporary Chinese Studies, Waseda University. The article can beaccessed on the Tokyo Foundation website, http://www.tokyofoundation.org/en/
articles/2014/us-engagement-policy-toward-china (accessed 14 October 2014).
27
Henry Kissinger, White House Years (Boston: Little, Brown & Co., 1979), p. 1089.
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security role, as there has been an incremental expansion in areas of Japan-US
cooperation, such as through the drafting of the Guidelines for Japan-US Defense
Cooperation in 1997. This worried the Chinese leaders, who wondered whether
the Guidelines might apply to contingencies across the Taiwan Strait. China is also
concerned with the ongoing revisions to Japan-US security arrangements, which
are expected to expand the areas and degrees of security cooperation following the
1 July 2014 Japanese cabinet decision outlining a new interpretation of the Constitution.
Using NATO to Reassure China
Japan and the United States would welcome NATO’s role as a new “reassurance
mechanism” for China. Japan and the United States cannot stop working
closely together, as they need to deter potential aggressions by an unstable North
Korea and to keep China’s assertiveness in check. A multilateral security architecture could potentially be built in the region obligating all players, including China,
the United States, and Japan, to adhere to common rules and laws. ASEAN, theASEAN Defense Ministers Meeting Plus Dialogue Partners (ADMM-Plus), theASEAN Regional Forum, and the East Asia Summit are some potential forums forsuch a regional security mechanism. There are limitations, however; China’s recent
behavior shows that it has little respect for multilateral frameworks. China is
instead seeking a grand bargain: a power-sharing arrangement with the UnitedStates that would enable it to circumvent a full commitment to multilateral cooperation.
An imperative for the Asia-Pacific region and the world, then, would be to notjust advance cooperative engagement with China but to induce the country to become a cooperative and rule-abiding player—without damaging economic ties orsacrificing regional stability. NATO’s European member states are already important players engaged in trade and other economic activities. In this context, NATO
could become a key factor in inducing China to cooperate with a regional security
framework. The Chinese are far less suspicious of NATO’s European allies, who
are also critically important economic partners for China.
That is why cooperating with NATO is a safer and more effective approach to
making a proactive contribution to regional peace for Japan, as this would be lessprovocative for China and other neighbors. Security cooperation with NATO and,if possible, South Korea would greatly facilitate Japan’s participation in a regional
security initiative.

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3. What Do Japan and NATO Expect from Each Other?
Common Elements in Japan’s Cooperation with NATO and ASEAN
In May 2014, Japan and NATO signed the “Individual Partnership and Cooperation Programme” whose priority areas for cooperation include the following:
1. Cooperation and sharing lessons learned from Cyber Defense
2. Cooperation on humanitarian assistance and disaster relief
3. Counter terrorism
4. Disarmament, in particular related to small arms and light weapons, arms
control, non-proliferation of weapons of mass destruction and their meansof delivery
5. Maritime security, especially counter piracy
6. Comprehensive approach to conflict management
7. Defense science and technology
None of these items are highly sensitive for China or elicit anxiety over a resurgence of Japan’s militarism. Advancing security cooperation in the region with
NATO would greatly contribute to building confidence among East Asian players,
as NATO has a solid track record in improving the European security environment
over the past 65 years. The fact that NATO’s major European members have notbeen involved in a serious conflict with China or South Korea over the past half
century would give greater legitimacy to Japan’s security contributions. NATO also
has an important lesson for Asia, having overcome historical animosities and negative war memories to create and manage a cooperative multilateral security architecture.
In addition, the Japan-NATO agenda overlaps those of the Japan-ASEAN
security cooperation agenda, outlined in the joint statement of Japanese and
ASEAN leaders at the summit meeting in Tokyo on 14 December 2013, as follows:28
1. Maritime security and cooperation

Joint Statement of the ASEAN-Japan Commemorative Summit, “Hand in Hand, Facing
Regional and Global Challenges,” 14 December 2014, http://www.asean.org/news/
asean-statement-communiques/item/hand-in-hand-facing-regional-and-global-challenges(accessed 13 October 2014).

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2. Free and safe maritime navigation and aviation
3. Korean Peninsula
4. Global economy
5. A society in which all women shine
6. Societal issues
7. Millennium Development Goals (MDGs), post-2015 development agenda
8. Climate change
9. Humanitarian assistance and disaster relief
10. Sustainable utilization and management of water and natural resources andenvironmental protection
11.Transnational threats
12. Middle East
13. United Nations Reform
Japan and the two regional multilateral frameworks clearly seek to achieve
similar policy goals. NATO and ASEAN thus have considerable room for cooperation in addressing such issues as maritime security, cybersecurity, the proliferationof weapons of mass destruction, and humanitarian assistance and disaster relief.
They could very well create a cooperation framework addressing such urgent security issues without causing alarm to any regional actor.
HA/DR as Initial Area of Cooperation
Abe’s “proactive contribution to peace” has been well received by NATO, theUnited States, and ASEAN. The next step would be creating a framework for
implementation by identifying priorities for effective cooperation. A prime candidate would be humanitarian assistance and disaster relief (HA/DR), an issue thathas few obstacles and yet requires an urgent response in the light of such transnational threats as cyber attacks. It is an area that lends itself naturally to a cooperative framework involving NATO and partner countries like Japan and South
Korea.
The SDF have extensive expertise and capabilities in HA/DR owing to Japan’sfrequent earthquakes, typhoons, and other natural disasters. The joint operations
with US forces in the wake of the March 2011 Great East Japan Earthquake elevated HA/DR cooperation into a new mission for Japan and the United States andinto an international commons for the Asia-Pacific region. The Japan-US “two plus
two” Security Consultative Committee agreed to promote multilateral cooperation
in HA/DR through joint exercises and mutual logistics support. The two sides also25

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concurred on the importance of establishing a regional HA/DR logistics hub inJapan.29
HA/DR has two advantages over other issues. First, Japan and the United States
can offer their experience and capabilities to NATO or the European Union in
future joint operations. Second, HA/DR is an area in which cooperation with even
China would be possible, unlike other traditional military missions. If China participates in the framework, it would promote confidence-building and provide reassurance to other players in the region. China has, in the past, accepted SDF rescue
teams on Chinese soil, such as following the May 2008 Sichuan Earthquake, although the rescue workers were dispatched using a private charter flight rather
than an Air SDF aircraft out of consideration for Chinese sensitivity to the deployment of Japan’s defense personnel.30
In 2011, the Tokyo Foundation issued a policy proposal on “Japan’s Security
Strategy toward China” calling for the formation of “a resilient habit of cooperation capability” in an effort to deepen interdependence.31 Discussions on HA/DR
cooperation have already been advanced in the ASEAN Regional Forum following
the Sumatra earthquake and tsunami of 2004.
What Japan Hopes to Learn from NATOOne thing that Japan hopes to learn from NATO through cooperation withthe organization is its comprehensive approach to conflict management. For example, the National Security Strategy (NSS) issued by the Abe government in
December 2013 proposed that Japan will develop a new system of seamlessassistance to potential recipients in security-related areas through the strategic utilization of official development assistance and capacity building support, as wellas coordination with nongovernmental organizations. In addition, the NSS announced Japan’s intentions to engage in the training of peacebuilding experts
and Peace-Keeping Operations personnel in various countries, adding that Japan
will consult closely with countries and organizations that have experience in such
Joint Statement of the Security Consultative Committee by Secretary of State Clinton,
Secretary of Defense Gates, Minister for Foreign Affairs Matsumoto, and Minister of Defense Kitazawa, “Toward a Deeper and Broader U.S.-Japan Alliance: Building on 50 Yearsof Partnership,” 21 June 2011, http://www.mofa.go.jp/region/n-america/us/security/pdfs/
joint1106_01.pdf (accessed 14 October 2014).
30“Memories That Still Linger,” Japan Times, 1 June 2008.
31
Tokyo Foundation, “Japan’s Security Strategy toward China: Integration, Balancing, andDeterrence in the Era of Power Shift” (policy proposal), October 2011, p. 45.
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engagement, including the United States, Australia, and European countries.32
Currently, the Abe administration is drafting a revision to the ODA Charter
that outlines Japan’s desire to play a larger security assistance role with global
actors in a comprehensive manner. It is not yet clear how much the ODA Charter
will be revised, but there is no doubt that Japan will benefit through closer cooperation with NATO, which has been offering assistance in a comprehensive manner
to both military and civilian organizations, such as in the western Balkans, Afghanistan, and Libya.
Sharing a Successful Asia-Pacific Security Framework
Discussions on a security cooperation framework between Japan and NATO beganat the Track 2 (nongovernmental) level a few years before the Japanese government
and NATO officially agreed on the Individual Partnership and Cooperation Programme in May 2014. The Tokyo Foundation and the German think tank, Konrad
Adenauer Stiftung, for example, have been engaged in Track 1.5 dialogue over the
past few years. Such discussions among Japanese and NATO security experts suggest that the above-mentioned security cooperation agenda would have great benefits for both sides. Participants in an open conference hosted by the Tokyo Foundation in July 2012, for example, agreed that common global challenges liketerrorism, the proliferation of weapons of mass destruction, and piracy should be
addressed by deepening the partnership between Japan and NATO.33
NATO would thus be a great partner for the Asia-Pacific region. NATO would
give legitimacy and help build confidence in the region owing to its record of surviving a difficult game against the Soviet Union and preventing a catastrophic
military showdown through a combination of engagement and hedging. NATO’s
cooperation in building an Asian security architecture would not alarm China orother Asian countries. China would be less nervous with NATO’s engagement,
given its geographical and political distance from the Asia-Pacific. In addition,
major NATO members, such as Germany, France, Britain, and Canada, have close
economic ties with China. Since NATO is a military alliance involving the UnitedStates, troubled Chinese neighbors like Japan and the Philippines would also be
assured.

Government of Japan, National Security Strategy, pp. 30–31.
“NATO in a Changing World: Implications for Japan,” experts’ meeting and open forum
coorganized by the Tokyo Foundation and Konrad Adenauer Stiftung, http://www.kas.de/japan/en/events/51899/ (accessed 13 October 2014).

32
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NATO and Asian partners should seek to create a multilateral and multilayered
Asian regional security architecture in which China could ultimately play an activerole. China is not comfortable obeying the rules drafted by ASEAN countries,
which are much smaller and weaker economically and militarily. Neither is China
comfortable conceding to demands from the United States and Japan, which it
regards as potential rivals. Although the United States is a NATO member, China
is likely to respect NATO initiatives if they are well implemented and carefully
coordinated with other members, the EU, ASEAN countries, and US allies in theregion. Such a coordination process would be a big challenge for NATO, representing a new mission for the organization. But if successful, it would become anothergreat achievement that serves the economic and security interests of all member
countries.

Paper originally prepared for the “Euro-Atlantic Meets Asia-Pacific” conference in
Vancouver, Canada, May 2014, co-organized by NATO Defense College and Simon Fraser University. To be a chapter in the forthcoming Euro-Atlantic Meets
Asia-Pacific: NATO, Partners and the US Rebalance, eds. Brooke Smith-Windsor
and Alexander Moens (NDC/SFU).

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February 2, 2015

Governance and Human Security in the
Asia-Pacific
Akiko Fukushima

The Asia-Pacific has been slow to establish a system of regional governance, but economic
interdependence and the transnational nature of security threats now demand a collective
response. A “glue” is needed to hold the parties together, and Senior Fellow Akiko
Fukushima contends that the concept of “human security” could serve as such an adhesive.
This paper was originally prepared for a workshop on “Regional Architecture andFrameworks for Cooperation in the Asia-Pacific,” held on January 8–9, 2015, at the National University of Singapore. It is reprinted here with the permission of the organizers.
***

1. Cracks in Global GovernanceSeventy years ago, such global governance institutions as the United Nations,
World Bank, and IMF were created. They have certainly contributed to preventinga Third World War and to enabling global economic and financial growth. The
global environment has undergone an immense evolution since then, though, andthe concerns of the international community are focused not just on war but on awhole array of issues, from insurgencies, terrorism, cybersecurity, space, and epidemics to climate change. Structurally, the world has witnessed a tectonic shift in
power distribution, from a bipolar to unipolar and to a new type of multi-polar
arrangement. We do not yet know who will lead the new global order. Rising powers are reluctant to lead unless this serves their national interests. And declining
powers are losing the capacity they once had to lead.
Security incidents are far less predictable than ever. Crises appear out of theblue, no matter how hard we gather information in advance. Who could have pre-Akiko Fukushima   Senior Fellow, Tokyo Foundation; Research Fellow, Asia International Center, Aoyama Gakuin University; Lecturer, University of the Sacred Heart.
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dicted the Ukraine crisis, the Ebola epidemic, and the sudden surge of the IslamicState at the beginning of 2014?
Have global governance institutions adapted to these changes? Have they
maintained their raison d’être, legitimacy, and utility, some 70 years since theircreation? They have certainly tried to adapt. The World Trade Organization, thesuccessor to GATT, has tried to conclude a new global trade agreement to address
issues in a more interdependent global economy, but it has so far been unsuccessful.
This has led to a spawning of FTAs and EPAs of numerous kinds.
We have witnessed a surge of minilateral and informal multilateral networks
among political and economic powers to fill the lacuna of governance. In the wakeof the global financial crisis, for example, a G20 leaders’ summit was convened,
and its scope of discussion has expanded to include not only economic issues but
also those relating to energy and climate change. These informal “clubs” can assuage immediate uncertainties, but can they become the standard bearer of global
governance from a longer perspective? They tend to have strong momentum in its
initial phase but gradually lose steam over time, as they have neither a firm grounding in shared values and norms nor common perceptions of global public goods inways that inspire confidence and sustain cooperation. These ad hoc groups, at best,
merely provide patchwork governance.
How, then, can we enhance global governance? Can regional governance become a substitute for global governance or, at the very least, become a functioning
part of global governance? Given its shortcomings, global governance must be
strengthened and adapted to today’s prevailing circumstances, being supported byregional and national governance.
2. Regional Governance in the Asia-Pacific
What is the state of regional governance in the Asia-Pacific? The Asia-Pacific wasonce known as an infertile ground for regional institutions. However, there has
been a sea change after the creation of APEC and the ASEAN Regional Forum(ARF). In the past two decades, the region has given birth to a myriad of regionalgroupings with different acronyms—the so-called alphabet soup—which form a
multilayered regional architecture centered on ASEAN, including APEC, ARF,
ASEAN plus Three, the East Asia Summit, and ADMM plus. In addition, we havean inventory of Track 2 meetings, such as CSCAP, Shangri-La Dialogue, to namejust a few.
Are these institutions serving effectively as regional governance structures?
They have surely contributed to regional dialogue, promoting conversation and30Security Cooperation
leading to some practical cooperation, mainly with financial crisis management(such as the Chiang Mai Initiative) and in nontraditional security areas, such as
humanitarian assistance and disaster relief (HADR) exercises through ADMM plus
and ARF and piracy control in the Strait of Malacca through the Regional Cooperation Agreement on Combatting Piracy and Armed Robbery against Ships in Asia
(ReCAAP). These forums have failed to address core regional issues, however, suchas territorial disputes, competitive arms buildup, cyber threats, national rivalries,
and civil war.
This raises a question: Do we need regional governance at all in the Asia-Pacific? In contrast to member states of other areas that yield their sovereignty forregional cooperation and integration, nations in this region strongly cling to theirsovereignty and are keen to maximize their national interests. This does not lend
itself to regional governance. Given the growing interdependence of the global
community, however, we need to juggle our independence and interdependence if
the region is to prosper in the future. Two factors—namely, economic interdependence and the transnational nature of threats prevalent in the Asia-Pacific—naturally compel us to cooperate, since they demand a collective response. Multilateralism thus matters in the Asia-Pacific more than ever. If we agree on the need forregional governance, how should we go about achieving it?
3. Human Security as a Guiding Principle
In building a functioning structure for regional governance, we need regional institutions, concepts, and leaders. Whatever route we take in achieving regional governance, we will need a glue to bind us together. Can human security be such anadhesive? Since human security was conceived and introduced to policy debate by
Asians, such as Pakistani economist Mahbub ul Haq and Indian economist Amartya Sen, who authored the seminal 1994 UNDP Human Development Report, it
would be a natural glue in terms of its Asian pedigree. However, human security
has not only advocates but also skeptics and opponents in the region.
Those promoting the concept originally included Japan, Canada, and Thailand,
although they varied in their broad or narrow definition of the term. Japan stoodon the broader end of the spectrum, identifying human security as a means toachieve “freedom from want.” It has operationalized the concept through its development assistance since the December 1998 policy speech by Prime Minister Keizo
Obuchi, who cited the concept in announcing assistance for countries hard hit by
the Asian financial crisis the year before. Japan has embraced human security as acore component of its foreign policy, particularly in terms of ODA, as corroborated
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Security Cooperationin such policy documents as the 2003 ODA Charter, the forthcoming 2015 ODA
Charter (to be renamed the Development Cooperation Charter), and the 2013
National Security Strategy. Japan, since the report by the Commission on Human
Security, has further broadened its interpretation to include “freedom from fear,”
expanding its peace-building assistance from strictly the post-conflict phase tocover the period during a conflict, as exemplified by JICA’s assistance to the peace
process in Mindanao. The December 2013 National Security Strategy noted thenexus between development and security, which will be further elaborated in theforthcoming 2015 ODA Charter (Development Cooperation Charter). This willallow Japan to be even more proactive in addressing both “freedoms” while deemphasizing the “freedom from fear” in relative terms.
Canada, on the other hand, has stood by its narrow definition of human security, emphasizing the “freedom from fear” and leading efforts to set norms forlandmines, the International Criminal Court, child soldiers, the responsibility toprotect, and so on. The big divide between Japan and Canada lies in whether human security should include the use of force to intervene, including in humanitarian crises. The views of the two countries have converged over the years, though,and now both include the two freedoms. Canada, however, under the Conservative
government, has stopped using the phrase since 2006. Conceptually, though, Canada promotes the ideas that human security embraces.
Thailand espoused both the broad and narrow configurations of human security. It established the Ministry of Social Development and Human Security andwas active in supporting the Human Security Network internationally. Thailand
was a strong advocate of developing and applying the concept globally, regionally,and domestically. However, in 2005 with the change of government, Thailand
dropped its commitment to human security and no longer uses the concept or thephrase.
Mongolia, on the other hand, introduced human security as a priority policy
area in 2000 and has adopted a “good governance for human security” initiative
to enhance domestic human security. It remains a strong promoter of the concept,
so today, Japan and Mongolia are the two countries that remain the key promotersof the human security concept and retain the phrase in the Asia-Pacific.
The region’s strong opponent to human security was China, who criticized theconcept as a Western import. However, since the SARS incident, China has slowly
accommodated it, renaming it “humankind safety” in Chinese and shifting the
focus from the individual to the state. With this interpretation, it no longer opposes
the intermittent inclusion of the term in regional policy texts. The other nations in
the region are skeptics to varying degrees.
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After the Chinese acquiescence to the use of the term, “human security” hasappeared in the final report of the East Asia Study Group and is used repeatedly inpolicy documents in ASEAN-centered regional institutions. However it seems
ASEAN prefers to frame broader security threats covered by human security interms of “nontraditional security,” which, according to Canadian scholar Paul Evans, is “a conceptual cousin” of human security.
Can and will regional organizations embrace human security as a binding glue
in the future? Whether the concept is phrased as human security or nontraditional
security, the region shares an anxiety over the broad issues covered by these terms.
The region is keenly aware that threats envisioned by these phrases are transnational and demand cooperation.
If regional governance falls short of addressing core economic and security issues, it can at least cooperate on issues that may seem marginal but will nonethelesscause hardship and suffering to people in the region should they occur. Viruses andpollutants do not own passports and simply ignore immigration controls in landing
in different countries and waters.
Human security is no longer simply a mantra, as a common understanding of
the concept was agreed upon in a UN resolution in 2012. We are now at a phase
where we need to operationalize the concept—including both freedoms—and enable people to live with dignity. The phrase should be used not just as part of theforeign policy lexicon but applied domestically as well. Today, despite our varying
degrees of acceptance of the notion of human security, we all agree that threats toour security and safety are no longer limited to traditional interstate warfare. We
also agree that these broad and emerging threats are interconnected and frequently
affect innocent third parties. This situation demands a concept or a guiding framework for a comprehensive and integrated approach to deal with these unpredictable threats.
Human security—or another new phrase containing the same ideas—can help
us to understand a potential crisis; take interconnected, comprehensive action,rather than deal with a situation in a piecemeal fashion; and eventually create empathy, if not trust, among the players in a region.
What we need today in achieving good governance is the wisdom to come up
with a new label for an approach that acknowledges the blurring of the demarcation between traditional and nontraditional security issues and that can overcome
the lack of support in the Asia-Pacific for the phrase “human security.”33

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January 30, 2015

Issues and Prospects for CSR in Japan
Analysis of Japan’s CSR Corporate Survey
Zentaro Kamei, Taku Hirano

1. Implementation of the CSR Corporate Survey(1) Introduction
Social issues are becoming increasingly complex and segmented, and there are
growing limits to what the government can do to address them. There are rising
expectations, therefore, of greater contributions from the private sector throughcorporate social responsibility activities. Needless to say, corporations are profit-making organizations, so they will be unable to deal with social issues using thesame approaches as the government, whose prime objective is to promote publicwelfare. In particular, corporate activities are subject to cost performance constraints more stringent than those of public enterprises. This is bound to have aneffect on the shape of social issue resolution through CSR activities. To promote
issue resolution based on corporate activities, we must consider what forms of CSR
are desirable for both society and businesses. And for this it is important to ascertain the actual state of Japan’s CSR activities from the perspective of social issue
resolution.
There are many sources of information on CSR in Japan. Individual corporations publish CSR and sustainability reports, and comparative information is available through the comprehensive surveys conducted by specialized media organizations like Toyo Keizai and the Nikkei.1 As for how CSR reports are viewed fromthe side of the citizens, the NTT Group conducts an ongoing questionnaire survey

Zentaro Kamei   Research Fellow and Director of Policy Research, Tokyo Foundation.
Taku Hirano   Research Assistant, Tokyo Foundation.
For example, Toyo Keizai publishes CSR kigyo soran (Comprehensive Corporate Listingof CSR).

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directed at readers of environmental and social reports.2 There are also surveys ofsocially responsible investment as seen from the perspective of investors.3 But there
is no overview of CSR activities in Japan that focuses on their role in the resolutionof social issues. Nor has there been much published that analyze or scrutinize CSR
from a broader vantage point, encompassing such concerns as the correlation of
CSR activities with business operations and corporate strategies and the process ofcreating corporate value.
So when the Tokyo Foundation launched its CSR research project in 2013, thefirst task it undertook was to conduct a questionnaire survey focusing on the relationship between CSR and the major issues confronting Japanese and internationalsociety. The survey was sent to about 2,000 companies within Japan, including
listed corporations, major unlisted companies, and major foreign affiliates. Amongthe questions, companies were asked about the characteristics of the CSR activities
they deemed successful, the targets of their activities (which social issues they werefocusing on), the relevance of these activities to their business operations, whether
or not they were working with nongovernmental organizations or others in thecivil sector, and what issues they faced in promoting CSR.
(2) Basic Perspective
The basic perspective adopted for the survey is as follows.
First, the Japanese term used in the survey for “social issue” was shakai kadai(社会課題), which can also be translated as “social problem” or “social challenge.”
The sorts of issues that shakai kadai brings to mind range from global concerns,
such as the environment, poverty, and gender-based discrimination, to domestic,
local matters, including the increasing number of depopulated villages with elderly
residents and regional disparities in healthcare services. The term thus has diverse
meanings, and its scope changes with the passage of time. This makes it hard to
define.
A look through published materials concerning “social issues” reveals somecommon perceptions, such as that their resolution is believed to contribute to society’s sustained development or other public interests and that not enough is being
done to address them. The definition we adopted in our questionnaire was thus
The NTT Group has been conducting this survey since 2000. It has also organized a symposium based on the survey results. See http://eco.goo.ne.jp/business/event/env_report/
web_sympo2013/report01/01.html (in Japanese).
3
One example is the survey by the Japan Sustainable Investment Forum (website in English
at http://www.jsif.jp.net/#!english/c1tc5).
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made broad enough to cover as many concepts as possible, drawing from theseshared points: “Problems whose resolution is necessary for the sake of society’s
sustained development but for which resources (people, goods, money, technology,
knowledge, etc.) are not being sufficiently invested.”(3) Classification of Social Issues and Outline of the Survey
Next, a framework was developed to classify various social issues based on thisdefinition. For this we took note of existing strategies for issues requiring resolution to achieve sustained development, such as the Millennium Development Goals
adopted by the United Nations and the United Nations Global Compact. We thenestablished our own framework, giving consideration to the relative importance ofeach issue’s resolution and to consistency between the classifications and actualissues. On this basis we adopted a system consisting of nine items (including“other”), as shown in Figure 1, and two geographical categories: domestic andoverseas.
Figure 1. Nine-Item Classification of Social Issues
Respect for human rights
Eradication of poverty and hunger
Reduction of child mortality and improvement of maternal health (creating an environment conducive to giving birth and raising children)
Elimination of child poverty (including abolition of child labor and achievement of universal primaryeducation)
Women’s advancement (including promotion of gender equality)
Prevention of the spread of HIV/AIDS, malaria, and other diseases (including the reduction of mortality risks other than disease, such as suicide)
Ensuring environmental sustainability (including the conservation of biodiversity)
Respecting and promoting the preservation of (traditional) local cultures/customs
Other (social issues not covered by the above eight items, such as water resource issues and briberyof civil servants)

Some of the items in the global classifications are those that still require attention overseas but have largely been overcome within Japan, such as improving
maternal healthcare and preventing epidemics. For these items we broadened thescope of our definition; in the case of maternal health, for example, instead of focusing narrowly on initiatives to reduce child mortality and the risk of death from36

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disease during pregnancy, we included such related factors as the creation of asocial environment conducive to bearing and raising children.
In our survey, we asked respondents to choose which social issues their CSR
activities aimed to resolve based on our nine-item classification. They were asked
to make separate responses for their domestic and overseas operations, giving a
total of 18 items from which to choose. We also provided reference materials withspecific examples to give respondents a clearer idea of the social issues in question.
We also asked them about the content of their CSR activities for each issue, theprocess from planning through implementation, the results achieved from theiractivities, and the activities that they regarded as being most successful. They werealso asked to provide basic information about their company’s organizational
setup and budget for CSR activities to facilitate our analysis.4
2. Questionnaire Results5(1) Targeted Companies and Features of Respondents
We sent questionnaires to 2,082 companies, namely: (1) corporations listed in thefirst sections of the Tokyo, Osaka, or Nagoya stock exchange, (2) leading unlistedcompanies, (3) major foreign affiliates, and (4) companies that volunteered to participate.
We received valid responses from 218 companies. Of these, 185 (85% of thetotal) were from corporations listed in the first section of the Tokyo Stock Exchange; 12 (5%) from unlisted companies, 5 (2%) from foreign affiliates, 3 (2%)
from companies that volunteered to participate, and 13 (6%) from companies
listed in the Second or Mothers Section of the TSE or on other exchanges (Figure 2).
Broken down by industry, the largest number of responding companies was in
the field of electric appliances: 23 companies, accounting for 11% of the total.
Next was wholesale trade, with 19 responding companies (9% of the total), followed by chemicals, 17 (8%), banks, 16 (7%), foods, 14 (6%), and services, 12(5%). The top five industries accounted for 41% of the responses. Figure 3 shows
the overall breakdown.
We found that the measurement criteria for CSR budgets differ from company to company, making it difficult to aggregate the data using a uniform standard. How to advancethe disclosure of nonfinancial information, including but not limited to that about CSR,
may be a common challenge for many Japanese companies.
5
Except where noted otherwise, the graphs and tables presented herein were created by the
Tokyo Foundation on the basis of the CSR survey.
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Figure 2. Responding Companies by Stock Exchange Listing Type

Figure 3. Responding Companies by Industry

Note: Industry classifications are based on the 33 sectors of the Tokyo Stock Exchange. Unlisted companies were classified based on information from their websites and elsewhere.

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By age of the company (Figure 4), 51 of the responding enterprises were 60–69
years old—the biggest age group—followed by 70–79 (30 companies), and 90–99(23). Together, these three cohorts accounted for about 50% of the total. So a large
number of responding companies were established from around the second decadeof the twentieth century through the early post–World War II period.
Figure 4. Corporate Age of Responding Companies6(2) Initiatives by Type of Issue
Looking at the initiatives being undertaken by type of social issue, we found majordifferences among the nine categories and also between domestic and overseas
measures. Below is a comparison of the domestic and international activities of the
responding companies.
(i) Initiatives in Japan and Overseas
Figure 5 shows the numbers of companies implementing CSR activities within JaCorporate ages are as of 2012. Compiled by the Tokyo Foundation from Kaisha Shikiho(Japan Company Handbook, Toyo Keizai, Inc.) and other sources.

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pan for each social issue. The highest share of companies, at 96%, was engaged inenvironmental initiatives, such as efforts to counter pollution and climate change
and to protect biodiversity. Other categories with high responses were culturalpreservation (preserving local traditions and cultures), improvement of maternal
health (including support during the prenatal and postnatal periods), human rights(of all forms), and women’s advancement (promoting women to management positions and creating comfortable working environments). Well over half of the responding companies were undertaking initiatives to address the issues in these areas.
Figure 5. Numbers of Companies Addressing Domestic Social Issues7* Issues relating to the improvement of maternal health include the creation of an environment conducive to giving birth and raising children.
** Issues relating to disease prevention, in addition to the prevention of HIV and other diseases, also include the reduction of other mortality risks, such as suicide.

Relatively few of the responding companies reported activities in the area of
disease prevention, such as measures to prevent illnesses, accidents, suicides, andother common causes of death for each age group, or in the areas of eliminating
child poverty or eradicating poverty and hunger, in spite of the fact that the relative
The results are a compilation of the replies to the question, “In which of the areas listed
below has your company been taking concrete action for resolution of social issues?” withrespect to domestic social issues.

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poverty rate has been on the rise in Japan. These areas may be in need of greater
efforts to address social issues.
Figure 6 shows the numbers of companies implementing CSR activities overseas. Again, the environment is the category with the largest number of companies
undertaking initiatives—67% of the total. The figures for all the other areas are lessthan 50%. After the environment, the areas most commonly addressed in descending order are human rights, elimination of child poverty, eradication of poverty andhunger, and cultural preservation; only about 30% of the responding companies
reported involvement in these fields. The category with the lowest engagement wasmaternal health, in which only 23% (48 companies) reported that they were implementing activities. So there is an imbalance in the areas being addressed overseas, with relatively few companies tackling issues except the environment.
Figure 6. Numbers of Companies Addressing Overseas Social Issues8

When we look at corporate CSR reports, we find that the examples they cite ofinitiatives taken overseas in many cases take the form of volunteer activities underThe results are a compilation of the replies to the question, “In which of the areas listed
below has your company been taking concrete action for resolution of social issues?” withrespect to overseas social issues.

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taken by their employees; there is little mention, for example, of attention being
given to human rights in the local community. Though specific initiatives addressing social issues are being taken overseas, there are nonetheless many gaps when
we look at the breakdown by issue.
(ii) Findings from a Domestic-Overseas Comparison
Many Japanese corporations have actively expanded their operations overseas ina quest for new markets and to optimize their supply chains. The maturation of thedomestic market and the course of the exchange rate in recent years have accelerated such moves, and companies are expected to build close relationships withlocal societies overseas. Just as within Japan, they cannot ignore the importantsocial issues in the locations where they are operating.
Are there differences in companies’ initiatives within Japan and overseas? Figure 7 shows the numbers of companies implementing CSR activities for the various
categories of social issues, comparing the figures for within Japan and overseas.
The first point we note is the difference in the total figures: The overseas total
comes to 692, only two-thirds of the domestic total of 1,069. In the categories ofcultural preservation, improvement of maternal health, and women’s advancement,
the domestic figures are more than twice the figures for overseas. And the share ofcompanies addressing social issues is above 50% in five of the eight categories
domestically but only one of the eight overseas.

Figure 7. Numbers of Companies Addressing Social Issues: Domestic/Overseas Comparison*Asterisks indicate social issues that over 50% of the responding companies are addressing.

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There are not many industries in which companies can confine their operations
to within Japan, and while companies have been actively extending their overseas
operations, their CSR activities still tend to focus on the resolution of domesticsocial issues. CSR is important for the creation and maintenance of corporate
value, though, contributing both to long-term competitive strength and to risk
management. So the expansion of these initiatives—along with the adoption of acorporate mind-set to make this possible—can be identified as an issue for thecompanies surveyed.
The environment was the field with the largest numbers of companies undertaking initiatives both within Japan and overseas. This may be taken as an indication of Japanese companies’ strength in this field; a comparison of the domestic andoverseas figures shows, though, that there is still room for growth in companies’
overseas undertakings.
The results in the category of cultural preservation may be seen as reflecting
concern for the communities in which companies’ operate, both within Japan andoverseas. Especially with respect to overseas initiatives, though, scrutiny of thespecific activities may be required to determine whether they are truly making avaluable contribution to the communities in question.
The contrast between the domestic and overseas figures in the category of maternal health may be only natural in view of the qualitative difference in the issues
involved. But the domestic-overseas contrast in the categories of human rights andwomen’s advancement bears noting. The issues in these categories are basically thesame in Japan and elsewhere; the existence of such wide gaps between domestic
and overseas initiatives may be attributed to a lack of a global perspective on theseissues at Japanese companies. One wonders if the Japanese word for human rights,
jinken (人権), is actually synonymous with the terms used in other languages. Theremay be a need to reexamine the concepts of human rights and women’s advancement in a global context from the standpoint of protecting corporate value.
In the categories of child poverty and of poverty and hunger, the numbers ofcompanies conducting initiatives overseas are substantially higher than the numbers within Japan; this reflects the differences of circumstances, particularly between Japan and developing countries. But the numbers of companies involved arecomparatively low, and companies need to do more both within Japan and overseas, especially as these are fields with great importance for human life and survival.
Figure 8 presents the child poverty rates among members of the Organization
for Economic Cooperation and Development listed in declining order; Japan is inninth place with a relatively high rate. Figure 9 shows the changes in the Japanese
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rate in recent years. As this graph indicates, the overall trend is upward, albeit withsome fluctuations. So this can be identified as a social issue that needs to be addressed.
Figure 8. Child Poverty Rates in OECD Member Countries9

Figure 9. Japan’s Child Poverty Rate, 1985–200910

Two issues that are apparent from this look at CSR activities by category are(1) the need to expand efforts to resolve social issues overseas and (2) the need tostrengthen initiatives in fields like poverty within Japan that require resolution butthat are not adequately addressed by CSR activities.

Compiled by the Tokyo Foundation from the OECD Family Database and data fromJapan’s Ministry of Health, Labor, and Welfare.
10
Compiled by the Tokyo Foundation from the OECD Family Database and data fromJapan’s Ministry of Health, Labor, and Welfare.
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(3) Approaches Used in CSR Activities
There are various approaches by which companies undertake to resolve social issues through CSR. These include using a portion of the profits from business activities, volunteering by managers and employees, and conducting a “base of the
pyramid” business where the company’s products, services, human resources, andknow-how are used for the resolution of social issues. In this section we will lookat the approaches used in CSR activities broken down by social issue.
Figure 10 presents a breakdown of domestic activities for the resolution ofsocial issues by issue and approach, and Figure 11 presents a similar breakdown ofFigure 10. Domestic Activities by Issue and Type of Approach11

Note: “n” is the total number of activities conducted.

The results are a compilation of the replies to the question, “What specific sorts of activities is your company taking with regard to the areas [of social issues that you are addressing]?” (multiple response).

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Figure 11. Overseas Activities by Issue and Type of Approach12

Note: “n” is the total number of activities conducted.

overseas activities. The approaches are classified as (1) implementation of the company’s own programs (including business activities), (2) volunteer participation by
managers and employees in outside social activity programs, (3) donations of thecompany’s products or services, and (4) monetary donations.
As the graphs indicate, for every issue the main approaches taken are implementation of the company’s own program (including business activities) and monetary donations; volunteer participation in outside social activity programs anddonations of the company’s products or services are not common.
The contents of companies’ activities by issue can be grouped into three types:
The results are a compilation of the replies to the question, “What specific sorts of activities is your company taking with regard to the areas [of social issues that you are addressing]?” (multiple response).

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(1) “own program” type, where almost all of the activities are implemented in theform of the company’s own programs, (2) “monetary donation” type, where almost
all of the activities are implemented in the form of monetary donations, and (3)“own program/monetary donation balance” type, where the two approaches areclose to equilibrium (Table 1).
Table 1. Comparison of Approaches to CSR Activities

Note: *The “balance” type covers cases where the difference between the numbers of own
programs and monetary donations is 10% or less.

Overall, the “own program” type is most common for many categories. The“monetary donation” type is seen only in some overseas categories. This is probably because domestic social issues are relatively easy for companies to grasp and tofind ways of resolving; this facilitates the implementation of initiatives in the formof companies’ own programs.
(4) Characteristics of CSR Activity Formulation and Related Issues(i) Greater Emphasis on Action than on Deliberation
Rigorous implementation of the PDCA (plan-do-check-act) cycle in corporate activity processes has come to be of great significance in recent years, not only as ameans of improving companies’ earnings but also as an approach to fulfilling responsibilities to stakeholders.13 CSR activities are one form of corporate activity,
This is a good example of how the optimization of companies’ business processes has
nowadays become legally mandated.

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and observing the state of their PDCA cycles offers one interesting perspective on
them.
Table 2 presents a comparison, broken down by social issue, of the number ofcompanies that have conducted deliberation (the “plan” step of the PDCA cycle)
and that have taken concrete action (the “do” step). This shows that in every category, both within Japan and overseas, the emphasis in the surveyed companies’
CSR activities is on implementation. We can see from the survey results that thisemphasis on taking action also applies to the areas that we identified in the previous section as gaps in terms of efforts to resolve social issues.
Table 2. Numbers of Companies That Have Deliberated Issues vs. Numbers
That Have Acted on ThemThis result is also evident from companies’ CSR and integrated reports. ManyJapanese companies disclose information about their CSR activities, but it tends toconsist just of snapshots of officers and employees participating in volunteer activities and strings of explanations of the individual activities undertaken. We see
little by way of overall explanations that tell how the company as a whole haschosen the social issues to address and how it is implementing its efforts based on
their relevance to the company’s own business. So, as noted in another section ofthis report, the emphasis on implementation results in a state of affairs where com48

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panies are taking a “stapler” approach to CSR activities, binding together catalogsof their individual good deeds on an unsystematic basis.
(ii) Having a Department Dedicated to CSR Promotes Deliberation
How might the tendency to emphasize implementation over deliberation be corrected? We conducted a cross-tabulation analysis of factors promoting deliberationas part of the overall process, matching them against a number of variables. Thisrevealed that companies with a department dedicated to CSR (including those that
also handle other matters) have higher numbers of deliberation-based CSR activities and smaller numbers of activities not based on deliberation. Figure 12 presents
the ratios of deliberation-based to nondeliberation-based activities for each category of social issue at companies with dedicated departments, and Figure 13 presents the corresponding data for companies without such departments.
Comparing the two graphs, we see that the ratio of deliberation-based CSR
activities at companies with dedicated departments is higher than at companies
without such departments for every category of social issue. Also, at companies
without such departments, there are six categories of social issues for which nondeliberation-based activities account for around half of the total, while at companies with such departments, there is not a single category for which this is the case.
It seems reasonable to say that the existence of a dedicated department promotes
the inclusion of deliberation as part of the process of CSR formulation. The detailsof the mechanism by which a dedicated department contributes are a matter for
future study, but we can at least say that the establishment of a dedicated department is an effective means of alleviating the tendency to emphasize implementation
over the deliberation process.

(5) The Ideal Approach and Actual Performance(i) Introduction
How can CSR initiatives be integrated more fully into a company’s business operations? This has long been a major topic of concern both for corporate managers
and CSR specialists and researchers. It is a difficult problem to which no effective
solution has yet been found. In this section we will examine the relevance of CSR
activities to business operations with this question in mind.
First we will look at companies’ ideal vision of the relationship between CSR
and business operations and note how this is connected to the integration of the former
with the latter. Next we will look at this relationship in all the categories of social
issues covered by the survey, analyzing the results and considering the differences.
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Figure 12. Ratios of Deliberation-Based Activities to Non-Deliberation-Based
Activities at Companies with Dedicated CSR Departments

Figure 13. Ratios of Deliberation-Based Activities to Non-Deliberation-Based
Activities at Companies without Dedicated CSR Departments

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As part of our survey, we asked respondents to identify three of their CSR activities that they viewed as successful and that they wished to share with society. In
other words, we asked for their “top three” activities. Looking at the results, wefound many citations of activities relating to the environment, including climatechange and biodiversity, and to assistance for recovery and reconstruction fromdisasters, particularly the Great East Japan Earthquake of March 2011.14
The questions in the survey included items concerning the content of the companies’ activities and the results of those activities and their relevance to theirbusiness operations. These questions revealed the state of CSR activities in termsof their relevance and results relative to companies’ ideals.
In what follows, we will first show the ideal vision of the relationship between
CSR activities and business operations as revealed in the responses, and next wewill look at the extent to which they are achieving the results that they consider
ideal.
(ii) The Ideal: Integration with Business Operations
Figures 14 and 15 show the relevance of the activities that companies cited as their“top three” to their business operations.

Figures 14 & 15. Approaches to Implementation of “Top Three” CSR Activities and Approaches by Issue15

The specific contents of the activities are presented in the following chapter analyzing thesurvey results. See the references to the six cited companies’ support for recovery and reconstruction from the Great East Japan Earthquake.
15
The results are a compilation of the replies to the question, “How are your company’s
CSR activities relevant to your business operations?” (multiple response). The “top three”
are companies’ choices of the top three of the activities they have conducted that haveproduced successful results. The figures for activities addressing particular social issues are
all domestic.
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Looking at the results, we find high figures for two types of relevance: (1) implementation as an outgrowth of the company’s production, sales, hiring, or otherbusiness practices, such as efforts to reduce or purify the wastes and emissions
resulting from their procurement and production processes, consideration for various types of human rights, and active moves to promote women to senior posts,
and (2) use of the company’s own products or services, for example, through thedevelopment of medicine for the treatment of rare diseases and development of
new products using Fukushima-grown crops stigmatized by their association with
the nuclear accident. The figure is low for relevance through the use of profits frombusiness operations, a category consisting largely of donation activity. So we cansee that companies’ quest is to conduct activities that are in tandem with theirbusiness operations rather than ones that make use of the profits from their operations.
The ideal for CSR is to conduct it in ways that make use of products or services
generated by the company’s business operations or that operate through the company’s business processes—in other words, CSR that is integrated with the company’s business operations.
(iii) The Reality vs. the Ideal
To what extent and in what areas are CSR activities actually integrated with business operations?
In our survey we investigated the relationships between CSR activities in eachcategory and companies’ business operations. The details by category are presented
in the next chapter analyzing the survey results; here we will consider some representative examples, highlighting the actual state of integration with business operations in the case of companies’ “top three” categories and their initiatives directed
at specific social issues.
In the case of CSR activities that companies themselves rate as successful(their “top three”), there are high levels of usage of the company’s own
products or services and activities implemented as part of the company’sbusiness operations. But when we look at initiatives directed at specific social
issues, out of the 18 domestic and overseas classifications, the only one thatshows a similarly high level is that of domestic efforts in the field of the environment.
In the field of human rights, the level of implementation as part of the company’s business operations is as high as it is in the case of the “top three,” but the useof the company’s own products or services is low, so we cannot say that the activities in this field are truly integrated with business operations. This applies both52

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within Japan and overseas, and it is also true in fields like women’s advancement.16
In the field of child poverty, the number of initiatives is very small, and their
only relevance to the company’s business is that they utilize business profits and are
implemented in the course of normal business operations, so the state of affairs is
far from ideal in terms of integration. A similar tendency is widely seen in initiatives addressing social issues overseas, where, as in the case of child poverty, there
is a general lack of awareness of the issues and of action based on such awarenessin many fields.
So domestic initiatives in the field of the environment are the only ones forwhich integration with business activities has been achieved.
Next let us look at relevance to business operations broken down by category.
Figures 16 and 17 show the breakdown for initiatives within Japan and overseas,
respectively.17
Figure 16. Relevance of CSR Activities to Business Operations by Issue Category (Domestic)18

Please refer to the issue-by-issue outline of CSR activities in section 6 of the next chapter
outlining relevance to business operations.
17
To facilitate comparison between the figures for the “top three” and other issues, thesegraphs present ratios using the total numbers of initiatives for each type of approach as thedenominators. Please note that the values are different from the ones in Figure 14.
18
The numbers within the graph are numbers of activities conducted. The results are acompilation of the replies to the question, “How are your company’s CSR activities relevant
to your business operations?” (multiple response).
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Figure 17. Relevance of CSR Activities to Business Operations by Issue Category (Overseas)19

We find five categories of social issue in which implementation as part of thecompany’s business operations has a share above 50% and three in which the shareis between 40%–50%. So this form of relevance is the most prevalent. Next comesthe use of profits, with shares above 50% in four categories and in the 40%–50%
range in two. The lowest shares are for the use of the company’s own products orservices, in which not a single category has a share above 40%.
So companies’ actual activities—while showing some variation when broken
down by type of social issue—have progressed to a certain extent in achieving
relevance to business operations, but they have yet to achieve such relevance in theuse of the company’s own products or services. In their overseas initiatives, companies are mainly using their profits and are far from achieving relevance. As thenext set of steps, companies will need to (1) strengthen the links between CSR andtheir own products and services within Japan and (2) more fully incorporate CSR
into their business operations overseas. The case studies presented elsewhere in thisreport can serve as hints for how to take these steps.

The numbers within the graph are numbers of activities conducted. The results are acompilation of the replies to the question, “How are your company’s CSR activities relevant
to your business operations?” (multiple response).
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(6) Results Achieved from CSR Activities by Issue(i) Introduction
How CSR activities are assessed and how they contribute to corporate value are
difficult to grasp even for those actually involved in their implementation, andspecialized research does not offer clear clues either. In the CSR reports that companies publish, corporate value and social value are measured as fundamentally
separate items, and quantitative measures covering both types of value are rarely
offered. Companies commonly present evaluations based on key performance indicators (KPIs) that measure social value.20 But as noted repeatedly in this report,
corporate value and social value are not conflicting objectives; corporate activities
aimed at integrating the two and enhancing them together can, at the same time,
promote sustained social development and achieve a competitive edge for the company over the long term.
In this section, with this in mind, we will look at the results of CSR activities
from the perspective of corporate value. To be sure, it is not realistic to expect
companies to immediately start providing quantitative readings of this sort. As astarting point, we will examine what companies regard as the ideal relationshipbetween their CSR activities and corporate value. Next, as in the previous section,
we will look at the results by individual issue and compare these results with theideal.
(ii) The Ideal: Direct Contribution to Corporate Value
Figure 18 presents the contributions to corporate value made by companies’ “topthree” CSR activities. An improved corporate image was the most commonly citedcontribution, but over 50% also cited human resources development (through the
improvement of childcare leave systems and the active appointment of women to
managerial posts), new business opportunities, and enhancement of the company’s
technological strength. And close to half reported higher earnings.
Companies position CSR activities as ideally contributing to the enhancementof corporate value. If we combine this with the findings from the previous section,
we see that what companies seek in their CSR activities is integration with theirbusiness operations in terms of both relevance and benefits.

Key performance indicators are quantitative yardsticks that measure the degree to whichgoals have been accomplished. They are used mainly to quantify results that are hard tomeasure numerically, such as levels of contribution to society and stakeholder satisfaction.

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Figures 18 & 19. Results from Companies’ “Top Three” Activities and Resultsby Issue21(iii) The Environment: Ideal Results in Japan and Overseas
What results have companies actually achieved through their CSR activities? As in
the previous section, where we looked at the relevance of the activities to companies’ business operations,22 here again we will start by presenting some representative examples and highlight the relationship between the ideal vision of CSR activities and the benefits achieved from specific initiatives.
In the case of CSR activities that companies themselves rate as successful (their“top three”), the results have led to enhancing corporate value. But when we lookat initiatives directed at specific issues, out of the 18 domestic and overseas categories, the only one that shows a similar pattern is domestic efforts in the field of theenvironment—just as in the case of relevance to business operations, though theresults are not quite so positive.
For activities in the field of human rights, results are limited to human resources development and recruitment, while for those in the field of child poverty,
improvement of the company’s image is the only prominent result.
The trends observed in terms of results are similar to those seen in the case of
relevance to business operations. Figures 20 and 21 show the breakdown of resultsby social issue for initiatives within Japan and overseas, respectively.23
The results are a compilation of the replies to the question, “Did the above initiatives
enhance your company’s unique strengths?” (multiple response). The “top three” are companies’ choices of the top three of the activities they have conducted that have produced
successful results.
22
Please refer to the issue-by-issue analysis of CSR activities in the section describing theresults achieved in the following chapter.
23
The results are a compilation of the replies to the question, “Did the above initiatives
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Figure 20. Types of Results Produced by CSR Activities (Domestic Social Issues)

Note: The numbers within the graph are numbers of results reported.

Figure 21. Types of Results Produced by CSR Activities (Overseas Social Issues)

Note: The numbers within the graph are numbers of results reported.

enhance your company’s unique strengths?” (multiple response). To facilitate comparison
between the figures for the “top three” and other issues, in these graphs we present ratios
using the total numbers of initiatives for each type of approach as the denominators. Please
note that the values are different from the ones in Figure 18.
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The survey findings reveal no major differences between the results achieved
from CSR activities in Japan and those overseas in terms of the effect on corporate
value. The differences are more pronounced between categories of social issue. The
results from companies’ “top three” include large shares of short-term, direct effects, such as expansion of operations and earnings and enhancement of technological strength, but the overall results by social issue show low shares of activities
producing such direct effects.
Direct effects on corporate value like the ones observed for the “top three”
activities are seen only in the case of environment-related initiatives in Japan andoverseas. Disease prevention comes next, with a relatively high share. The companies undertaking initiatives in this field are limited to particular industries, and therelevance of such initiatives to their business operations is relatively high, but evenso, improvement of corporate image accounts for a large share of the responses. In
other categories, the main results reported are in human resources development
and recruitment and in image improvement. Expansion of operations and earnings
and enhancement of technological strength—results directly impacting corporate
value—account for less than 10% of the responses.
So the results of CSR activities are approaching the ideal—enhancing theircorporate value directly as well as contributing to it indirectly over the medium-to-long term—only in a few fields, such as the environment and disease prevention. The actual results achieved consist mostly of longer-term, indirect effects, suchas image improvement and human resources development and recruitment. A key
issue for CSR going forward will be finding ways to achieve results that will contribute directly to corporate value from activities undertaken across the spectrumof issues.
Our survey did not reveal the drivers for achieving results like business expansion or higher profits from CSR activities, but cross-tabulation analysis shows thatcompanies that are conducting dialogue with socially vulnerable groups and nonprofit organizations and those that are working in tandem with outsiders, includingNPOs and specialists, are achieving such results more successfully than those thatare not. Though it may seem like a roundabout approach, undertaking repeated,attentive dialogue in connection with specific activities, finding social issues appropriate for the company to address, and understanding the wellsprings of the company’s own competitive strength are what make it possible for a company to embark on cooperation with others. And it is probably fair to say that companies thathave the human resources capable of this sort of attentiveness are the ones that canachieve the integration of their CSR activities with their business operations andproduce successful results in terms of both social and corporate value.
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(7) Areas for Improvement in CSR Activities
Various studies have already revealed a number of areas for improvement in the
conduct of CSR, such as extension throughout the company, incorporation intobusiness operations, and formulation of indicators for evaluation. These studies
have largely evaluated CSR and identified issues on the basis of existing guidelines
like ISO 26000 or have focused on the issues recognized by companies’ CSR implementation departments.
Properly speaking, however, CSR activities should not be something handledjust by the implementation department but rather be conducted through integrated
efforts encompassing management and various operating departments. It is also
important to survey the views of those outside the implementation department on
problem areas relating to CSR.24 Our survey thus sought the views of three different areas of each responding company: the executive level, in the operating departments, and in the CSR implementation department.25(i) Differences Depending on the Organizational Locus
We asked survey respondents in each of the three divisions to identify the issues
their company faced in promoting CSR. The answers were in written (as opposed
to multiple-choice) form, and we used text mining and qualitative analysis to classify and tabulate the results.26 Table 3 presents the top five types of issues we foundin each of the three divisions.
Differences of main issue types were seen depending on the locus. At the executive level and in the operating departments, the most frequently cited set of issues
concerned ways of linking CSR activities with business operations and fitting theformer into the latter, while in the implementation departments the top set concerned spreading policy awareness throughout the company. In other words people
in the implementation departments sense that the basic ideals and guiding princiThe interviews conducted by the Tokyo Foundation revealed the strong possibility ofawareness gaps and conflicts of perspective between those working in CSR implementation
departments and those at the executive level or in other departments.
25
We should point out, however, that the actual respondents to our questionnaire weregenerally in companies’ CSR implementation departments.
26
Our analysis yielded the following 11 classifications: (1) insufficient understanding ofCSR (including lack of policy clarity), (2) lack of clear priorities, (3) [difficulty in] fitting
into business activities, (4) coping with globalization, (5) spreading policy awarenessthroughout the company, (6) publicity to stakeholders and others outside the company, (7)collaboration with other departments, (8) difficulty in measuring effectiveness, (9) arrangements to keep activities going, (10) insufficient resources, (11) other.
24

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Table 3. Top Issues for CSR Activities as Viewed from Different Loci in the
Company

Note: The figures show the numbers of responses of each type.

ples are not shared by others in their company, an issue more fundamental thanthat of integrating CSR activities with business operations. We can interpret
what we see here as being two sides the same coin: People are viewing the same
issues from different standpoints. But while those in the CSR implementation
departments are focusing on ideals and modes of thinking, feeling concern overthe lack of progress in incorporating CSR policy into the company’s business
operations, those at the executive level and in the operating departments are moreinterested in concrete action. This may reflect the emphasis on implementation
over deliberation that we touched on earlier. And given the fact that CSR is a termwith a variety of definitions, we can imagine the depth of the concern felt bymembers of the implementation departments. The insufficient understandingof CSR that is one of the top types of issues at the executive level and in
the operating departments may be seen as another manifestation of this same
situation.
Meanwhile, many implementation and operating departments cite insufficient
resources, but executives seem to be relatively unaware of this issue. This suggeststhat the departments actually planning and carrying out CSR activities encounter
shortages of resources, including personnel and funds, but this information is notreaching the executive level.27
In contrast, little difference was seen among the three loci in their awareness of
how to adjust CSR activities so as to cope with the globalization of markets. This
seems to indicate a shared recognition of this issue across organizational lines. It
The written answers often mentioned both the lack of personnel and the lack of understanding at the executive level.
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may also be taken as evidence of progress in sharing the idea of promoting CSR topreserve corporate value as one aspect of risk management.
So we see that even within the same company, the view of CSR activities is not
uniform but varies from one locus to another. And even within organizational units
information is not adequately shared. An important key to the development of CSR
activities henceforth will be to find was of narrowing such internal gaps and establishing a companywide PDCA cycle for CSR.28
3. Where Is CSR Headed and What Should It Do?
(1) The Importance of Selection
We can see the current state of CSR activities in Japan by observing the contrast in
the levels of attention being paid to various social issues. Almost all of the responding companies are involved in environment-related activities, including measures
to address climate change and to preserve biodiversity. But only about 70% ofthem are addressing issues in the areas of human rights and women’s advancement,
which ought to be core concerns for corporate management. And fewer than 30%
are involved in seeking to resolve the issues of disease prevention and mortality
reduction and of poverty and hunger, which are universal concerns and are also
becoming more serious within Japan.
Social issues are diverse, and so are companies. So why do we see this sort of
sharp contrast between widely addressed and little addressed issues? One factor
that may be cited is the strength of companies’ herd mentality. If we look at thechanges in the shape of CSR, we find trends that reflect the times, and many people
involved in CSR report that their companies’ activities have been conducted withan eye on what other companies are doing.
But we think the essential cause lies at a deeper level. As noted above, Japan’s
CSR is characterized by an emphasis on implementation, with relatively little
weight placed on deliberation (see Figure 22). When we conducted the survey,
many of the target companies commented that while they were accustomed todescribing their CSR activities, they had never been asked what social issues they
were trying to resolve. They were able to speak eloquently about what they are
doing, but they give little attention to the purpose of those activities.

28

Many case studies presented in this report were chosen with this point in mind.
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Figure 22. Three Approaches to Integrating Business Operations and Resolution of Social Issues29

As we noted in the Overview section of this report, Japanese companies arewont to take a “stapler” approach to CSR, merely binding together sheaves of
documents cataloging the good deeds they have done. Without a process of deliberation to determine what sorts of social issues exist, what society expects of thecompany, what are the fields in which the company can tap its strengths, and whatsocial issues the company will seek to resolve, the content of CSR programs is likely
to end up being shaped by what other companies are doing or by the inclinationsof a few top executives.
Needless to say, in order for a company to achieve the ideal integration of efforts to resolve social issues with business operations, it needs to repeatedly conduct dialogue with stakeholders and make use of guidelines based on a good graspof their significance. We would also note that integration of CSR with business
operations is crucial for the sake of creating and maintaining corporate value.
Above all, these initiatives should be grounded in an awareness of the relationshipbetween society and the company. The key challenge is to position CSR in such amanner as to solidify the company’s raison d’être.
Compiled by the Tokyo Foundation based on corporate CSR reports and websites andJapanese National Committee for ISO/SR publications.

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CSR stands for “corporate social responsibility,” which is commonly translated
as kigyō no shakaiteki sekinin (企業の社会的責任) in Japanese. Sekinin, the word
used for “responsibility,” also denotes “obligation,” and so perhaps the use of thisterm has caused companies to feel that they need to follow the example of others.
But if we consider the original English term carefully, we see that it is derived from“respond.” And native speakers of English tell us that this word refers not so muchto the stiff, lifeless reaction to an external stimulus—like a balloon buffeted by thewind—as to a flexible, animated response. This is the sort of response that is demanded of companies by their stakeholders throughout society. The nature of thedemands will vary from company to company, and so of course will the methodsby which they respond. But it is by responding dynamically that companies display
their raison d’être within society. “Corporate social responsibility” may be taken
to refer precisely to this raison d’être.
What are the most compelling social issues currently confronting Japan? What
are the social issues that companies can address, putting their corporate raisond’être on the line and tapping their strengths to respond to all their stakeholders insociety? Companies need to think carefully about these questions by conducting athorough process of deliberation.
And what about issues outside of Japan? Japanese companies are doing little
to address social issues overseas except in the field of the environment. And evenin that field, their efforts fall short of what they are undertaking domestically. If welook at their initiatives as a whole, comparing those in Japan to those overseas, we
see a clear emphasis on the domestic side.
In terms of tapping strengths, if, as is often noted, Japanese companies’ forte isin the environment, then they can probably expand their initiatives more actively
in this field. And by applying the technologies developed in Japan at overseas locations, they may be able to transform the CSR activities that they have implemented
as part of their business processes into direct sources of corporate value. With respect to environmental affairs, some people note the lack of consistency in legal
standards in Japan and elsewhere, but instead of waiting for the emergence of
uniform standards, companies can make management decisions to redefine theirstrengths and actively apply them. In any case, it is important for companies toselect social issues to address overseas, just as within Japan, in the light of theirown corporate raison d’être.
(2) Initiatives as Part of Business Practices or in the Form of Donations
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tives with business operations leads to increased corporate value and is the idealthat companies are pursuing. In practice, however, it is only in the field of the environment that they have approached this ideal; overall its realization is still far off.
Japanese companies’ CSR activities mostly fall into two broad categories: (1)business practices that address problems like discrimination based on gender ordisabilities and emissions of pollutants by making sure that the company’s business
operations do not give rise to such problems or exacerbate their seriousness, and(2) donations making use of the profits arising from business operations, contributing to the resolution of social problems not as a direct actor but indirectly, by
supplying money (or goods) to third parties like NGOs and others in the civil
sector.
Activities in the first category are largely preventive, aimed at keeping the company’s own business operations from generating new social problems or exacerbating existing ones. Examples include ensuring compliance with laws and other provisions adopted for the sake of human rights and women’s advancement (such asbans on discrimination in hiring and on violations of privacy in business operations) and moves to improve childbirth and childcare leave systems, which are by
far the most commonly seen concrete initiatives to address the issue of creating anenvironment conducive to childbirth and childcare.
Activities in the second category largely involve donating funds for the resolution of social issues outside the company, without becoming directly involved
themselves. The survey revealed many examples aimed at resolving the issues ofpoverty and hunger and of maternal health overseas through donations to NPOs
and NGOs; domestically, donations were made for festivals and other local events
held in communities where the company operates—a common type of initiative inthe field of cultural preservation.
Are these activities likely to continue? Given the changes in contemporary society and the circumstances in which companies find themselves in—particularly
the inexorable progress of globalization—companies may be forced to change thenature of such CSR programs.
(3) Changes Due to Globalization
Starting in the latter part of the 1990s, the trend in the flow of goods around theworld shifted.30 Companies strengthened their supply chain management, setting
From this period through the early 2000s, the flow of goods expanded dramatically, especially across the Pacific.

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up operations in locations across the globe for everything from procurement of raw
materials through production, warehousing, and sales. If one includes intermediate
goods, complex supply chains now extend across national borders. Some suchchains start with raw materials, while others originate with markets close to consumers. The construction of supply chains optimally suited to the characteristics ofcompanies’ materials, products, and customers has become essential for the sakeof achieving a competitive edge. Many Japanese companies, unable to achieve sustained growth from operations in the mature, domestic market, have been moving
into overseas markets with good prospects for further expansion. While some suchmoves have been more successful than others, the fact is that the number of companies stepping up cross-border activities to develop new markets and rebuild their
supply chains has been on the rise. Globalization has hence become a precondition
for successful corporate management.
How is the progress of globalization related to CSR?
Globalization has caused the scope of companies’ activities to broaden.
Through their supply chains, the reach of their activities is continuing to grow,extending even to regions where they are not directly engaged in buying or selling.
But in addition to fostering the spread of superior technologies and products andrare resources, globalization has also resulted in the cross-border transmission ofpests, diseases, and technologies that can be used to make weapons of mass destruction, resulting in the creation or enlarging of social issues. Globalized companies are directly involved in moving resources across borders, and they are theprime beneficiaries of this movement. They are also the main actors in a position
to take effective measures against the negative consequences. Increasingly, they arebeing asked to take steps to restrain the emergence of such issues.
Another way in which globalization relates to CSR is the need to deal withissues that arise through the cross-border contact of different cultures and value
systems. Today’s multinational corporations need to build close relationships withmany different regions with diverse cultures and values. They must understand andrespect the cultures and values in those regions that differ from their own. This iseasier said than done, though, and not a few companies have unknowingly walked
into a hornet’s nest in the course of globalization. As noted elsewhere in this report,31 the NTT Group’s international survey of readers of CSR reports has revealed the low level of awareness regarding human rights within Japanese society.
This is a fact that needs to be more fully recognized.
In the overview article <http://www.tokyofoundation.org/en/articles/2014/overviewof-csr-in-japan>, in the case studies, and elsewhere.
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Recognizing and addressing the social issues that accompany globalization
contributes to the preservation of corporate value. The focus should be on foreseeing and taking action to prevent such issues from emerging, but this requires
paying close attention to the various factors that are changing the shape ofthese issues, including globalization and advances in science and technology. Companies must keep an eye on shifting developments, both close-up and from a
broader perspective. Maintaining such multiple viewpoints entails developing
personnel who understand the languages both of social issues and business
operations, but this is not something that can be accomplished overnight. Ongoing
efforts are needed to promote dialogue with outside experts, conductedattentively and with open minds, and to position the CSR department as a division
to develop human resources capable of viewing society from a long-term perspective. Companies must constantly strive to enhance their organizational ability toascertain key social issues and to make judgments about how such issues are addressed.
As was made clear at the Rio+20 conference,32 the capability of governments
to resolve social issues has declined in relative terms, and companies should havean understanding of this fact. Government authority does not extend across national borders. Cross-border action requires agreements among governments, butsuch agreements are not easy to achieve today. Companies, by contrast, are operating across borders on a daily basis. They are in the best position to address
cross-border issues. It may thus be only natural for society to expect global corporations to take the lead in tackling global social issues.
(4) The Future of CSR: Which Way Forward?
Economists often classify the constituent elements of society into (1) citizens, (2)the government, and (3) corporations (markets). They are the only ones who canresolve social issues. We have already pointed out the limits of governments; theircapabilities are greatly constrained by national borders and by fiscal circumstances.
As a result of the development of the welfare state, many industrially advanced
nations face fiscal crises to one degree or another. To the extent that the problems
in public finance result from excessive expectations directed at governments, thesituation is clearly unsustainable.
Citizens and civic groups are also the target of expectations as potential actors,
The United Nations Conference on Sustainable Development, held in Rio de Janeiro,
Brazil, in June 2012.

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but in Japan, compared with other countries, their capabilities have yet to maturein terms of both scale and consciousness of their own role.
For companies, meanwhile, the resolution of social issues acts as a source ofcorporate raison d’être and contributes to the creation and maintenance of corporate value. Companies have technological and organizational power and are goodat adopting and expanding the scale of innovations. So they are the best positioned
to broadly spread the benefits of social issue resolution.
The relationships between citizens, the government, and companies havechanged over time. We are entering an age in which companies will need to standat the forefront of initiatives for resolution of social issues.
Our survey revealed that Japanese companies have the desire and the will to
integrate their CSR activities with their business operations. They have gained adeeper awareness of the imperatives accompanying society’s demands and the various social changes, and they have a good idea of what they want to achieve. In
practice, however, they have yet to reach their ideal and continue to implement
earlier initiatives. This is where Japan’s CSR stands. Said another way, companies
have a clear view of what they need to do but are struggling to break out of theircurrent box and move on to the next stage.
Our project has involved a quantitative analysis based on a questionnaire survey, along with case studies and qualitative analysis based on direct interviews. Our
aim has been to allow both society and companies to reconfirm and share theirvision of the desired shape for CSR and to contribute at least something to thesearch for materials that will help achieve this. With this in mind, we will continue
this survey in future years, enhancing its accuracy as an information infrastructureamenable to fixed-point observation. In fiscal 2015 (starting April 2015) we plan
to carry on with a more detailed investigation into points like companies’ implementation of the PDCA cycle and their responses to globalization.
There is no need to go back to the idea that the resolution of social issues andthe business operations of companies are totally separate and that they conflictwith each other. The ideal is integration of CSR activities with business operations;people throughout each company—not just those in the CSR departments but also
executives and those in operating departments—should be mindful of their respective roles in this pursuit.

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January 23, 2015

The State of Global Corporate Sustainability
Georg Kell

The United Nations Global Compact was launched in 2000 based on the proposal thatbusiness and the UN jointly initiate a “global compact of shared values and principles, togive a human face to the global market.” Georg Kell, Executive Director of the UN Global
Compact, traces the history of the corporate sustainability movement and the challenges ofa globalized world that the United Nations is increasingly partnering with the business
community to solve.
***

The United Nations–Corporate Sustainability Link
Corporate sustainability has always been defined by and evolved within the broader
context of politics, power and technological change—the supreme driver of productivity and wealth creation. And it has always responded to the call for the“common good” and the betterment of all societies. In our globalized world, nosingle actor or institution can solve our complex and pressing challenges. Therefore, it follows that the United Nations has increasingly turned to the business
community as a key partner in finding solutions.
What few know is that in fact business provided strong support for the United
Nations at its founding. With the end of the Second World War, a spirit of hopefulpragmatism prevailed in 1945. Business understood peace and prosperity as two
sides of the same coin. International cooperation based on fairness and nondiscrimination was seen as essential for societies to flourish and businesses to grow.
The private sector’s alignment with the United Nations foundered later due toCold War hostilities and ideological rivalry. But with the end of the Cold War, andthe re-emergence of global consensus on the important role of accessible markets,
interaction between the business world and the world organization resumed.

Georg Kell   Executive Director, United Nations Global Compact.
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By the late 1990s, the need for action was unmistakable. The gap between
commercial advances and the relative neglect of human rights and social and environmental issues had provoked a backlash. Companies were increasingly under fire
for substandard conduct—often in relation to labor abuses, environmental degradation, and corruption instances. In developed countries, job fears and national
security concerns fed a rising discontent and call for protectionism. And inmany ways, it appeared the rest of theworld did not figure in the growth andopportunity associated with massive
increases in international investment
and trade.
It was in this context that the UN
Global Compact was launched in2000 based on the proposal that business and the UN jointly initiate a“global compact of shared values and principles, to give a human face to the global
market.” At the same time, the corporate sustainability movement began to lift off.
Since then, several troubling trends that could hinder our progress haveemerged.
We are dependent, yet divided. People and countries are ever more dependent
on one another in our globalized world, yet our willingness and ability to cooperate is diminishing. Technology and the free flow of ideas, trade, and investment
have improved the lives of people around the world on a scale never seen before.
However, the very system that has been supporting global integration and cooperation is under stress and shows serious cracks. Crisis management, short-termism, and populism characterize much of our fragmenting world. Walls are goingback up, and so is the prospect of nationalism and protectionism—all leading toan inability to cope with global threats.
The multilateral system is eroding. Narrowly defined national interests are
gaining the upper hand. The institutions and ideas that have supported interdependence no longer have the required political endowment. The vision of the postwar
architects that durable peace and prosperity can only be built on the foundationsof interdependence no longer enjoys universal support. A vision of trade, investment, entrepreneurship to create and spread wealth and a vision of political freedom and social fairness is being eroded.
Our systems are not set up for the long-term. Most politicians are focused ondelivering within election cycles. Markets remain obsessed with short-term returns,
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meaning that corporate sustainability is not properly valued. In a world driven by
urgency, there simply is not enough appetite by politicians, the private sector, andpeople to look beyond their own interests—to uphold the common good.
Thus, the case for collective solutions to shared challenges in a globalized world
seems obvious. Yet, despite plain evidence, agreement and solutions have notproven easy to find. Our problems have not only moved ahead at a rapid pace but
also become more connected and complex due to globalization.
The writing is on the wall: Over 1 billion people lack access to food, electricity,or safe drinking water; most of the world’s ecosystems are in decline; inequality
and widening gaps between rich and poor are global phenomena; and climatechange and population growth are expected to make these challenges even worse.
The negative implications for natural resources, health, and security fundamentally
threaten the prosperity and productivity of economies.
A Clear Case for Corporate Sustainability
The ability of business to innovate and grow depends critically on the collective
system to support prosperity, equity, freedom, dignity and peace. What is good forbusiness is also good for society. The business case for sustainability has strengthened substantially. And the notion and practice of corporate sustainability has
evolved significantly in the past decade.
Corporate sustainability has shifted from a moral imperative to a material one.

Corporate leaders increasingly see that responsible conduct, sustainable development, and long-term business success are mutually reinforcing. Global environmental, social, and economic challenges can, and do, affect the bottom-line. Market
disturbances, social unrest or ecological devastation—no matter how near or far
away—are having real impacts on the supply chain, capital flows, public opinion,and employee productivity.
As a result, companies are increasingly putting corporate sustainability on theiragendas. This means delivering long-term value in four realms: financial, social,environmental, and ethical—what the UN Global Compact has coined “the quadruple bottom-line for business.”
Business has emerged among a growing number of new actors in the international arena. While many traditional donor countries are facing fiscal austerity, weare seeing dynamic growth in the East and South and the emergence of potential
new partners that can help us shape a new development paradigm. Business-led
development, through foreign direct investment, is now seen as a promising way
forward.
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Transparency is on the rise. Modern communications technology combinedwith growing demands for transparency make it harder for companies to flout laws
or ignore public opinion. Companies have little choice but to better manage their
supply chains. Years ago, it was a challenge for companies to simply explain theconnection between principles and business, now thousands are communicating
annually in public reports on tangible efforts to address sustainability issues.
Where We Stand Today
A vanguard of companies has already understood that public and private interests
are ever more interwoven—and decided to take action. Today, the Global Compact

counts over 8,000 corporate signatories from more than 140 countries—representing approximately 50 million employees, nearly every industry sector and size, andhailing equally from developed and developing countries. Each has committed toembed human rights, labor, environment, and anticorruption principles into theiroperations and disclose progress. In order to uphold the initiative’s integrity, thousands of companies have been removed from the Global Compact for failing tomeet the annual disclosure requirement.
Deeply connected to the UN Global Compact are the Principles for Responsible
Investment (PRI)—with more than 1,000 investors managing assets over US$30
trillion—and the Principles for Responsible Management Education (PRME)—with
over 500 academic institutions from nearly 80 countries. These sister initiatives arebringing mainstream investors and business schools into the fold of corporate sustainability.
All of this is a great start, but too many companies are doing nothing. It is time
for business to step up efforts. A new level of corporate performance is needed.
Corporate sustainability as practiced is insufficient. Universal values have not penetrated business strategy and leadership, nor have we seen the depth of actionneeded. With an estimated 80,000 multinationals and millions of smaller enterprises, much remains to be done to reach critical mass.
The new development is that companies are looking beyond their own walls
and seeing the urgency of addressing society’s most pressing challenges. They are
beginning to put forward innovations and enter into collaborations that can havetransformative impacts on some of the toughest issues we face.
For example, a number of UN Global Compact issue platforms, sets of principles, and global working groups have been developed to spur action by companies
and lead the way to new solutions and actions. Many of these platforms havemethodologies for engagement, following the “commit, act, report” model. The UN
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Global Compact has a wide menu of issue platforms, each of which offers enormous potential to drive collective, widespread and specific actions.
• Through Caring for Climate, more than 300 companies are working individually and together on critical innovations on energy efficiency, renewableenergy, adaptation and finance;• The CEO Water Mandate provides a platform for companies to advance theprinciples of “corporate water stewardship”;•O ur new Business for Peace initiative will expand and deepen private-sector
action in support of peace by promoting transparency and accountability andby adopting conflict sensitive practices;• Our new Rule of Law and Business initiative is mobilizing companies to takeconcrete action to strengthen the rule of law, with emphasis on human rights
and good governance;• The Women’s Empowerment Principles help business to promote genderequality and women’s empowerment in the workplace, marketplace, andcommunity. The WEPs have over 600 CEO signatories, signaling the importance of this issue to business;• Finally, the Children’s Rights and Business Principles have been launched in
more than 30 countries around the world. I am proud to note the immense
support provided by Sweden for the children’s principles.
In addition, Global Compact Local Networks in more than 100 countries
are convening committed companies and acting on sustainability issues at the
ground level. Networks serve an essential role in rooting global norms, issue
platforms, and campaigns within a national context. Our experience has shownthat most business partnerships are formed at the country level and our networks
are well-positioned to facilitate these connections. The UN Global Compact supports and builds the capacity of networks and facilitates knowledge sharing among
them.
Finally, a new class of technology-powered action hubs has been introduced toconnect players at the global and local levels. The UN Global Compact Business
Partnership Hub will further action on climate, water, social enterprise, anticorruption, and UN-business partnerships.
The Post-2015 Development Agenda
This year, we stand at the threshold of an enormous global opportunity. As the72CSR White Paper 2014
Millennium Development Goals 2015 deadline approaches, governments are undertaking a process to define a post-2015 global development agenda.
The post-2015 agenda—as we refer to it at the United Nations—can open thedoor to a new era of business contribution and engagement. A set of global andambitious sustainable development goals will inspire business action. And a concise
set of goals and targets will translate into a framework for businesses to measureprogress and establish corporate goals aligned with global priorities. This opportunity is enormous to create value for business as well as the public good.
To help business advance global priorities at a new level, the UN secretary-general launched the Post-2015 Business Engagement Architecture at the UN Global
Compact Leaders Summit in September 2013. Our new Architecture is the roadmap for scale and transformative impact. It is an open invitation to co-invest in
partnerships, to collaborate to advance UN goals, and to build overall societal trustthat allows markets to work for the benefit of all.
Leveraging the Architecture, companies everywhere are called on to do moreof what is sustainable and put an end to what is not. It is time for chief executives
everywhere to show leadership and actively orient their business towards corporate
sustainability.
1. L ead. Ensure that corporate governance systems recognize environmental
and social issues as critical to long-term business success, for example
strengthening directors’ ability to understand and oversee social components. This helps cascade sustainability practices throughout the value chain.
2. Integrate. Take a sophisticated and comprehensive approach to integrating
sustainability issues across the organization—from the board down throughthe organization and subsidiaries and out into the supply chain. Work toconnect sustainability issues and move beyond silos. Join Global Compact
issue platforms—on climate, water, gender, and children’s rights—to drive
performance and impact.
3. M
 ake. Goods and services that respond to the growing demand for moresustainable solutions should be encouraged and rewarded. Consumers andmarkets are ready for them, but incentive structures have not kept pace withshifting values and preferences.
4. C ommit. Make a commitment to action—individually or in partnership—on
a sustainable development issue with clear targets and accountability measures in place. Transformative public-private partnerships can have lasting
positive impacts on policy, market structure, and social norms.
5. C
 ollaborate. Turn to civil society, local communities, employees, and aca73

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The Post-2015 Business Engagement Architecture

Source: UN Global Compact

demia, for example, for input and feedback on practices and plans. Collaborate with governments, other companies, and civil society in partnershipthat address collective challenges—where combined efforts are more powerful than going it alone.
6. Report. Heed the call of a new generation of investors by publicly reportingon sustainability performance.
7. Lobby responsibly. Ensure that lobbying actions are not in conflict withyour company’s stated values and take a lowest-common-denominator approach, rather than pursuing long-term interests. Call on governments toadopt smart regulatory frameworks and incentives so business is rewarded
for environmental and social performance.
8. Advocate. Spread this message to your peers, partners, and customers thathave yet to act—those sitting on the fence or even actively opposing change.
It is time for us all to wake up to the urgency of sustainability, scale up ouractions, and speed up the delivery of collaborative solutions.
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When companies take a principled approach to doing business, this can help
restore balance in economies and boost confidence in the social legitimacy of the
global marketplace. Of course, none of this can happen without strong politicalleadership. Voluntary initiatives like the UN Global Compact can help bridge thegap while regulation is being developed and raise the bar when regulation is either
insufficient or improperly enforced. As a growing number of companies are embracing the sustainability challenge, it is hoped that political leaders will be encouraged and inspired to do their part to transition to a sustainable future.
For more than a decade, through corporate sustainability we have been able to
make real advances to build environmental, social, and governance pillars into
globalization. But today, corporate sustainability still serves as a stop-gap for the
shortfalls in global governance. We must work to ensure that the global marketplace will induce all nations to fully incorporate universal values into their societies. Until that day comes, responsible business will remain a vital solution.

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February 18, 2015

Demanding Social Responsibility from All
Organizations
Masao Seki

The weakening of the government sector has highlighted the growing need for private companies to tackle such key social issues as climate change and human rights abuses. Indeed,rather than act as a drag on sustainable development, businesses are now moving to promote responsible behavior, notes Masao Seki of Sompo Japan, and global-scale initiatives
are being advanced to give the private sector a bigger problem-solving role.
***

CSR in a Global Context
The ideal of “sustainable development”—solving environmental problems anddealing with the issue of poverty at the same time—was set forth at the Earth Summit (United Nations Conference on Environment and Development) in 1992. Morethan 20 years have passed since this lofty pronouncement, but prospects for its
realization seem to have receded in the interim.
Along with climate change, we have seen a marked increase in the frequency of
extreme weather. The sustainability of the environment, far from improving, has
deteriorated to a critical degree. And while the number of people living in extreme
poverty around the world has started to decline, as measured by statistics, the globalization of markets and labor has led to greater inequality in the distribution of
wealth, with domestic income gaps widening in both the developing and advanced
countries. So poverty has actually become more widespread.
On the political front, the shift in the international power balance has left theworld leaderless, with no country capable of reconciling differences regarding theenvironment and development on its own. It has become difficult to achieve theideal of sustainable development through political leadership. And it appears

Masao Seki   Associate Director and Chief CSR Officer, Sompo Japan Insurance.
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doubtful that traditional forms of global governance, relying mainly on national
governments, can produce solutions for global issues.
The weakening of the government sector was highlighted by an event at COP
19 (19th Conference of the Parties to the United Nations Framework Convention
on Climate Change) in November 2013. The decline of political leadership has
been painfully visible in recent years at international forums dealing with climatechange, where political negotiations have shown no sign of leading to solutions. At
COP 19 in Warsaw, the representatives of the major nongovernmental organizations that have long been playing a
key role in the negotiation process
walked out of the conference en masse
in protest as it was drawing to an inconclusive end. This was an unprecedented gesture.
Meanwhile, even as government-level negotiations became
bogged down, there was a new development at COP 19 indicative of ashift in global governance, namely, the Speakers and participants at the COP Presidency Business Dialogue, held as part of the COP 19 program on
visible presence of the corporate sec- November 20, 2013. (Photo by the author)
tor, which had previously been absent
from the COP process. The official program for the 2013 conference included apair of first-ever events in this connection: the Caring for Climate Business Forum(November 19–20) and the high-level COP Presidency Business Dialogue (November 20, see photo). “Caring for Climate” is an initiative by the UN Global Compact, the UN Environment Program, and the secretariat of the UN Framework
Convention on Climate Change (UNFCC) aimed at advancing the role of businessin addressing climate change. In addition to organizing the two-day business forumon the occasion of COP 19, Caring for Climate prepared a report titled “Guide for
Responsible Corporate Engagement in Climate Policy.” So far the business world
has resisted regulations and acted as a drag on policy initiatives for sustainable
development. This must change. Corporations need to get actively involved on the
problem-solving side. The new events at COP 19 showed them doing so.
So, even as political leadership is weakening, we can see a search for a newform of global governance, one in which various nonstate actors participate in thequest for sustainable development. It is hoped in particular that businesses will playa greater role in this connection than they have up to now. We need to consider
corporate social responsibility in this global context.
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In 2010 the International Organization for Standardization (ISO) issued a setof international guidelines for social responsibility, ISO 26000, that integrates theideals of social responsibility and sustainable development into business management. This means including consideration for society and the environment as anelement of corporate strategy and as part of their everyday decision-making andoperating processes. Social and environmental concerns are to be made an essential
part of the corporation’s core business. And the communication from the European
Commission in 2011 defining CSR as “the responsibility of enterprises for theirimpacts on society” called on businesses to maximize the creation of shared value
and to prevent and mitigate the possible adverse impacts from their activities. Businesses are now being called on to address global issues through their core activities
and to be the source not of problems but of solutions.
CSR in Japan
When people talk about corporate social responsibility in Japan, they often referto the sanpo-yoshi (“three-way good”) precept handed down through the generations by the Omi (now Shiga Prefecture) merchants of the Edo period (1603–1868).
The secret of success, according to this precept, is to do business in a way that isgood for three parties, namely, the buyer, seller, and society. It is a concept thatmeshes with the contemporary idea of CSR, calling on those who do business notjust to seek profits for themselves but also to contribute to the development ofsociety and to seek prosperous coexistence with others.
This is a positive element of Japanese tradition and should be preserved, but it
is not identical to today’s CSR, which needs to be understood in the global context
set forth above. CSR is not a static ideal aimed at maintaining good relations withexisting stakeholders. It calls on enterprises to play an active role in generatingchanges in order to solve problems.
It was in 2003 that some Japanese consumer electronics manufacturers andother firms with operations in Europe first established organizational units explicitly tasked with the promotion of CSR, so this was dubbed “year one” for Japanese
CSR. The following year, Keidanren (Japan Business Federation) substantially revised its Charter of Corporate Behavior, adding content in line with global trends
in CSR. For several years after 2003 there was quite a boom in CSR in Japan, andit spread at a dramatic pace through the business world. Japan came to occupy aleading position internationally in terms of the share of companies issuing sustainability reports, and Japanese companies undertook independent initiatives to implement CSR while also following the latest global trends in this field.
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A major difference between Japanese CSR and CSR as practiced in Westerncountries, though, is the level of involvement by corporate stakeholders. Japanesefirms have moved to implement CSR on their own initiative, not in response topressure from their stakeholders. It is rare in Japan for companies to become embroiled in sharp conflicts with NGOs and other civil society organizations. The
government in Japan, unlike the authorities in Europe, has not come out with asystematic set of CSR policies, nor has it become strongly involved in this field. And
Japanese institutional investors have not shown active interest in the concept ofsocially responsible investment (SRI); as a result, the volume of such investment inJapan is far smaller than in Europe and the United States.
Generally speaking, Japan’s CSR is characterized by the weakness of pressure
on corporations from their stakeholders, in sharp contrast to the situation in Europe and North America, where major enterprises have struggled with fierce adversarial engagement from stakeholders—NGOs in particular. This is a reflection notjust of differences in the maturity of the civil sector but also of Japan’s cultural andsocial climate favoring coexistence and harmony over conflict.
The relative lack of engagement from civil society may be perceived as a weakness of Japanese CSR, but it can also be turned into a strength. According to theresults of the CSR survey conducted by the Tokyo Foundation, Japanese companies
take a positive view of collaboration with stakeholders, and 73% are alreadyworking with them. The main reason cited for such collaboration was the hope oflearning from stakeholders’ experience and know-how.1 A series of surveys by
Keidanren shows that the share of corporations that have collaborated with nonprofit organizations has been rising by 10 percentage points every three years andhas recently topped 50%.2 These results indicate that Japanese corporations areactively establishing cooperative ties with civil society to address social issues. They
should continue to develop these constructive relationships and turn them intostrengths.
The Tokyo Foundation survey found that Japanese corporations are focusing
their CSR on not just domestic issues but also issues outside of Japan in such areas
as the environment, human rights, and poverty and are starting to take concrete
initiatives to address those issues. And they are eagerly seeking to improve their
Tokyo Foundation, “CSR kigyo chosa deta shu” (CSR Corporate Survey Data), 2014,section 6, “CSR katsudo ni okeru gaibu soshiki to no kyodo no genjo” (The Current Stateof Collaboration with Outside Organizations in CSR Activities).
2
Keidanren, “2011 nendo shakai koken katsudo jisseki chosa kekka” (Results of the Fiscal
2011 Social Contribution Activity Performance Survey), 2012, section II-4, “Kigyo to hieiri
soshiki to no renkei” (Partnership between Corporations and Nonprofit Organizations).
1

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CSR by learning from international practices. But they tend to hold back fromdirect involvement at the international level in implementing initiatives and drafting norms and policy proposals. Japanese companies will need to show leadershipin this respect, participating more actively in international discussions and sharing
the lessons of their own CSR activities with others.
Mainstreaming CSR
The concept of CSR is now known around the world, but in terms of content it isstill developing. Advanced cases are small in scale and are incapable of having an
impact big enough to set off social reforms. There is a need to expand such efforts
and turn CSR into a mainstream social endeavor. I believe the following threepoints are keys to the future development of CSR:
(1) Stronger corporate leadership
The World Business Council for Sustainable Development (WBCSD) was launchedfollowing the Earth Summit in 1992 to serve as a voice for policy proposals fromthe business world, and it has long played a leading role in this connection. In 2013its chairmanship was assumed by Paul Polman, chief executive officer of Unilever,a company that has been at the forefront of global CSR. Based on its long-range
Vision 2020, last year WBCSD, in a joint effort with the think tank Stockholm
Resilience Center, formulated Action 2020, a plan based on scientific findings, andpresented it as part of the policy dialogue at COP 19.
Meanwhile, the UN Global Compact now has more than 12,000 signatories
and has become the world’s biggest CSR initiative. At the 2012 United Nations
Conference on Sustainable Development (Rio +20), the Global Compact organized
a four-day, 120-session corporate sustainability forum that 2,700 people attended.
This raised the profile of the Global Compact, which is now functioning as the hub
for promoting the spread of CSR, working through its regional networks in countries around the world.
These corporate initiatives are in the process of forging partnerships. The
WBCSD and the UN Global Compact, for example, are forming a “coalition of
coalitions” through which they intend to present the voices of the business world
at various forums, such as the UN General Assembly and the World Economic
Forum at Davos.
Even so, the corporate coalitions that are seeking to play an active role in promoting sustainable development still represent only a minority of the world’s com80

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Chinese Enterprises Issuing CSR Reports, 2001–13

Source: China WTO Tribune.
Note: The 2013 figure is for January–September.

panies, and they need to find ways to make their voices better heard. We can hopethat joint endeavors by major international initiatives, each with its own strengths,
will make it possible for the corporate sector to play a leading role in this field.
(2) Roles for emerging and developing countries
As globalization progresses and the world becomes a more level playing field, CSR
must spread to emerging and developing countries in order for it to become morewidespread and effective.
In the first decade of the new millennium, CSR spread mainly in the industriallyadvanced countries, thanks to initiatives like the UN Global Compact and theadoption of international standards like the Global Reporting Initiative (GRI).
Now it is spreading rapidly among the emerging and developing countries.
This trend was visible at the May 2013 Global Conference on Sustainability
and Reporting in May 2013. Among the top 10 countries in the number of participating enterprises, alongside host Netherlands and other industrial countries, were
emerging countries like China, Brazil, India, and South Africa. At the nationalpresentations that were a new feature of this 2013 GRI conference, the participantsfrom these countries explained their progress in CSR and reporting, drawing attention from many other participants. The theme of the South African presentation
was the country’s adoption of the world’s first integrated reporting requirement, asubject that drew many questions from the floor.
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The stronger presence of the emerging countries was a major change from theprevious international GRI conference in 2010. Over the intervening three years,
South Africa introduced a requirement for all listed companies to issue integrated
reports, and in Brazil the stock market introduced a new index focused on governance. In India, CSR was added as a requirement under the Companies Bill, and in
China, the number of enterprises issuing CSR reports topped 1,800 (see the tableon page 81).
The emerging and developing countries, which are playing a growing role in
the world’s political and economic affairs, can be expected also to be increasingly
prominent in the promotion of CSR.
(3) A new approach to sustainable governance
The principal actors in CSR are corporations, but the corporate sector alone cannot produce major changes in society. In order to achieve a paradigm shift that willturn the tide, interaction among corporations and other stakeholders is essential,
along with the collaboration arising from such interaction.
The ISO 26000 standard sets forth the concept of social responsibility not justfor corporations but for all organizations. It is based on the idea of universalizing
the CSR codes of conduct formulated in the context of corporate operations so as
to promote collective action for sustainable development by all organizations. And
in a first for the ISO, the working group that drew up this standard adopted amulti-stakeholder process.
We are entering a new age of sustainable governance, with engagement by
multiple stakeholders collaborating and interacting in such a way as to give rise toinnovations leading to social reforms and solutions that will promote sustainable
development. We need to rethink the role of corporations in this new context. And
we should implement stakeholder engagement with a view to achieving dynamic
interaction among stakeholders aimed at finding solutions to our social issues (seethe text box below).
Stakeholder Engagement
Definition: The process of being actively involved with one or more stakeholders throughdialogue or other means, with the aim of achieving a mutually acceptable outcome, in thecourse of a corporation’s integration of its social responsibility into day-to-day practice.
Source: Keidanren, “Implementation Guidance on Charter of Corporate Behavior,” 6th version (September 2010).

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Progressive companies like Unilever are already undertaking initiatives to draw
their entire value chains into their social responsibility framework. Unilever’s “Sustainable Living Plan” calls on government agencies, NGOs, suppliers, consumers,
research institutes, and other stakeholders to collaborate in achieving sustainableconsumption. Corporations alone cannot change society, but through collaborative
efforts like these, they can create the triggers for setting off social reforms andparadigm shifts. They should actively seek solid engagement with other stakeholders in the pursuit of common objectives.

83Views on China
February 16, 2015

New Directions for Chinese Diplomacy?
Kazuyuki Suwa

The government of Xi Jinping continues to send mixed signals on foreign policy, now flexing
its muscles in the East China Sea, now touting its commitment to international cooperation. Kazuyuki Suwa reviews diplomatic developments in China since the spring 2014 session of the National People’s Congress in the light of discussions with experts on the ground.
*

*

*

T

he National People’s Congress held in Beijing from March 5 to March 14,
2014, received relatively little media attention, inasmuch as the 2013 meeting had previously approved all key party and government appointments.
But as the first annual session since President Xi Jinping took office, the meeting(Second Session of the Twelfth National People’s Congress) put the seal of approvalon the new administration’s goals and targets, and in this sense it holds considerable significance for policy trends going forward. In the following, I examine thetrajectory of China’s foreign policy approach since the NPC spring session with theaid of interviews conducted in Beijing.
The New Normal
In his Report on the Work of Government, delivered on the first day of the spring
NPC session (March 5), Premier Li Keqiang made the following statement concerning China’s foreign policy:“This year is the 60th anniversary of the issuance of the Five Principles ofPeaceful Coexistence.1 The Chinese people love peace and cherish development,

Kazuyuki Suwa   Professor, School of International Relations, University of Shizuoka.
The Five Principles of Peaceful Coexistence are mutual respect for each other’s territorial
integrity and sovereignty, mutual nonaggression, mutual noninterference in each other’sinternal affairs, equality and cooperation for mutual benefit, and peaceful co-existence.

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and China needs a long-term stable international environment for its modernization. We will continue to hold high the banner of peace, development, cooperationand mutual benefit; unswervingly follow the path of peaceful development; andunwaveringly implement a win-win strategy of opening up. We will resolutely safeguard China’s sovereignty, security and development interests, and fully protect thelegitimate rights and interests of Chinese citizens and legal persons overseas.”2 In
addition, the State Council’s report on government jurisdiction over implementation of the national agenda (referred to below as the “jurisdiction report”) statedthat foreign policy henceforth would be implemented in “a pragmatic and open
fashion.”3
The question is, how does Beijing intend to reconcile the “path of peacefuldevelopment” with the seemingly divergent course of “resolutely safeguarding China’s sovereignty” at a time when Deng Xiaoping’s exhortation to maintain “lie low
and bide our time” seems more and more like an artifact of a bygone era? I posed
this question to a young professor of international politics at a major university inBeijing and received the following answer (with the qualification that he had norole in the policymaking process and thus could only convey his “impressions”).
“Since the outbreak of the 2008 global financial crisis,” he said, “the so-called
mainstream principles of peaceful development and biding our time have ceased tobe the mainstream in foreign policy. Of course, there is always a range of opinion
on foreign policy as on other issues, even in a country like China. But in the past,policymakers were able to hold off calls for a more aggressive stance by taking
refuge in the principle of peaceful development. That’s no longer possible.
“In Chinese foreign policy today,” he continued, “there’s no longer a single
approach or policy direction that could be called mainstream. This creates fertile
ground for the diffusion of extreme ideas—such as the notion that China can dowhatever it wants by leveraging its economic power, and Maoist concepts like ‘It’sokay to let half the people die’ [for the good of the nation]. In China today you
hear a lot of talk about the importance of ‘public diplomacy,’ but the real reason
for this seemingly progressive stance that is that the people who make and implement policy are afraid of public opinion.”If this is an accurate assessment of the dynamic driving foreign policy in China
today, then we who desire peace and stability in the region have reason to view
China with a sense of genuine alarm.

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85Views on China
Inconsistencies on “Peripheral Diplomacy”
In the 2014 Report on the Work of the Government, “peripheral diplomacy”
ranked number one on Beijing’s list of foreign-policy priorities, followed by developing countries, major powers, the Asia-Pacific Economic Cooperation forum(APEC), and multilateral cooperation.4 This new emphasis on relations with China’s closest neighbors is a direct reflection of the basic policy established by the Xi
regime in an unprecedented working conference on peripheral diplomacy, held in
Beijing on October 24–25, 2013.
The October 2013 conference was the first forum focusing specifically on peripheral diplomacy in the history of the People’s Republic of China. According toRenmin Ribao (People’s Daily), it was held to “establish strategic targets, basic
policies, and comprehensive arrangements for peripheral diplomacy over the next
five to ten years.” In his remarks to the participants, President Xi Jinping, whochaired the forum, reportedly called for “vigorous promotion of the principles offriendship, good faith, generosity, and tolerance in order to achieve the great revivalof the Chinese people.” In a commentary on the conference carried by Renmin
Ribao, Qui Xing, president of the China Institute of International Studies, statedunequivocally, “Among the categories of major-power, peripheral, developingcountry, and multilateral diplomacy, the periphery is assuming increasing importance.” A companion article sought to convey the importance of the periphery innumbers, noting that the region consists of 29 countries with a combined population of 2.5 billion, while placing particular emphasis on the importance ofChina’s relations with Russia, Central Asia, the Association of Southeast Asian
Nations, India, Pakistan, and South Korea. Conspicuously missing from the list
was Japan.5
China’s Japan policy entered a period of instability immediately after the 2008
state visit of then President Hu Jintao, and Beijing has gradually intensified its
hardline stance toward Tokyo since then. Designating 2015 as the “70th anniversary of the victory over fascism,” the Chinese leadership is calling for an international united front against its “principal enemy,” Japan.
It is unfortunate that the government of Xi Jinping has chosen to exclude Japan
from the list of countries meriting stronger diplomatic efforts under its “peripheral

The Chinese use the term zhoubian waijiao in reference to diplomacy with neighboring
countries. I have adhered to the literal translation here because I believe it reflects the persistence of a traditional Sinocentric worldview.
5
Renmin Ribao, October 26, 2013.
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Views on China
diplomacy” initiative, but it is consistent with the policy China has adopted toward
Japan since late 2009, when the Japanese government “nationalized” its control
over the disputed Senkaku Islands by purchasing several islands that were in private hands at the time. In its 2014 Report on the Work of the Government, theState Council was clearly targeting Japan when it stated, “We will safeguard thevictory of World War II and the postwar international order, and will not allow
anyone to reverse the course of history.”
Speaking to the press on March 8 on the sidelines of the NPC session, Foreign
Minister Wang Yi underscored China’s intransigence toward Japan, insisting that“on the two issues of principle, history and territory, there is no room for compromise.”6 Such statements suggest that the road to Japan-China rapprochement could
be a long and difficult one. As one Japanese government official said to me in Beijing, “There is, unfortunately, no possibility that these incursions by Chinese naval
vessels into the waters around the Senkakus will come to an end. Now that Beijing
has established and fleshed out a legal and institutional groundwork for the current
policy, letting things slide is no longer an option.” At the time I felt his pessimism
was warranted.
Nonetheless, the last few months have produced unmistakable signs of an overall thaw in diplomatic relations between Tokyo and Beijing. In early April, Hu
Deping, former vice-chairman of the All-China General Chamber of Industry andCommerce and the son of late Chinese leader Hu Yaobang, visited Japan at theinvitation of the Ministry of Foreign Affairs and met with Prime Minister Shinzo
Abe and other officials, a possible signal of Beijing’s readiness to begin mending
fences. In mid-April, Vice-Premier Wang Yang received a delegation from the Japanese Association for the Promotion of International Trade headed by veteran
Liberal Democratic Party politician Yohei Kono. Later that month, Wang met with
Tokyo Governor Yoichi Masuzoe during the latter’s visit to Beijing. It was the firsttime in 18 years that a Tokyo governor had traveled to the Chinese capital at thelatter’s invitation.
Despite the unprecedented strains in bilateral ties, China cannot realisticallyignore the objective importance of Japan in the context of either peripheral or
major-power relations, especially given Beijing’s growing emphasis on “economic
diplomacy.” In this sense, the development of Japan-China ties in the months andyears ahead can be considered a litmus test of Beijing’s practical commitment to“peaceful development” going forward.

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87Views on China
Cracks in the Principle of Noninterference
Meanwhile, the ongoing crisis in Ukraine has called into question China’s commitment to the Five Principles of Peaceful Coexistence, touted as central to Beijing’s
foreign policy since the establishment of the People’s Republic of China. At issue
in particular is the principle of noninterference in internal affairs, which Beijing has
cited time and again in connection with its treatment of ethnic minorities and its
handling of the Taiwan problem.
In mid-March, after the collapse of Ukraine’s pro-Russian regime and its replacement by a pro-Western government, the Crimean parliament declared independence from Ukraine. The separatist government then signed a treaty with theRussian government under President Vladimir Putin to incorporate the region into
the Russian Federation. Despite a chorus of international criticism, including a
joint condemnation from the leaders of the Group of Seven industrial powers,
Russia refused to reverse its action, and the annexation became a fait accompli. The
crisis soon spread to eastern Ukraine, where pro-Russian forces stormed government offices in several cities. Since then the United States and the European Union
have continued to engage the Kremlin in talks aimed at stabilizing the region, but
tensions have only escalated.
Regardless of Russia’s insistence that the majority of Crimea’s inhabitants favored annexation, the act was clearly at odds with China’s cherished principle ofnoninterference in internal affairs. Given Beijing’s stated commitment to this principle and insistence that other countries respect China’ sovereignty in regard tointernal policies, the Chinese should have been among those most vigorously condemning Russia’s annexation of Crimea and its continued intervention in Ukraine.
But Beijing seemed more concerned with maintaining friendly ties with Moscow, which
Xi Jinping has proclaimed are better than at any point in history. In an apparent
effort to placate all sides, China offered only a most tepid and ambiguous responseto the crisis, as typified by this statement at a March 2 Foreign Ministry briefing:“China is deeply concerned about the current situation in Ukraine. . . . It is
China’s long-standing position not to interfere in others’ internal affairs. We respect
the independence, sovereignty and territorial integrity of Ukraine. There are reasons why the situation has reached this point in Ukraine today. China calls on all
the parties involved to seek a political resolution of their differences through dialogue and negotiation based on respect for international law and norms governinginternational relations in order to maintain regional peace and stability.”7
7

http://www.fmprc.gov.cn/ce/cglagos/eng/xwfb/fyrth/t1133558.htm

88Views on China
In keeping with this non-position, China abstained from a March 15 UN Security Council vote on a draft resolution urging member states not to recognize theresults of Crimean referendum on annexation held on March 16. (The draft resolution was vetoed by the Russian Federation.)Interestingly, the reaction within China to Beijing’s noncommittal response waslargely positive. Typical of media coverage was this report on the website Xilu.com,
carried under the title “Why Are Russia and Ukraine Thanking China?”:“On March 18, President Putin delivered a fervently patriotic speech to theRussia Parliament, concluding by saying, ‘We are grateful to those who have shown
understanding of our actions in Crimea. We are deeply impressed by China’s response. China’s leadership has analyzed the situation in Crimea from all angles,
from a historical and political perspective.’ On the morning of March 21, theUkrainian embassy in China held a press conference on the situation in Ukraine
and the current state of and outlook for economic and trade cooperation between
Ukraine and China. The Ukrainian ambassador responded to questions from domestic and foreign reporters. On the subject of China’s position and response to
the changing situation in Ukraine, the ambassador stressed his gratitude for the
Chinese government’s level-headed response to these events.”8
Between Internationalism and Hegemony
The National Security Commission of the Communist Party of China, establishedat the Third Plenum of the Eighteenth Party Congress November 2013, met for the
first time on April 15. Made up of members of the Politburo Standing Committee
and empowered to coordinate all aspects of internal and external security policy at
the highest level, the council is expected to have a decisive impact on foreign policy
going forward. Commenting on external policy at the NSC’s inaugural meeting,President Xi Jinping, who chairs the commission, said that the country would “seekpeace, cooperation, a win-win situation, and a harmonious world.” But how dosuch lofty sentiments apply to China’s policy toward Japan?
When US President Barack Obama, meeting with Prime Minister Abe on April
24 this year, assured the Japanese government that the Japan-US Security Treaty
applied to the Senkaku Islands, Beijing accused Japan and the United States of“ganging up” on China. Will this sort of backlash intensify, or will the governmentof Xi Jinping begin to steer a more moderate, conciliatory course? More generally,
does Beijing’s pledge to participate in international affairs as a “responsible power”
8

http://junshi.xilu.com/20140324/1000010000417439.html
89Views on China
herald a new phase in Chinese diplomacy? Will the regime of Xi Jinping find a wayof reconciling the goal of “resolutely safeguarding China’s sovereignty” with the“path of peaceful development”?
Hitoshi Amako of the Waseda University Graduate School of Asia-Pacific Studies argues that China is caught in a basic dilemma in its relations with Japan as it
wavers between the path of international cooperation and that of “great power
politics,” or hegemony.9 Frankly, I fear that China has already resolved the dilemmaby choosing the path of hegemony. If I am correct in this assessment, our task now
must be to leverage the principles of international cooperation to which we adhere
in order to draw China into the same circle of cooperation.

Hitoshi Amako, “Nitchu kankei no zento: Shu Kinpei seiken no taigai senryaku karamiru” (Outlook for Japan-China Relations from the Perspective of the Xi Regime’s International Strategy), Toa, April 2014.

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Views on China
February 25, 2015

Post-Summit Prognosis for Japan-China
RelationsTakashi Suzuki

Japan and China made an important step toward rapprochement last November, when
their top leaders sat down for the first bilateral summit in more than two years. But canthey overcome fundamental sources of tension to build on that progress? China scholar
Takashi Suzuki comments.
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I

n November 2014, Prime Minister Shinzo Abe and Chinese President Xi Jinping sat down together on the sidelines of the Asia-Pacific Economic Cooperation summit in Beijing for the first Japan-China summit in two-and-a-halfyears. Their meeting set the stage for a thaw in a diplomatic freeze dating back to
September 2012, when the Japanese government purchased three of the Senkaku
Islands from their private owner.
The security climate around the Senkakus remained fraught in the months
leading up to the summit. In incidents in May and June, Chinese fighter jets flew
dangerously close to Japanese Self-Defense Forces aircraft patrolling the area, raising fears of a military clash.
Yet despite this tense atmosphere, efforts to lay the groundwork for a rapprochement were making steady progress. In May 2014 Japanese delegations fromthe ruling Liberal Democratic Party and the Japan-China Friendship Association
visited Beijing and secured audiences with high-ranking Chinese officials, including
Zhang Dejiang (chairman of the Standing Committee, National People’s Congress)
and Yu Zhengsheng (chairman of the of the Chinese People’s Political Consultative
Conference).
In June, private-sector figures from both countries conferred in Nagasaki at a

Takashi Suzuki   Associate Professor, Department of Chinese Studies, Aichi Prefectural
University.
91Views on China
meeting of the nongovernmental New Japan-China Friendship Committee for the
21st Century. In September, the Japanese and Chinese foreign ministers exchanged
views on the sidelines of the United Nations General Assembly, and the two countries held a second round of high-level maritime consultations in Qingdao following a hiatus of two years and four months. These assiduous efforts paved the way
for November’s bilateral summit.
But what are the prospects for a substantive improvement in Japan-China ties
in the wake of those talks? In the following, I will begin by assessing short-term
developments in the light of the bilateral agreement issued prior to the summit. I
will then look at some of the structural sources of discord and discuss the longterm outlook for progress.
November Harvest
The biggest accomplishment of the Japan-China summit was securing a commitment from both sides to move the relationship forward again after years of deadlock stemming from differences over the Senkaku Islands and historical issues.
With this goal in mind, the two sides worked hard to reach a pre-summit agreement.
The document, whose strategic ambiguity earned it praise as a masterpiece ofdiplomacy, articulates a general agreement on four basic points: (1) reaffirmationof the policy of developing “a mutually beneficial relationship based on common
strategic interests”; (2) “some recognition” of the need to overcome political differences stemming from historical issues; (3) establishment of a crisis-management
mechanism to avert clashes around the Senkaku Islands and in the East China Sea;and (4) promotion of dialogue in multiple fields using various channels.
Points 2 and 3 refer obliquely to the two key issues that have blocked diplomatic progress until now: Abe’s visits to Yasukuni Shrine and the Senkaku dispute.
Most analysts have noted that Tokyo agreed on point 2 (regarding Yasukuni visits)
in exchange for a commitment on point 3, on which no compromise was possible.
Indeed, the document is notable for the relatively precise language of point 3 withregard to the establishment of a crisis-management mechanism to “avert the rise of
unforeseen circumstances.” The agreement’s key achievement, however, was point
4: “Both sides shared the view that, by utilizing various multilateral and bilateralchannels, they would gradually resume dialogue in political, diplomatic and security fields and make an effort to build a political relationship of mutual trust.”1
1This article follows the English translation issued by the Ministry of Foreign Affairs of92

Views on China
To a large degree, the content of the talks held between Abe and Xi on November 10 reiterated or elaborated slightly on these four points, with calls for further
steps toward a mutually beneficial relationship based on common strategic interests, early implementation of a maritime communication mechanism between thetwo countries’ defense authorities, and broad-based efforts to improve relations on
various levels.2 However, as one who has made a study of the political thinking andbehavior of Chinese leaders, I was particularly intrigued by two statements by Abe
regarding Beijing’s foreign and domestic policies.
First, Abe praised Xi’s leadership as an economic and social reformer, something the latter must have found particularly gratifying, given his challenges on thedomestic front. “Since being appointed,” said Abe, “President Xi has been boldly
engaging in domestic economic reforms and other initiatives, and is exercising
powerful leadership. I [too] am striving to restore vitality to Japan’s economy andsociety.”3 Second, Abe stated, “The peaceful development of China brings a favorable opportunity for the international community and Japan. I want to utilize thatfavorable opportunity, and cooperate as the world’s second- and third-largest economies in order to fulfill both countries’ responsibility for the peace and prosperityin the region and international community.”
Former Ambassador to China Yuji Miyamoto, who is personally acquainted
with both Abe and Xi, commented that “if the two of them could speak freely to
one another, they would probably connect surprisingly well.”4 I am inclined toagree that these two leaders might find it relatively easy to build trust on a personallevel, depending on their mode of communication. But even if they succeed inbuilding a personal relationship of mutual trust, there is no guarantee that they canovercome the major structural impediments to amicable Japan-China relations,discussed below.
I have spoken with experts and officials in both countries since the meeting
between Xi and Abe, and for the most part their assessment of the talks was positive. But generally speaking, the Chinese side seemed more optimistic that theJapan, “Regarding Discussions toward Improving Japan-China Relations,” November 7,
2014, http://www.mofa.go.jp/a_o/c_m1/cn/page4e_000150.html.
2
See MOFA, “Japan-China Summit Meeting,” November 10, 2014, http://www.mofa.go.
jp/a_o/c_m1/cn/page4e_000151.html.
3
While the official English version leaves out “too,” the Japanese version has “watakushimo.” See http://www.mofa.go.jp/mofaj/a_o/c_m1/cn/page3_000999.html.
4Yuji Miyamoto, “Nit-Chu shuno kaidan go no arubeki Nit-Chu kankei” (Japan-China
Relations After the Japan-China Summit), Nit-Chu Kankei Gakkai, November 14, 2014,
http://www.mmjp.or.jp/nichu-kankei/taisinochugokuron/141114nichuushunoukaidan.html.
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summit would lead to a rebound in Japanese direct investment in China, which has
declined sharply since 2013 (posting a year-in-year drop of 42.9% during the first
10 months of 2014).5 Whether these hopes will pan out is an open question. Unlike
Chinese businesses, which operate under powerful political constraints, Japanesecompanies follow economic imperatives when making business decisions. And theeconomic reality is that growing risks—including rising wages and the threat posedby the real estate bubble—make China a less attractive investment destination than
before, at least from the standpoint of Japanese manufacturers.
Bridges and Obstacles to Understanding
Perhaps the most obvious fact highlighted by the November meeting was the fragile state of Japan-China ties today and the constant vigilance that is still required
to keep them on track. It is sobering to think that, more than four decades since
the normalization of relations in 1972, our top leaders must forge a formal agreement calling not merely for political fence mending but for resumption of economic, cultural, and social relations. Moreover, the meeting between Abe and Xi
has in no way resolved the fundamental historical and territorial issues that precipitated the recent chill in Japan-China ties. All it produced was an agreement by
the two leaders to contain these intractable issues as best as they can. Needless tosay, this will require self-restraint on both sides.
A basic source of friction between Japan and China is the latter’s ever-growing
and increasingly assertive military presence in the East China and South China
Seas, including the area around the Senkaku Islands. Unfortunately, this behavior
is unlikely to change as a result of the summit. Nor is Japan likely to depart fromits longstanding policy of patiently relying on the Coast Guard and Maritime
Self-Defense Forces to deal with the situation. Given the unlikelihood of a fundamental solution or a compromise by China anytime soon, we must content ourselves for now (perhaps for another year, perhaps for another three decades) withmeasures to ensure that tensions do not escalate into a full-blown crisis.
An even more fundamental problem—one that government-level talks havelittle power to change—is public opinion and the perception gap between the Japanese and the Chinese people with respect to their countries’ policies and positionsin the international order. A “mutually beneficial relationship based on common
strategic interests” is all very well as a diplomatic slogan, but neither the Japanese
nor the Chinese people have a clear idea of what such a relationship would look
5

Asahi Shimbun, December 9, 2014.

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like or what role the other country would play in it. Largely as a consequence,
mutual hostility between the Japanese and Chinese people has intensified over the
past several years.
The results of the 2014 Japan-China Opinion Poll conducted by Genron NPO
are revealing in this regard.6 The following are some of the survey’s key findings.
1. In both Japan and China, the share of respondents with an “unfavorable” or“relatively unfavorable” impression of the other country stands at roughly
90%.
2. These negative images notwithstanding, about 70% in both countries agree
that “the Japan-China relationship is important” and at least that many oneach side see the worsening feeling between their two nations as a concern.
(Specifically, 79.4% of Japanese respondents and 70.4% of Chinese respondents chose either “This is an undesirable situation; I have concerns,” or“The situation is a problem, and it needs to be resolved.”)3. In Japan, the portion of those with an “unfavorable” or “relatively unfavorable” impression of China rose 2.9 points from the previous year to reach
93%, the highest level recorded since the survey began in 2005. In China,
the corresponding figure was 86.8%, down 6 points from its peak in 2013.
4. The top reasons respondents identified for their negative impressions of theother country were as follows.
Top Japanese reasons for unfavorable impression of China:• Behavior incompatible with international norms (55.1%)• Selfish policies for securing resources, energy, food, etc. (52.8%)• Criticism of Japan over historical issues, etc. (52.2%)
Top Chinese reasons for unfavorable impression of Japan:• Kindling of territorial dispute through government purchase of Diaoyu Islands (64.0%)• Failure to apologize adequately or show sufficient remorse for past aggression
against China (59.6%)
Genron NPO and China Daily, “The 10th Japan-China Public Opinion Poll: Analysis
Report on the Comparative Data,” September 9, 2014, http://www.genron-npo.net/en/pp/
archives/5153.html.

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Views on China• Policy of working with the United States to contain China militarily, economically, and ideologically (41.8%)
5. Meanwhile, the top five reasons Chinese respondents identified for positive
feelings toward Japan were as follows.
• High quality of Japanese goods (57.2%)• Earnest, hardworking character of the Japanese people (53.8%)• Kindness, courtesy, and high cultural level of the Japanese people (52.6%)• Japan’s advanced technology (41.0%)• Japan’s physical cleanliness and hygiene (38.2%)
As I see it, there are three important insights to be drawn from these survey
results.
First, while the level of negative feeling between our two nations is deplorable,
it bears noting that a majority of people in both countries wish for better ties. This
is not to paint an overly optimistic picture or to suggest that improving bilateralrelations will be an easy task. But these findings do indicate that the will for rapprochement is there, and if our leaders can get things moving in that direction, I
believe they have a good chance of succeeding.
Second, the survey highlights significant differences in the reasons for eachside’s negative images of the other (finding 4). For China, the keywords are “historical issues,” “Diaoyu Islands,” and “containment,” in that order. For Japan, they
are “international norms,” “Chinese foreign policy,” and “reaction to historical issues.”
Third, given the top reasons for China’s unfavorable and favorable impressionsof Japan (findings 4 and 5), we can surmise that a key to building friendship is topromote people-to-people exchange, even as we seek a political resolution to thehistorical and territorial issues. At the risk of sounding simplistic, I would venture
to suggest that the best and fastest way to improve the Chinese people’s image ofJapan is to have more of them visit the country, come into contact with Japanesesociety and people, buy Japanese products and souvenirs, and return home ladenwith fond memories.
Thanks in large part to the falling yen, a record number of international tourists visited Japan in the first 10 months of 2014. During that time, the number ofChinese tourists jumped 80.3% from the same period in 2013, passing the 2 million mark to set a new record.7 This is an extremely welcome development not only
7

Chunichi Shimbun, November 20, 2014, and Asahi Shimbun, December 9, 2014.

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from Japan’s economic vantage point but also from the standpoint of Japan-China
relations.
However, this takes us to a fourth observation. While Chinese impressions ofJapan have a good chance of improving henceforth, Japanese attitudes toward
China seem likely to deteriorate further. The biggest sources of negative Japanesefeelings—overshadowing even backlash over the historical controversies and the
Senkaku Islands—pertain to China’s growing power, combined with its ambiguous
relationship with the international order, its lack of respect for the rule of international law, and its apparent willingness to use its power to alter the status quo inthe region. In fact, in the year between the 2013 and 2014 Genron NPO surveys—
during which diplomatic progress between Tokyo and Beijing was nil—Japanesesentiments toward China sank to their lowest level ever, even as Chinese impressions of Japan improved somewhat as the immediate furor over the Senkakus andYasukuni visit subsided.
A Distorted Self-Image
One of the basic factors underlying China’s problematic policies and behavior on
the international front is a gap between the way other countries view China andthe way China views itself in relation to the international community.
In a survey of nongovernmental experts in 11 Asia-Pacific economies (Australia, China, India, Indonesia, Japan, Myanmar, Singapore, South Korea, Thailand,
Taiwan, and the United States) released by the Washington-based Center for Strategic and International Studies in June 2014, the Chinese experts polled diverged
sharply from the rest in their response to questions concerning US involvement inEast Asia and China’s impact on regional security.8 While 85.8% of respondents
from countries other than China (92% of Japanese respondents) expressed support
for the Obama administration’s strategic rebalance to Asia, the Chinese surveyed
disapproved of it by a margin of 77% to 23%. And while only 13.4% of nonChinese experts (a mere 2% of Japanese) felt that China’s impact on regional security was “very positive” or “somewhat positive,” a full 83% of Chinese respondents gave it a positive assessment.
These findings suggest that China is quite cut off from the rest of the world in
its perception of international and regional affairs. Under the circumstances, its
Michael J. Green, Nicholas Szechenyi, et al., “Power and Order in Asia: A Survey of Regional Expectations,” CSIS, July 2014, http://csis.org/files/publication/140605_Green_PowerandOrder_WEB.pdf.

897Views on China
external policies and actions are unlikely to change anytime soon, and until they
do, the Japanese public’s views of China are unlikely to improve significantly.
A Challenge to the International Order?
Let us shift, now, from the short-term prognosis for Japan-China relations to longterm policy implications.
As I have discussed elsewhere, there are five basic modes that an emerging
power like China can choose from when dealing with the existing international
order. 9
1. Cooperation mode: Actively supporting the existing order and participating
in it as a constructive critic
2. Free rider mode: Passively supporting the existing order and reaping its benefits without contributing substantially
3. “My way” mode: Pursuing one’s own path and policies without regard to
the international order
4. Veto-group mode: Using one’s veto power to obstruct the international order
5. Overthrow mode: Working actively to overturn the existing order and establish a new one
With respect to the general international economic order, China’s trade policy
and behavior have adhered mostly to mode 2, supplemented by some efforts at
mode 1. On the other hand, as a non-member of the OECD’s Development Assistance Committee, China’s attitude toward the international development regime
has basically conformed to mode 3. The difference relates partly to the fact thatparticipation in the international development regime offers China relatively little
in the way of direct benefits and partly to the fact that China’s own official status
and national identity as the world’s largest developing country have given it leeway
to ignore the OECD regime and follow its own policies in the realm of development cooperation.
However, the situation may have changed somewhat since October–November
2014, with the launch of the Asian Infrastructure Investment Bank, a Chinese iniTakashi Suzuki, “Kokusai enjo shakai ni taisuru Chugoku no mikata to sono gaikoteki
shatei” (China’s Stance Toward the International Aid Community and Its Diplomatic
Range), in eds. Yasutami Shimomura and Hideo Ohashi, Chugoku no taigai enjo (China’s
Foreign Aid), (Tokyo: Nihon Keizai Hyouronsha, 2013).

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tiative. Some experts believe that the establishment of the AIIB represents a challenge to the existing international development finance framework—in otherwords, a shift from mode 3 to mode 5.
At this time, the United States and Japan continue to oppose the AIIB. Australia, New Zealand, and South Korea have adopted a cautious attitude, in deference
to their ally, the United States. However, in view of their close economic ties with
China and the latter’s importance in an uncertain global economy, as well as the
progress of negotiations to date, we cannot assume that these three countries—letalone others with looser ties to the United States—will continue to hold out overthe medium to long term.

99Views on China
January 08, 2015

Rain, Soil Erosion, and Desertification in
DatongKunio Takami

The deep rifts of the Huangtu Plateau in Datong are a fascinating sight for visitors, butthey also expose the consequences of overcultivation that results in a vicious cycle of environmental degradation and rural poverty. Kunio Takami of the nonprofit Green Earth
Network introduces the harsh conditions that villagers in Datong must brave and the policies that have been implemented to halt the ongoing process of desertification.
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K

oji Hashimoto is a photographer whose work focuses on farmers and thevillages where they live. Over the course of six years he traveled to the
Huangtu Plateau in Datong, and in 2001 he published a book of photographs documenting life there. Almost all the landscape photos in the book show
the distinctive eroded valleys of the plateau—deep rifts that the elements have cut
into the silt-like loess soil. The rifts, some of them up to 100 meters deep, can beseen everywhere on the plateau and are familiar scenes for the people who live
there. But they have a strange fascination for visitors from abroad, few of whom
have ever seen anything like them before.
Datong’s “Guerrilla Rains”
Average annual rainfall in the regionis around 400 millimeters, two-thirdsof which is concentrated into a threemonth period from mid-June. The
rain often comes in short, concentrated bursts that drench one narrow

Kunio Takami   Executive Director, Green Earth Network.
100Views on China
area at a time; from an elevated vantage point, one can see black clouds moving
across with great speed and the rain falling from the sky like a black curtain, often
accompanied by violent lightening. I was in Datong several times when it received
some 70 mm of precipitation per hour. In Japan, “guerrilla rain” is a phrase used
to describe the summertime downpours that have become more frequent in recent
years; it is also a perfect description for the violent deluges of Datong.
Over the course of its long history,
the Huangtu Plateau has lost its
woodlands and forests, so the rain
now beats down on the naked earth,unprotected by vegetation. The rainwater quickly washes away, often taking the topsoil with it. The loess soil isbasically silt, made up of tiny grainsthat have a particle diameter of between 0.004 mm and 0.06 mm. When
it is dry, it bakes hard so that you canbarely break it with a shovel. Once decompacted, though, it splinters into finewisps of powder-like sand, easily carried away on the wind. And the slightest
amount of water is enough to turn it into a greasy, liquid slick.
Good farm soil does not appear out of the blue but is the result of hard workby many generations of farmers to make it fertile. Producing a centimeter of farmsoil is said to take more than a hundred years. When the earth is washed away year
after year, the quality of the soil deteriorates, and its capacity to support crops andother vegetation is lost. This is the process of desertification that has led to the
Huangtu Plateau we see today. Ironically, rainwater is a chief culprit behind therapid desertification here in recent years.
“Fields of the Three Runaways”
A true picture of this process is hard to grasp from a simple description. According
to figures released by the Chinese government, more than 1.6 billion tons of earth
flows into the Yellow River from the Huangtu Plateau every year. To illustrate just
how much this is, I often ask people to guess how long a levee—measuring 1 meterhigh and 1 meter wide—one could build with this volume of soil. The choices I give
are that it would be enough to circle the Earth at the equator 0.5 times, once, 3times, 5 times, 10 times, and 30 times.
Generally, less than 1 in 10 is able to guess correctly. Based on a soil density of101

Views on China
1.4 grams per cubic centimeter, the levee would measure 1.14 million kilometers,
which is 30 times the Earth’s circumference. This is the amount of soil that is carried away by the Yellow River each year.
Local people describe the seriousness of the erosion with a phrasethat translates roughly as “fields ofthe three runaways,” referring to theway in which the water, earth, andfertilizer escape from the fields every
time it rains. In areas where steep
hillsides are common and there is
only a shallow level of topsoil, farmers grow their crops in fields thatslope at an angle. Visitors are always
astonished by the sight of these sloping fields and ask, “Why would anyone growcrops in a place like this?”Dazhai, which became famous as a result of Mao Zedong’s 1963 directive forthe nation’s farmers to learn from this village’s example, is 270 km south of Datongin Shanxi Province. The problem of water erosion was particularly severe here, andto reduce the damage, local people organized mind-boggling landscaping and irrigation projects to turn the sloping fields level by creating a remarkable concentration of terraced fields. This achievement was what led Mao to extol the region’s
farmers as a model of hard work and self-reliance.
I visited Dazhai three times
during the 1970s. Having grown up
in a poor farming family in Tottori
Prefecture, I could not help being
impressed by the evidence of diligence I saw there. Just like in Japan,
farmers in China have achieved
great things through hard work. Buta friend who visited Dazhai ataround the same time remarked tome that he did not hear a single bird
singing while he was there. The reason, he realized, was because hardly any trees
or forests were left in Dazhai.
The fact is that the summer rains are only half the reason for the rapid pace ofdesertification; the rest is due to human activity. The biggest factor in the deforesta102

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tion of the Huangtu Plateau is overcultivation, with farmers plowing fields everywhere they could find space—including steep mountainsides.
Grazing sheep and goats are another problem. The damage is most serious inearly spring, when goats, desperate for something to eat, tear up the grass by theroots with their front legs because there is no greenery left. People working in afforestation projects say that if 100 people plant trees, 100 goats will soon comealong to eat them all up—even on steep, rocky slopes. The government is working
hard to minimize damage by restricting grazing, but since the income from pastureanimals, albeit small, is significant to farmers in the poorer villages, it has provenimpossible to eradicate this style of farming entirely.
Some trees have also been cut
down by local people for fuel. Datong is one of the most importantcoal-producing areas in China, andfor many years coal was the main
fuel used in the farming villages. But
the rise in crude oil prices has
sharply pushed up the price of coalas well; what was 60 yuan a ton in2000 rose to 850 yuan in 2008 andis now more than 1,000 yuan. Thishas put coal out of the reach for many farmers. Instead, they burn the stalks andcobs of corn and sunflowers and the straw made from millet and similar plantmaterials; increasing numbers have also turned to the mountains to make up forany shortage.
Lingering Preference for Sons
The tendency is for farmers in poorer villages to have more children, perhaps dueto the pressure to continue having children until a boy is born. There are fewer
farmers in mountain and hillside villages, and they need to look after larger plots,
since poor water and soil conditions result in low yields. It is not possible to keep
large animals like horses, cows, donkeys, or mules in these villages, so farmers musttill the land with their own hands. Until recently, it was also necessary to travel long
distances to fetch water, and men were thus needed to do the heavy work. Despite
slogans reminding people that daughters are just as important as sons and are capable of carrying on the family farm, the preference for boys has persisted owing
to the need for male workers.
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I should add, though, that as people’s income has increased, they have becomeless particular about having sons, even in the farming villages. Parents commentthat daughters who marry into afamily in another village will comehome from time to time, often bringing food and money, while sonsrarely look after them after marrying. And people tend to have fewer
children as school attendance becomes a normal part of life, even
without government restrictions on
the number of children.
One of the first experts to be dispatched to Datong by the Green Earth Network, in August 1994, was Hisayuki
Maenaka (now representative director), who unlike most other experts—who
worked either in the tropics or within Japan—specialized in the Inner Mongolia
Autonomous Region and other arid areas of China. He pointed out that althoughnatural conditions are much harsher in Inner Mongolia, both the villages and farmers are much poorer in Datong, shedding light on important but often overlooked
links between population and land use that give rise to a vicious circle of environmental degradation and rural poverty.
Today, major changes are underway in these villages. Younger people havemigrated to the cities to find work, leaving only old people and children in thevillage. After a while, the children also disappeared, and the only ones remaining
in the mountains today are the elderly.
Change also resulted from the policies promoted under Premier Zhu Rongji toencourage farmers to abandon their fields on steep hillsides and other places notconducive to farming and to allow these areas to return to woodland. This “backto greenery” policy was a bold attempt to reverse the long history of single-minded
expansion of arable land. In actual implementation, there was a tendency for projects (and money) to be concentrated in villages with the best farming and economic
conditions, sometimes resulting in strange sights of high-quality, roadside farm
fields being covered by pines and poplars. But there is no denying that rural villages
have become greener and that the environment has improved.
In December 2008 Datong was hit by a severe cold spell that made it impossible for us to continue our work in the mountains. I took this opportunity to travel
to Dazhai, where I saw major changes since my last visit. The Hutou Hills, one ofthe places where the symbolic terraced fields had been hewn out of the mountain104

Views on China
side, had been turned into a forested park. Work had begun on the park in 1992,
seven years before the government’s reforestation policy began on a trial basis andthe same year that we began our regreening efforts in Datong. Just as human activity can destroy the environment, people also have the power to undo the damage
and return the environment to something close to its original condition.

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Nippon Foundation Fund for Japanese Language Education ProgramFebruary 05, 2015

The World’s Southernmost “Koisuru Fortune
Cookie Project”
Naomi Collins

Japanese language is the third most popular foreign language in New Zealand, after Frenchand Spanish. According to the Japan Foundation Survey Report on Japanese Language Education Abroad 2012, conducted in New Zealand on behalf of the Japan Foundation by
Massey University’s Naomi Collins, there were some 30,000 learners of Japanese in New
Zealand in 2012, approximately 0.7% of the population. The following report by Collins,
who is also coordinator of the Sasakawa Fellowship Fund for Japanese Language Education (Sffjle) —as NF-JLEP is called in New Zealand—is based on an account of the Koisuru
Fortune Cookie Project, originally written by Masayosi Ogino, lecturer at the University ofCanterbury, and Akiko Harada, senior expert in the Japanese language at the Japan Foundation. Sffjle implements various programs to encourage Japanese language education at alllevels, such as by offering scholarships for university students and a range of support projects
for school teachers. The video referred to below has been viewed over 12,000 times as ofFebruary 2015.
*

*

*

M

any companies and municipalities have been producing dance videos
based on AKB48’s massive hit song “Koisuru Fortune Cookie” (Fortune Cookie in Love, also known as “Koitune”), and several of thesevideos have already been made by Japanese language learners overseas. However,
it is noteworthy that our New Zealand “Koitune” video was created by high school
and university students studying Japanese in Christchurch, along with their Japanese language teachers. This included 270 people dancing together in a large university lecture theater. Please take a look at our “Koitune” video—it’s the world’s
southernmost version! [https://www.youtube.com/watch?v=CQE8kGwWsv8]
Naomi Collins   Coordinator, Sasakawa Fellowship Fund for Japanese Language Education and the Ryoichi Sasakawa Young Leaders Fellowship Fund, Massey University, New
Zealand.
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Nippon Foundation Fund for Japanese Language Education Program
One-Day Workshop at the University of Canterbury
New Zealand has a population of approximately 4.5 million people, but it
is a country where Japanese language
learning has thrived, as it ranks eleventh in the world in terms of Japanese
language learner numbers (based on
the Japan Foundation’s 2012 data).
However, in recent years the numberof Japanese language learners in New
Zealand has begun to decline, and, ac- Canterbury University and Christchurch high school
students work together at the workshop.
cording to statistics from a research
report commissioned by Sffjle (NZ),“Japanese Language Education in New Zealand: An Evaluative Literature Reviewof the Decline in Students Since 2005,” and the NZ Ministry of Education’s “Education Counts,” the figure has now fallen to 45% of the peak it reached in 1996.
Maintaining learner numbers is proving difficult in Christchurch in particular,
partly as a result of the population exodus that occurred following the devastating2011 earthquake.
The Sffjle research report notes that cooperation between high schools and also
between high schools and universities is important for maintaining the number oflearners and further enhancing the quality of language learning. With that in mind,
and with the invaluable financial support of the Sffjle Program through its language camps, speech contests, and immersion days grants program, the Japanese
language teaching staff at the University of Canterbury and high schools in Christchurch cooperated to carry out a “One-Day Japanese Workshop” for high school
students studying Japanese. The “Koitune Project” was planned as a part of thisworkshop with the goal of encouraging learners to study together beyond theclassroom and to deepen their interest in popular Japanese culture. But it developed
a life of its own.
Completing the “Koitune Project”
We started this project by asking each high school to shoot and submit a “Koitune”
video before the One-Day Japanese Workshop. Then we filmed all the participants
dancing together on the day of the workshop, and finally we edited this and theindividual school versions together to create the final version. Many students had
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Nippon Foundation Fund for Japanese Language Education Program
never heard of AKB48 or “Koitune” despite the widespread popularity of Japanese
pop culture, such as the manga One Piece and Shingeki no Kyojin (Attack on Titan). We therefore had some concerns
about whether everyone would engage in the project enthusiasticallyand whether there would be enoughtime for everyone to memorize thedance. Nevertheless, even those students who were not initially inspiredby the idea started to enjoy dancing
together after a few practice runs, andkeener students even undertook special training on their own ahead of the High school students in Christchurch practice theirmoves for the “Koitune” video.
video shoots.
Finally, the day of the workshop
arrived. After splitting up into smaller groups for Japanese lessons, all the highschool students gathered in a large lecture theater for the final session. They werejoined by 23 university students who had joined their language lessons during the
day as mentors and teaching assistants, so the total number of “Koitune” dancers
swelled to 270.
For many high school students, this was the first time they had been inside alarge university lecture hall, and dancing in such a space was certainly a new experience for them as well. They all joined in the “Koitune” dance together, irrespectiveof their school, year, or level of Japanese proficiency. It was at this momentthat they got a real sense of being partof a larger community of Japanese
language learners.
Our “Koitune Project” may haveended, but the video symbolizing cooperation between Christchurch-area
tertiary and high school Japanese language teachers and learners remains.
Christchurch high school students interacting with the
In this video you can see our aspiraguest speaker.
tions toward the potential for invigorating and developing Japanese language learning in New Zealand.
We have all been inspired by the spontaneous smiles, the sincerity of the danc108

Nippon Foundation Fund for Japanese Language Education Program
ers’ efforts, the sense of belonging, and the many valuable instances of collaboration that arose out of this project. It has also inspired us to do our utmost to further
develop Japanese language education in New Zealand.

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International Affairs
January 26, 2015

A New Direction for America’s Cuba Policy
Paul J. Saunders

US-Cuba ties took a major step forward with the announcement that the two countries
would normalize relations. While the move was widely accepted by the US public, Paul
Saunders believes that domestic politics may create obstacles in the short run.
*

*

*

T

he Obama administration’s dramatic announcement that the United States
will normalize relations with Cuba, establish an embassy in Havana, andloosen a variety of trade, financial and travel restrictions establishes a fundamentally new direction for US policy toward one of its closest neighbors.
Nevertheless, despite majority public support for the moves—and widespread
popular acceptance that the five-decade US effort to isolate Cuba has failed—following through will not be easy. Indeed, with presidential elections looming in2016 and broad political challenges facing an administration many see as weak,domestic politics may create significant obstacles in the short term. Over time,
however, the prospects for a better US-Cuba relationship may improve.
Only the First Step
The most significant elements of the administration’s new policy are plans to open
a US Embassy in Cuba and to review the US designation of Cuba as a state sponsor
of terrorism, as well as moves to ease travel regulations and trade rules (which tookeffect on January 16, 2015). The administration has so far had nothing to say
about Cuban-Americans’ property rights—an issue of great importance to many
who fled the Cuban Revolution—and have suggested that the status of the US naval base at Guantanamo Bay is not on the table.

Paul J. Saunders   Executive Director, Center for the National Interest (Washington,
DC).
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International Affairs
Notwithstanding the symbolic impact (and practical convenience for diplomats) of normalizing relations, it is the first step in building a new relationship with
Cuba, not the last one. Likewise, loosening regulations governing travel and commerce can only do so much within the limits of current US law. From this perspective, removing the terrorism designation—which requires a review process that theWhite House has said should take no longer than six months—may be the mostimportant step, in that it would actually end certain sanctions. But many more willremain in effect.
Of course, the biggest problem in going any further is the Republican Congress.
Lifting the embargo on Cuba will require passing legislation to undo multiple
rounds of sanctions, something toward which Senate and House Republicans presently seem disinclined. Likewise, sending a US Ambassador to Havana will requirea Senate confirmation vote. Neither will be simple—or happen soon. (Either orboth of these tasks may well fall to Obama’s successor, if he or she wants to do it.)
Senate action in particular could falter if any one of the body’s three Cuban-American Senators decided to block it.
History is a useful reminder of the obstacles. In an interesting coincidence, aRepublican Congress passed the last major sanctions legislation (the Cuban Liberty
and Democratic Solidarity Act of 1996) during a Democratic administration. Many
Democrats supported the bill, though with House Republicans theoretically able
to pass it without any Democratic support and the 1996 elections approaching,some may have done so to avoid paying a price during the campaign for casting avote that would not affect the outcome. Still, since this was the last big vote on
Cuba, the vote totals may be useful to review: 74-24 favoring tighter sanctions in
the Senate, and 294-130 in the House of Representatives. Republicans today actually have larger majorities in both chambers.
No Longer a Threat?
Still, public opinion has evolved substantially since that time. According to a January 2015 poll by the Pew Research Center, 63% of Americans now support normalizing diplomatic relations with Cuba and 66% support ending the embargo,
despite the fact that only 32% think that Cuba will become more democratic afterward. [www.people-press.org/2015/01/16/most-support-stronger-u-s-ties-withcuba/]
Notably, a CNN/Opinion Research poll found that between 1997 and 2014
the share of Americans who considered Cuba a “very serious” threat fell by morethan half, while the number saying that it is “not a threat” nearly doubled. A com111

International Affairs
bined total of 72% believe that Cuba is “not a threat” or only a “slight threat.” In
contrast, the same poll found that about 70% of Americans see Iran, North Korea
and Russia as “moderately serious” or “very serious” threats. [www.washingtonpost.com/blogs/the-fix/wp/2014/12/18/whos-afraid-of-cuba-almost-nobodyanymore/]
No less significantly, an early 2014 Florida International University poll shows
similar (and somewhat larger) majorities favoring normalization and an end totravel restrictions. [https://cri.fiu.edu/research/cuba-poll/2014-fiu-cuba-poll.pdf] A
narrow majority of 52% oppose continuing the embargo—but some 63% believethat Cuba should remain on the terrorism list. Younger respondents and those whoarrived in the United States since 1995 tend to support an opening to Cuba, whileolder people and those who fled the island earlier are more skeptical.
Taking all of this into account, the administration’s clear intent to move forward slowly with further changes is probably wise. Unless something unexpected
happens, public opinion will probably continue to support greater engagement.
Likewise, if the process shows slow but steady progress, its opponents may findthemselves in a weaker position in the future.
At the same time, former Cuban leader Fidel Castro and current leader Raul
Castro will not get any younger. Eventual leadership changes in Cuba might contribute to a more favorable domestic political environment in the United States byremoving these two highly visible symbols of the past. That said, if Senator Marco
Rubio (or Senator Ted Cruz) wins the presidency in 2016, outreach to Havana
might stop abruptly.
The Obama administration is unlikely to complete its effort to change US policy toward Cuba before the president’s term ends, but his successor will have important new options.

112

Voices from the Sylff Community
February 5, 2015

Arbitration in Europe
Article 2 of the European Convention on International Commercial
Arbitration
Nērika LizinskaNērika Lizinska, a Sylff fellow at the University of Latvia, used her Sylff Research Abroad(SRA) award to research state participation in international commercial arbitration in
2014. She conducted her research at the Swiss Institute of Comparative Law. It was in
Switzerland that the European Convention on International Commercial Arbitration—
which plays a significant role on this issue—was signed. A summary of her research regarding Article 2 of the convention is presented below.
***

Introduction
Everything starts with an idea. Parties then enter into a commercial contract withthe hope of profiting from it in an optimistic frame of mind. At this stage, unfortunately, not all parties think that a dispute might someday arise and that a mechanism would be needed to resolve it. However, international trade and commercial
transactions are specific and linked to particular legal systems (which laws are tobe applied and which court will hear the case, etc.), that need to be agreed upon
between the parties in any contract.
Businesses mainly choose arbitration (arbitration is the “settlement of a disputeby the decision of a person or persons chosen and accepted as judges”)1 as a mechanism for dispute resolution, instead of litigation (litigation is “a formal process
whereby claims are taken through court and conducted in public. Judgements are

Nērika Lizinska   Sylff fellow, 2012, University of Latvia (Riga). Is currently a PhD
student at the University of Latvia.
1

A.S. Hornby & Ruse, Oxford ESL Dictionary, Oxford University Press, 1997, p. 30.
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Voices from the Sylff Community
binding on the parties subject to rights of appeal”2) due to its neutrality (parties
can choose the seat of arbitration), flexibility (“parties may control the manner ofthe proceedings having regard to the nature of the dispute and to their precise
needs”),3 finality (there is no appeal), confidentiality, and speed of resolution. “Parties in cross-border disputes may be unfamiliar with the complicated procedure of
litigation and the language of the national court. . . . [M]ost businesses want aquick and efficient remedy and are reluctant to wait for an extended period fortheir disputes to be resolved through national courts.”4
Nowadays, it is internationally accepted that a state, too, can conclude international commercial contracts with a private party (for example, to purchasegoods) and can choose arbitration as a dispute resolution mechanism by adding an
arbitration clause in a commercial contract. This means that in the case a disputethat cannot be otherwise resolved between the parties (for example, by negotiation
or mediation, which “is essentially a negotiation facilitated by a neutral third party”),5 a claimant can seek arbitration.6 Although a state can act like a private party
and has similar rights, there are plenty of issues and risks for contracting parties.
The main risk is that when a state becomes a contractual party, dispute resolution
can take a considerably different course from general procedures. This is why the
inclusion of an arbitration clause for a commercial party in such agreements has
become a precondition for concluding a commercial contract with the state. The
state, too, has many considerations in this regard.
History and Application
At the international level, a document governing the capacity of states to conclude
arbitration agreements is the European Convention on International Commercial

Peter Fenn, Commercial Conflict Management and Dispute Resolution, Spon Press, 2012,p. 12.
3
Ibid, p. 89.
4
Sameer Sattar, “National Courts and International Arbitration: A Double-edged Sword?”
Journal of International Arbitration, 27 (1), Kluwer Law International, 2010, pp. 51-52.
5
What is mediation? Detailed information available at http://adr.findlaw.com/mediation/
what-is-mediation-.html.
6State participation in international arbitration can be analyzed from various aspects, forexample, whether arbitration as a dispute resolution mechanism is suitable for state contracts in general, is it possible to properly protect state interests in arbitration, and whether
an arbitration clause in a state contract automatically implies a waiver of state immunityfrom jurisdiction and enforcement, etc.
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Voices from the Sylff Community
Arbitration7 (hereinafter called the European Convention), signed on April 21,
1961, in Geneva at a meeting convened by United Nations Economic Commission
for Europe. More than 30 countries are currently party to the European Convention, including Cuba, Burkina Faso, the Russian Federation, and Turkey,8 whichbecame contracting parties in accordance with the provisions of Article 10 (1) and(2) of the European Convention.
Provisions regarding the application of the European Convention are stated in
Article 1 (1), according to which “this Convention shall apply: (a) to arbitrationagreements9 concluded for the purpose of settling disputes arising from international trade between physical or legal persons having, when concluding the agreement, their habitual place of residence or their seat in different Contracting States;(b) to arbitral procedures and awards based on agreements referred to in paragraph 1 (a) above.” This means that if arbitration agreements concluded for the
purpose of settling disputes arising from international trade between physical or
legal persons having, when concluding the agreement, their habitual place of residence or their seat in countries that are not contracting states—such as the United
Kingdom, the Netherlands, and Switzerland—the European Convention will not
apply.
Historically, “the intention of the European Convention was to introduce thefirst uniform set of rules concerning international arbitration in order to remove
the obstacles created by widely differing national arbitration laws. With its scopefocusing on Europe, the aim was to facilitate and promote European trade between
the (back then) Eastern and Western block.”10 “When the European Convention
European Convention on International Commercial Arbitration, available at https://treaties.un.org/pages/ViewDetails.aspx?src=TREATY&mtdsg_no=XXII-2&chapter=22&lang=en.
8
Full list of contracting states available at https://treaties.un.org/pages/ViewDetails.aspx?src=TREATY&mtdsg_no=XXII-2&chapter=22&lang=en.
9
Article 1 (2) of the European Convention gives the following definitions: (a) the term“arbitration agreement” shall mean either an arbitral clause in a contract or an arbitrationagreement being signed by the parties, or contained in an exchange of letters, telegrams, orin a communication by teleprinter and, in relations between States whose laws do not require that an arbitration agreement be made in writing, any arbitration agreement concluded in the form authorized by these laws; (b) as the term “arbitration” shall mean not
only settlement by arbitrators appointed for each case (ad hoc arbitration) but also bypermanent arbitral institutions; (c) the term “seat” shall mean the place of the situation of
the establishment that has made the arbitration agreement.
10
Alice Fremuth-Wolf, “Issues Specific to Arbitration in Europe: The European Convention
on International Arbitration as a Tool to Remedy Pathological Arbitration Agreements—
There’s Still Life in the Old Dog Yet!” in Chapter 1 of C. Klausegger, P. Klein, et.al. (eds.),
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Voices from the Sylff Community
was signed, . . . Europe was still dominated by the East-West conflict. The different
political and economic systems made trade between parties coming from the two
blocks very difficult. Each side had little confidence in the courts of the other sidewith the consequence arbitration was often the only option for dispute settlement
acceptable to all parties. . . . The main purpose of the European Convention was toovercome these psychological barriers and the legal problems which were affecting
arbitration in the East-West trade in Europe.”11 In addition, it should be noted that“in certain countries that were to become Contracting States of the European Convention, public corporate bodies were not allowed to enter into arbitration agreements. This led the draftsmen of the European Convention to include Article 2(1).”12
Right of States to Resort to Arbitration
With regard to the historical circumstances, Article 2 (1) of the European Convention states as follows: “. . . legal persons considered by the law which is applicableto them as ‘legal persons of public law’ have the right to conclude valid arbitrationagreements.” The term “legal persons of public law” is used here instead of “state”
in order to cover a broader scope of state institutions, such as state agencies, public entities, and governmental institutions.
There have often been cases in which the state argues that in accordance withits domestic laws, it is not entitled (lack of capacity issue) to enter into an arbitration agreement, thus an agreement, even if legally concluded, does not have legal
force. There have also been cases where a state party concludes an agreement but
then relies on its national (internal) law to prove that a contract is null and void,
as its national law prohibits resorting to arbitration. For example, Article 2060 of
the Civil Code of France prohibits French state public bodies and institutions fromconcluding arbitration agreements.13 Article 487 of the Latvian Civil Procedure
Austrian Yearbook on International Arbitration 2013, pp. 60–61.
11
Stefan Michael Kroll, “Issues Specific to Arbitration in Europe: The European Convention on International Commercial Arbitration—The Tale of a Sleeping Beauty,” in Chapter
1 of C. Klausegger, P.Klein, et al. (eds.), Austrian Yearbook on International Arbitration2013, p. 3.
12
Nikolaus Pitkowitz, “Issues Specific to Arbitration in Europe: Is There Still a Scope ofApplication of the European Convention on International Commercial Arbitration?” In
Chapter 1 of C. Klausegger, P. Klein, et.al. (eds.), Austrian Yearbook on International Arbitration 2013, p. 106.
13
Article 2060 of the Civil Code of France, Title XVI of Arbitration Agreements, states,“One may not enter into arbitration agreements in matters of status and capacity of the116

Voices from the Sylff Community
Law states, “any civil dispute may be referred for resolution to an arbitration court,with the exception of a dispute: . . . 2) in which a party, albeit even one, is a Stateor local government institution or the award of the arbitration court may affect therights of State or local government institutions.”14 In Hungary, Act CXCVI of 2011
on National Assets, which came into force on January 1, 2012, states in Article 17(3) that “in civil law agreements concerning national assets located on the territoryof Hungary, the governing language may only be Hungarian, the governing law
may only be Hungarian and the jurisdiction for the settlement of disputes may only
be that of the Hungarian state courts.”15 At the same time, for example, Article 177(2) of the Swiss Private International Act contains advanced regulation stating, “ifa party to the arbitration agreement is a state, a stateheld enterprise or a state
owned organization, it cannot rely on its own law in order to contest its capacity
to be a party to an arbitration or the arbitrability of a dispute covered by the arbitration agreement.”16
Belgium also has special regulations.17 In fact, Belgium was involved in one of
the first cases18 in which the court had to decide whether a state can invoke its
domestic laws to avoid arbitral jurisdiction. “Benteler v. Belgium provides further
authority for the proposition that a commercial arbitration between a [s]tate anda private party cannot be avoided simply by the [s]tate’s invoking a prohibition in
its own law against arbitration by the [s]tate.”19 After this ad hoc decision, Belgium
chose to use its rights provided in Article 2 (2) of the European Convention.

persons, in those relating to divorce and judicial separation or on controversies concerning
public bodies and institutions and more generally in all matters in which public policy isconcerned, (Act no 75-596 of 9 July 1975), however, categories of public institutions of anindustrial or commercial character may be authorized by decree to enter into arbitrationagreements,” available at http://www.legifrance.gouv.fr/Traductions/en-English/Legifrance-translations.
14
Latvian Civil Procedure Law, Civilprocesa likums. 14th edition. Rīga: TNA, 2010.
15
Gabor Bardos, “The Award and the Courts, Hungary: New Rules on Arbitration Related
to National Assets” in Chapter 4 of C.Klausegger, P.Klein, et al. (eds), Austrian Yearbook
on International Arbitration 2013, p. 181.
16
Swiss Private International Law Act available at https://www.swissarbitration.org/sa/en/
rules.php.
17
See Article 1676.2 of Belgium Code Judiciaire, May 19, 1998, available at http://www.jus.uio.no/lm/belgium.code.judicature.1998/1676.2.html.
18
Ad Hoc Award of November 18, 1983, Benteler v. Belgian State, Journal of International
Arbitration, 1984, pp.184–90.
19
Jan Paulsson, “May a State Invoke Its Internal Law to Repudiate Consent to International Commercial Arbitration? Reflections On the Benteler v. Belgium Preliminary Award,”
Arbitration International, Vol. 2, No. 2 (1986), p. 95.
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Declarations
Article 2 (2) of the European Convention stipulates, “On signing, ratifying or acceding to this Convention any State shall be entitled to declare that it limits theabove faculty to such conditions as may be stated in its declaration.” “The content
of Article II met strong opposition from Civil Law countries where public entities
are, generally, prohibited from resorting to arbitration. To accommodate theseStates, which otherwise would have not ratified the Convention, a second paragraph providing for the possibility of a reservation was added to Art. II.”20
One may say that to some extent the European Convention has reached theobjective set out in its Preamble,21 because at the present time only Belgium hassuch a declaration, as provided for in Article 2 (2). After the Benteler v. Belgium
case, Belgium stated that “in accordance with article II, paragraph 2, of the [European] Convention, the Belgian Government declares that in Belgium only the Statehas . . . the faculty to conclude arbitration agreements”22 to avoid similar cases in
the future.
When Latvia ratified the European Convention, it also made a declaration inaccordance with Article 2 (2). It stated that Latvian state and local government
authorities have no right to conclude arbitration agreements. At a time when there
were discussions and debates about the withdrawal of the declaration, one of thedraft laws stipulated that “local government authorities before concluding the arbitration agreement shall transmit a draft to the Ministry of Environmental Protection and Regional Development to obtain opinion from the State Chancellerythat the arbitration agreement is in conformity with the state interest.”23 Accordingly, if such a law were to be adopted, the State Chancellery would need to assess
whether the arbitration clause included in international commercial contracts (between a local authority and a private party) is consistent with the public interest.
Albert Jan Van Den Berg (general ed.), Yearbook Commercial Arbitration, Volume XX,
1995, Kluwer, p. 1017.
21
The Preamble of the European Convention states as follows: “. . . desirous of promoting
the development of European trade by, as far as possible, removing certain difficulties that
may impede the organization and operation of international commercial arbitration in
relations between physical or legal persons of different European countries, have agreed on
the following provisions.”
22
Declarations and reservations are available at https://treaties.un.org/pages/ViewDetails.aspx?src=TREATY&mtdsg_no=XXII-2&chapter=22&lang=en
23
Draft law available in Latvian, “Grozījums likumā ‘Par Eiropas konvenciju par Starptautisko komercšķīrējtiesu,’” available at http://titania.saeima.lv/LIVS11/saeimalivs11.nsf/0/
ED4CEB6E5CF3B1A5C22579A00044FB8C?.
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Voices from the Sylff Community
The questions this gave rise to were, what is the state interest (common good), how
to determine it, and is it possible only from the content of the arbitration agreement
to determine whether the state interest will be protected?
On December 23, 2013, Latvia notified the Secretary General of the United
Nations of its full withdrawal of the declaration under Article II (2), made upon
accession in 2003. Accordingly, these fundamental changes can be considered a
new page for Latvian state and local government authorities and practitioners torecord their experiences in the history of international commercial arbitration andfor scientific researchers to document new ideas and findings in the field of arbitration.

119