English summary drafted by SAIS.

JEF-SAIS Japan-US Forum 2019
The United States and Japan in a Globalizing World
Friday, May 17, 2019
Washington, D.C., USA
Summary of the Forum
Opening
Kazumasa Kusaka, Chairman and Chief Executive Office, Japan Economic
Foundation (JEF)
Kent E. Calder, Vice Dean for Faculty Affairs and International Research
Cooperation, Johns Hopkins University (SAIS)
Kent E. Calder: Introduced opening remarks. Discussed subtle changes in theinternational system including how technology is changing the global system.
Introduced Jim Shinn. Dr. Calder stated his belief that technology is beginningto change the meaning of geography, using examples of initiatives such as theBelt and Road Initiative and infrastructure changes in communication and what
it means for geography. This was then related to socioeconomic changes and therise of populism, including the implications of communications changes fornation states and the role of cities. It was related to how they all transform local
politics. Dr. Calder then introduced Kusaka-san and their common Princeton
connection. “Iconoclastic, likes an argument, and has things to say.”
Kazumasa Kusaka: Thanked Dr. Calder and speakers. Noted how the JEF had
convened forums among the experts in the US, Europe, and Asia since the 1980s
to discuss the common economic agenda. Last Japan-US Forum cohosted withSAIS was convened in September 2014. Recently the JEF has built a focus on

global risk and its solutions to discuss with a holistic approach beyond academic
disciplines, such as economics, politics, security and so on. Presented aconceptual note for discussions in the Forum. (The full text of his remarks is
attached.)

Session 1: Domestic and International Transformations
This session considered major looming uncertainties in global affairs, withspecial emphasis on political-military dimensions, but with some attention totheir economic antecedents. Issues considered detail would include tensions in
the Middle East, the Korean peninsula, and the energy sea lanes between
Northeast Asia and the Persian Gulf, as well as the geopolitical implications ofChina’s Belt and Road program.

Panel I: Emerging Geopolitical Risks
Moderator: Kent E. Calder, Vice Dean, Johns Hopkins University (SAIS)＜Speakers on U.S. Side＞
David Shear, McLarty Associates. Recent US Assistant Secretary of Defense for
East Asian and Pacific Affairs, as well as US Ambassador to Vietnam
Kent Calder: Introduced David Shear and discussed the value of discussing thebroader global future and as a repeat of some of the issues relating to the global
environment and global risk, as well as the implications of growth of countries
like India. Dr. Calder remarked on their common experienced at U.S. Embassy
Tokyo where David Shear was Minister Counselor for Political Affairs and his
SAIS education, where he earned an M.A.
David Shear: Introduced the four aspects of the geopolitical competition
between China and the United States. 1) Fighting hegemony with hegemony 2)Overlapping Chinese and American lines of defense in the Western Pacific. 3)
The struggle over allies and partners between the Chinese and the United States.
4) The maneuvering for position by small and medium powers within this overallgeopolitical conflict. One of America’s traditional grand strategies has been toprevent the emergence of a hegemon on either side of the Eurasian continent.

Touched on whether the U.S. should withdraw into insularism, or fighthegemony with hegemony— the struggle for allies and partners after the Obama
Asia-Pacific rebalancing. Touched on the importance of medium states ininternational affairs. America’s failure to maintain American hegemony has led
to China taking advantage of this hegemony. There are two lines of defense for
China. One is close to the Chinese coast, the other is further away. The Chinese
have sought to diminish American alliances. “You can buy Laos but you can only
rent Cambodia.” The U.S. can’t rely on the Philippines as a partner. Discussed
the ARIA and BUILD acts and the reapportionment of Asian military financing.
[There is a need] for the great powers not to get bent. Countries are networking
with like-minded potential partners. Japan has been taking the lead where theU.S. has declined to do so. The US has a long way to go before it’s an effective
partner in infrastructure finance. The BUILD Act is a good first step. What will
the region look like under US-China increased competition?
China will continue to extend its influence over Southeast Asia. Southeast Asiancurrencies are now moving in tandem with the yuan. Known as “stealthsigneurage.” There is a need to ensure ASEAN survives. Tensions between
militaries will increase on the water and in the air. It is up to Japan and US
partners to negotiate the rules with the Chinese. Steve Bannon has created a newversion of the Committee on the Present Danger.
Hal Brands, Henry A. Kissinger Distinguished Professor of Global Affairs at theJohns Hopkins School of Advanced International Studies (SAIS). Former Special
Assistant to the Secretary of Defense for Strategic Planning
Kent Calder: Introduced Hal Brands—his distinguished academic career and his
latest book The Lessons of Tragedy, the ideas that a sense of historical
understanding will allow nations to have a more sophisticated foreign policy.
Hal Brands: Introduced his nine points relating to the geopolitical risks, four key
features of the post-cold war era and five dominant shifts that are driving the
global politics and global risk today.
The post-Cold War world in his view was defined by four key phenomena.

1) Uncontested U.S. and Western primacy.
2) The 1990s democracy and free markets were spreading worldwide like neverbefore and there was just no credible global competitor like the capitalist
model.
3) The remarkable great power comity of the post-cold war era. The end of thecold war didn’t see a fragmenting of America’s alliances, it didn’t see aresurgence of German divisionism, Germany and Japan, these countries had
been closely tied to the United States. Discussed that great power rivalryhasn’t gone away, it’s just muted.
4) Multilateral cooperation relating to issues. The structure of international
politics was uniquely conducive to U.S. and allied interests after the cold
war.
Discussed change to multilateral cooperation in five ways.
1) The erosion of U.S. and western primacy.
2) The return of great power revisionism and rivalry. Discussed China’s
strategies for doing this through a range of military, economic, diplomatic,
and informational tools in the western Pacific and beyond. Discussed Russia
reasserting its lost influence.
3) Global ideological competition has returned. The spread of democracy has
stalled for a number of years now. The number of electoral democracies in
the world basically has stagnated, perhaps even contracted a bit since around2005. And in every year since 2006 more countries have experienced
declines in freedom than increases.
4) General intensification of global disorder.
Discussed the geopolitical conflict between the US and Russia in regards to
Syria.

5) Growing uncertainty about the willpower of the chief defenders of the postWorld War Two system.
Discussed that the crisis has deeper origins than many people often realize.
“There was always going to be a certain ennui with American globalism after thecold war, just because the threat that originally catalyzed that global agenda, theSoviet Union, has vanished. And that ennui temporarily retreated after 9/11 but
it returned with a vengeance after the wars in Iraq and Afghanistan.”
The supporters of the existing international order today have a pretty credibledefense of that order if they can get their act together. Stated that the question iswhether they will find the cohesion and resolve to do so.
Kent Calder: Introduced questions for the implications of new technology forthis new order? The implications of data localization and emerging technologies
for making global risks even more severe than they have in the past.
Q) What kind of global government framework should we have? What should
we discuss in this new global framework, will it be security focused, etc.
A) Hal Brands- Discussed the declining role of the G20, when it was created ata time when the major world economies were converging towards eachothereconomically but politically overtime as well. Discussed that in a best casescenario in the coming decades would be to strengthen cooperation in what
would have been called “the free world” during the cold war. Discussed
countries supporting the status quo of what was broadly aligned in the
Liberal International order. The worst case scenario is a decline ofcooperation which would see greater fragmentation to face the challenges
the system is now facing.
Q) Dr. Calder to Hal Brands- Does that mean the G7 is going to have more of arole in the future.
A) Hal Brands- Responded in the affirmative, you’re looking for reforms
characterized by democracies looking for a liberal international order.

Q) Stanley- Referencing the 2017 National Security Strategy, during theVietnam War there was a slogan “What if they gave a war, and nobody
came?” Asked about failing U.S. military recruitment objectives in light offrequent deployments. Asked about American willingness to join the armed
forces without a draft?
A) David Shear—Agreed with those points, and discussed civil-military
relations. Called for diplomatic and economic competition with other great
powers to take the same importance as military might. Hoped the U.S.
government would recognize recruitment weaknesses while also placing agreater reliance on diplomacy.
＜Speakers on Japan Side＞
Yoriko Kawaguchi, Visiting Professor, Musashino University, Distinguished
Fellow, the Tokyo Foundation for Policy Research; and former Minister for
Foreign Affairs, Japan
Introduction by Kent Calder—former foreign minister and environment
minister, distinguished career with METI, played an important role in climatechange negotiations. M.Phil from Yale and has a deep sense of international
affairs.
Yoriko Kawaguchi: Discussed increase of risks into the future and ways to deal
with risk. Stated that the core issue in risk reduction would be the easing of U.S.China tensions. “The inability of the international community to create a new
governance structure will have implications for future instability.” Discussed
U.S.-China trade statistics—China has to reduce their prices to compete, thus isaffected more. Discussed Implications—will China conscribe to WTO rules?
Brought up the point that the US has not called other countries’ cooperation. In
the meantime, the DPRK came to the table because sanctions worked. It worked
when China and Russia agreed. The U.S. is losing its ability to control events inother parts of the world. International as well as Chinese businesses will shift toother countries and regional industrial structure will change. Stated that she
doesn’t see a quick solution to the U.S.-China tension and doesn’t expect use offorce. The trade war has to do more with micro-economic policy and economic
reform; tariffs are only a part of solution. Also, two countries’ politicalphilosophies and implementation style may differ. The ultimate goal is that theinternational community doesn’t have one country imposing their rules, “this iswhat we need to achieve.”
How would they get out of this situation? Discussed the longtime frame, when
the world becomes multi-polar, not bi-polar. Kawaguchi-san presented forecastsof the OECD report on long run scenarios for the economy. India’s growth has
overtaken China. U.S. economic growth will catch up and go beyond economic
growth. Indonesia and other countries will be geared for this multipolar world.
One big issue: Even though India and China will have a greater GDPthanpresent developed countries, thier per capita income will still be lower.
Discussed the levels of wealth needed to maintain international governancesystems. Redistribution policies and fostering of human capita will be important.
Democratic countries need to cooperate to put our houses in order and toincrease development assistancePanel II: Domestic Transformations
Moderator: Naoyuki Haraoka, Executive Managing Director, JEF
This session considered first the technological changes implicit in the Fourth
Industrial Revolution, such as IoT, AI, and Big Data, together with anassessment of their political-economic implications. Particular emphasis would
be placed on the employment and income implications of these technicalchanges, especially the intensification of unemployment and income inequalitythat they imply, as well as the populist backlash. The political and economic
policy consequences of that backlash were also considered, including
implications for the impending 2020 Presidential elections in the United States.
＜Speakers on the U.S. Side＞
Yascha Mounk, SAIS/Johns Hopkins University; Formerly Lecturer on
Government, Harvard University; and Commentator, the Wall Street JournalNaoyuki Haraoka: Introduced Yascha Mounk along with his books Strangers in
My Own Country: A Jewish Family in Modern Germany and the People vs.
Democracy: Why Our Freedom is in Danger and How to Save it.
Yascha Mounk: Discussed the growth of populism in the United States and in its
domestic institutions. Three of the biggest democracies in the world—Brazil,
India just having elections right now, and the United States are ruled byauthoritarian populists.
Discussed the long-term causes of populism. 1) The stagnation of living
standards for ordinary citizens in developed democracies. 2) Rapid cultural anddemographic transformations in those countries. 3) The perceived decline ofstatus by certain segments of the population and their struggle to maintain theirstatus. 4) The rise of digital technology—which makes it much harder for
gatekeepers to keep control of the system. 5) Dissatisfaction by some with theirgovernment’s ability to develop, where they are afraid of the transformations
going on, feeling like they have less of a place in their country’s future.
Introduced the second point―a crisis of the America led alliance, and a crisis ofpredictability within the international system. Discussed the rise populist forces,
whether in Europe or in Asia, having ties with either Russia or China.
Discussed rising populist forces in Europe indifference to the United States andRussia and China on the other side. Many actively prefer Russia latter for two
reasons. A) because they emulate and aspire to their strongman leader systems
and B) in the case of Russia particularly, they actually admire the monoethnic
nature of that society and are deeply opposed to the multiethnic nature ofAmerican democracy.
Two closing points: 1) It is interesting that Japan has not so far seen the rise of
populism in the way that other countries have. One reason is that despite theeconomic stagnation the economic ascent is still within living memory, Japanesepeople are still better off than their grandparents were.

Discussed the choice Japan makes with immigration, whether it will choose
between abandoning its status as a monoethnic society or facing economic
stagnation.
Discussed rising populism. Populism endangers domestic politics. Viewed as aninsurgency. Brazil, India, and the U.S. are ruled by authoritarian populists.
People who set out to emulate Donald Trump in EU parliamentary elections.
The causes of populism: rapid demographic changes, economic stagnation, andthe rise of digital technology. The consequences: The age of ideologicaldominance of democracy is waning. The GDP of autocratic regimes rival theGDPs of democracy for the first time since the 19th century. There is a crisis of
the American alliance and a crisis of predictability. Countries are cozying up to
Russia or China. Populists admire the monoethnic nature of Russia. Nobody
knows which countries will contain Russia or China. It is interesting that Japan
has not so far seen the rise in populism. The Japanese ascent is still in living
memory. Immigration: if Japan is monoethnic there will be challenges ofdemographic decline. They face the choice of economic stagnation vs.
immigration. There has been the “populistification” of mainstream parties.
Daniel Bob, Senior Fellow, Reischauer Center, SAIS; and former Legislative
Assistant to Senator William Roth, Chairman, US Senate Finance Committee
Daniel Bob: Discussed the 4th industrial revolution and the technological impact
on politics. According to Bain & Company Report, tech will displace workers 2x
faster than the industrial revolution. Those hit hardest will be the low skilledworkers. Increasing business income will go to profits rather than wages.
Discussed economic inequality in this country. Of 36 OECD countries only
Mexico, Chile, and Turkey have greater income inequality than the U.S. The
percent of adults looking for work is the lowest in 30 years. Absence of work
generates despair. Half of unemployed in the U.S. take pain medication.
Trump’s coal mining jobs promise won’t happen due to technological change.
MAGA is a response to changes in the U.S. Cities have become the antithesis ofother parts of the country. The 2020 election will be won or lost in the industrial
Midwest—assuaging economic insecurity. Andrew Yang has encompassed the 4th

industrial revolution vote. “We need to wake up to the fact that it is not
immigrants, but technological change causing job and economic uncertainty forworkers.”
Discussed Joe Biden’s campaign promises focusing on rebuilding the American
middle class—guaranteeing education and training for all Americans. Discussed
Bernie Sanders questioning the tenets of capitalism. Elizabeth Warren isfocusing on recreating the middle class. Pete Buttigieg supports a wealth tax.
Worked with Drucker Institute to address income inequality. The economic
insecurities of Americans has called for greater equality of opportunity. Trump
blames immigrants and stokes racial divisions in the U.S. The negative economic
impacts of the 4th industrial revolution can be mitigated. Social change won’t end
and the backlash won’t abate. Immigration will continue due to climate change.
According to the OECD, there will be 140 million people climate change
refugees by 2040. The economic impacts can be mitigated by policy.
＜Speaker on Japan Side＞
Naoyuki Yoshino, Dean, Asian Development Bank Institute; and Professor
Emeritus, Keio University
Naoyuki Yoshino: Thanked those in attendance—noted his Johns Hopkins
connection through him being an alumnus of Johns Hopkins University.
Introduced two points he would discuss. Japan’s economy, specifically focusing
on why Japan has been stagnant. And Chinese influence in many Asian countries
from the financial side. Many outsiders from Japan said “Japan’s monetary policy
is not enough. That’s why Japan has stagnated for so many years.” And this isafter Mr. Kuroda came into power. Discussed the monetary base suddenly
increasing and Mr. Kuroda’s actions with increasing the money supply. The
Japanese money supply now is the same size as Japanese GDP. No other country
has done this kind of huge increase in the money supply except during wartime.
So that is what is happening in Japan. But Japan has not recovered. It is not
because of monetary policy, it is because of demographics.

And then Mr. Kuroda wanted to introduce negative interest. *Showed chart

displaying the central markets purchasing large amounts of government bonds.*
The purchasing of government bonds has softened the debt situation and thatwill allow the politicians to continue printing money and issuing government
bonds.
Discussed Chinese financial influence in Asia and Japanese economic stagnation.
Japanese monetary supply (=Base money) is about the same amount of GDP.
Aging population in the economy. When the population is young, the multipliereffect is larger. Solution should make people as long as possible rather thanretiring at the age of 60 or 65 by introducing productivity based wage rate rather
than seniority wage rate. Extremely speaking if most of the people can work aslong as possible, pension expenditures and social welfare expanses will drasticallydecline which reduces budget deficits of Japan significantly. If current
retirement age remains, the tax burden of working generation will keep on rising
as population is expected to be much older. Young generations cannot consume
much since their disposal income falls. China is exceeding Japanese traderelations in many Asian countries. Increased regional and global integration
creates a co-movement of Asian exchange rate with Chinese RMB. Yoshino-san
then discussed how the BRI will create economic spillovers for the region andthe role of Chinese exchange rate policy. China would better to open its capital
flows and make its exchange rate gradually based on market conditions.
Otherwise, many Chinese have to put their money only in Chinese market which
may increase property values by making over heated investment in housing andreal estate market.
Q) Kent Calder: Yascha Mounk was stressing that Japan is an anomaly, Japan is
an unusual case that populism hasn’t risen in the way that is more or lesseverywhere else in the industrialized world. So the question is what is
impact of the economic forces in the transformation of Japan and so on. Is
this going to stimulate an emergence of populism in Japan or because of theaging phenomenon, or is Japan going to be immune from populism in the
future?

For Yascha Mounk—Is Japan an anomaly where populism hasn’t risen?
A) Yascha Mounk— I would like to first see an answer from someone who
knows Japan better than I do.
Daniel Bob: Well I think the immigration aspect of this is pretty important so it
may be evident simply that immigration is a more important factor in driving
some of these trends towards authoritarianism and Japan has extremely low
levels of immigration and that’s not going to change. So perhaps its one of thethings is immigration, technological change is also a driver in this trend towards
authoritarianism and populism.
Naoyuki Yoshino: Immigration will not solve the aging crisis. If immigration is
opened, many of the immigrants will be coming from China. Japanese language
is not easy to understand since Japan uses Chinese character. It would be betterto utilize elderly people by using robots and other technological equipment.
Elderly people if they do not work will rely on pensions and social welfares which
will keep on creating budget deficits. Working population has to support elderly
people by paying higher tax if they retire as early as we are now. Immigrant
workers will oppose to pay high tax to support retired Japanese and politicalinstability may be created. Finding the way for old people could work as long as
possible would be the solution to tackle with aging population of Japan.
Yascha Mounk: I’d like to think out loud for a moment to make a response to acouple of those points. In the United States and in Britain to some extent we’reused to the idea that it is older voters who tend to vote for these populist parties.
That’s not true everywhere, it’s less true in Italy and Germany and some of thoseplaces, but it still tends to be the case in many countries. So I guess one questionis, why is it that older voters in the United States--who have reason to be risk
averse, just as older people in Japan do—are not flocking to forms of populist
politics. And I think part of the reason is that its easier to flock to a form of
populist politics when the vehicle for it is a traditional political party. And so forthat reason and other structural reasons about the Japanese political system,
perhaps we’re less likely to see the rise of far-right political parties, but we maysee the politics of resentment on behalf of older people start to take over the
Democratic Party.
Now I don’t know what form that resentment would take. I do think that
immigration is one of the things that drives resentment among older white votersin the United States for example. But you can certainly see alternatives to it, so
in a country like Brazil, which doesn’t have strong immigration, it is broadersocial and cultural changes that drive a lot of voters to vote for somebody like
Bolsonaro.
And certainly I think there does seem to be from a distance a pretty significant
generational divide on cultural issues like gay rights or broader social questions.
And I wonder whether the younger generation is really trying to change Japan inthose ways, older voters may feel resentful against that and you could have not somuch immigration based but other cultural changes based reactionary politics
against it.
Yoriko Kawaguchi: Discussed the implications and factors of the Imperial family
to the political movements in Japan cited by Yascha Mounk.
Yascha Mounk: Discussed demand side vs supply side of populism. Economic
stagnation deprives political parties of trust. It is now easier to start neworganizations—it’s easy to put up organizations in a much faster way. This has
driven the rise of populism. We’re in a situation where we don’t understandwhat’s happening. Trump’s election means that more populists will try. Thereare certain supply side obstacles that have been removed from populist
groupings. There is a vacuum in the Democratic Party. The ruling party in Japan
has a very wide specter. Japan was the pioneer in laptop computers, but was thelast to use it.
Daniel Bob: Discussed Steve Bannon’s trip to Japan, where Bannon lauded Abe
as the “first” populist. Discussed how economic stance was the basis of party
affiliation before. “Now it’s based on cultural factors.”

Kent Calder: Discussed the undertone of populism in Japanese politics in
response to communism and the appeals against entrenched interests.
Stanley Kober: Discussed the impacts of Identity relating to cultural experienceis a part of populism, the issue of identity relating to the historical experiencee.g. Germany’s culture of sorrow.
Yascha Mounk: There is a divide in the U.S. where there is an atonement ofslavery or a “that’s history” mentality versus identifying the issues as still being
alive. Japan never engaged in memory politics after the war.

Session 2: Toward Stronger, Rule-Based Globalization
This session, building on the findings of the previous panel, focused onprospects for constructing a rule-based system for ordering world economic
affairs, which is at the same time sensitive to emerging political-economic
realities in key nations, including the United States and Japan. Special attention
would be given to how intellectual property could be protected, and to how the
US-Japan-China relationship could be stabilized.
Moderator: Joshua White, Associate Professor, SAIS/Johns Hopkins University;and former Director for South Asian Affairs, US National Security Council
Introduced the discussion as prospects for a rules-based order for economic
affairs. Labeled topics as Trump’s disruption of the global order its connection
to new U.S. national security strategy and the bureaucratic power centers within
the U.S. government in shaping broader U.S. policy towards key countries andthe growth of USTR. Asked for a discussion of the impact that Trump had hadon the global trade order and why.
Discussed the implications of New Zealand’s “Christchurch Call” on eliminating
violent content from the internet as well as the EU’s WTO cross-bordercommerce proposal. Asked for discussion on the pressures for global regulationand intellectual property—relating to the special 301 report and its relation to
China and India. Introduced the role of large players in the market and theimplications of data localization, and how China and India will decide to respondto these issues.
Cited the more than 2,000 complaints put forward relating to pressure for global
regulation, and their enforcement actions. Related to a comment made by Hal
Brands questioning the role of new global regulatory regimes if they represent
new kinds of alliances or partnerships of likeminded countries and players.
Asked for clarification of Japan’s unique role and influence in relation to wider
trade and regulatory partnership.
＜Speakers on US Side＞
Jacob M. Schlesinger, Senior correspondent in the Wall Street Journal
Washington Bureau, covering trade and globalization
Kenneth I. Levinson, Executive Director, Washington International Trade
Association＜Speaker on Japan Side＞
Soichiro Sakuma, Senior Advisor to CEO, Nippon Steel Corporation
Joshua White: Discussed Trump’s disruption of the global order and theconnection to bureaucracy. The voices that used to shape policy are sidelined
and USTR is given a greater voice. Cited California’s consumer policy act.
Discussed methods towards a stronger rules-based globalization-cited New
Zealand’s clarion call for regulating online violent content—New Zealand as aninternet agenda setter. Discussed the increased pressure for global regulation.
Cited the Special 301 Report that identifies trade barriers to United Statescompanies and Japan’s unique role in the global system.
Kenneth Levinson: Cited the 1990 Trump interview with Playboy magazine
where he stated that he wanted to tariff Japanese cars. Discussed newbilateralism and limiting uncompetitive practices. Noted that Bob Lighthizer isfrom Ohio, like President Taft, who opposed binding agreements by the U.S.
Discussed the prospect of bringing the WTO back to its original function ornegotiating agreements. Drug pricing has been wrapped into the issue ofintellectual property. The WTO needs to address issues with a plurality. The
fight over IP and forced technology transfer is at the heart of the deal between
the U.S. and China. 30 companies hated the tariffs, but now that we have gone
down this road, we cannot lose.
Sochiro Sakuma: Discussed the regulatory vacuum that has been created. 22%of the top global companies are state owned enterprises. State owned enterprises
are enjoying the double standard of competition law. Noted the absence of asingle day of democracy in China’s 4,000 year history. Discussed how the U.S.Japan-China relationship is developed in favor of the rules based system.
Jacob M. Schlesinger: Cited Keith Bradsher NYT articles. Discussed tradebarriers as a threat to the World Trade Organization. Discussed Mexican andCanadian steel tariffs. Discussed Korea’s export quotas on steel. Discussed
Canada and Mexico preventing transshipments from Mexico and China. Some
provisions aimed at reducing the bilateral auto trade deficit are on the table.
Discussed Canadian and Mexican export quotas for their cars. The Trumpadministration is not geared to a rules based globalization. “Careful about
recognized multilateralism for multilateralism’s sake. Gary Cohn, head of the
National Economic Council challenged the president. Discussed challenges tothe WTO—the WTO legal system has an appellate legal system that acts as thefull-time body. You won’t be able to have any rulings at the higher level. The
motto of Geneva is “after darkness, light.” You haven’t had updated rules ofglobal trade since 1995. The TPP was to have high standards for digital trade
rules. The CPTPP concerning data flows does not exist under MCA.
Sochiro Sakuma: Discussed the long history of loss of technology to China andthe open and close strategy to make it impossible to use technology. “Protecting
know-how doesn’t appear on the WTO application.” Discussed how because
SOE’s are controlled by the state, suing the SOEs means suing the Chinese
government.
Kenneth Levinson: Quoted Alan Wolfe “Do things have to get worse before it
gets better?” Bob Lighthizer has his own private channel with Alan Wolfe.

Institutional money shifted from fostering the multilateral trading system tofocus on health and environmental issues after the Cold War. US MCA- the new
NAFTA-interestingly the labor unions have not come out against the new
NAFTA. If there were wage agreements under the TPP. The TPP was all about
China. The main purpose was to get a coalition of the willing and create
standards that China had to aspire to in order to join.
Jacob Schlesinger: Cited Simon Evenett from University of St. Gallen’s global
trade alert. The settlement portion of the WTO’s relevance to the global
economy shrunk. Discussed the WTO’s slower role in daily commerce. The
WTO ending with a whimper and not a bang. Discussed that trade is not on the
democrat’s agenda.
Joshua White: Q) Why are Chinese companies doing well?
Soichiro Sakuma: A) They’re ranking is due to production volume, notprofitability. Discussed the low profitability of state owned enterprises.
Kenneth Levinson—Discussed how one would account for inefficiencies of stateowned enterprises, not competitive enterprises.
Jacob Schlesinger: From day one Trump said China was a currency manipulator.
Desperately propping the RMB up, tremendous capital outflows which could
destroy their financial system. Southern democrats were the key supporters of
free trade.
Daniel Bob: Q) Are we reaching an inflection point on the party’s views on
trade.
Jacob Schlesinger: A) Polling has been blown up by Trump and that distorts
polling. Democrats will have to figure out new base or old base. Cited Douglas
Irwin’s “Clashing over Commerce.” Democratic alignment with labor is a
Washington, D.C. incentive. Labor unions in D.C. give money to candidates.
Trump knows Japan is dependent on the U.S.

Kenneth Levinson: Discussed the Trump administration’s faults inunderstanding the strategic importance of Korea.
Joshua White: Discussed failure of American public understanding of theinternational order.
Kenneth Levinson: In the Post-war era it was understood that trade wasimportant. Abe is the leader of free trade.
Kent Calder: Lack of strong U.S. support of US multilateral systems is starting toerode. Cited Henry Kissinger’s “absolute insecurity for one country means
absolute insecurity for everyone else.” Discussed the relationship of Europe andChina.
Kenneth Levinson: James Lewis testified at the Senate judiciary committee
about Huawei. The Germans have been looking for a 3rd way around to get to theChinese. Brexiters want to leave the EU so they can negotiate their own trade
agreements.
Joshua White: Q) What happens if the business cycle changes?
Jacob Schlesinger: A) No recession now, but a bad trade war could trigger one.
Cited a Trump tweet from early May that if the fed wasn’t changing rates we
could take on the trade war better. Trade did not seem like a big issue in the lastelections.
Kenneth Levinson: Wouldn’t bet against it right now.
Daniel Bob: Q) Does Trump want the trade war?
Jacob Schlesinger: A) Discussed the Trump Administration’s faults in charting apath forward and outlining its aims and goals. Discussed outside voices
influencing theAppendix: The full texts of Opening remarks
Kazumasa Kusaka, Chairman and CEO, Japan Economic Foundation (JEF)
Thank you very much for the introduction. This is Kazumasa Kusaka, Chairmanof the Japan Economic Foundation. I would like to extend my sincere welcome to
Dr. Kent Calder who has helped realize co-hosting this Forum, to Mrs. Yoriko
Kawaguchi, and to all of the speakers and the participants in this room, fortaking part in this Forum.
We at the Japan Economic Foundation, JEF, have been convening dialogue
amongst the experts in Europe, Asia, and the US since the 1980s, to discusscommon challenges and their solutions and the successes and lessons learned,
focusing on economic issues and their surrounding political and social
environment. This Forum, co-hosted by the team at SAIS led by Dr. Calder,convened the last time in September 2014. Back in 2014, we discussed what
Japan and US can each do, and what Japan-US cooperation can achieve on broad
range of challenges such as global economic growth, energy, security, trade, andfree trade agreements.
Since then in the past five years, JEF has deepened our interest in global risks
through such efforts as study groups amongst industry, government andacademia. The key concept then, was to get out of the silos segmented byacademic disciplines, look at the whole picture, and take a holistic approach. Can
sound judgements be made in the business world with private business persons
not having literacy on geo-political risks, or in the security world with security
experts not understanding economics? The purpose was to try to understand theentire situation. We have also tried this approach at hosting a symposium with
the Chatham House, who resonated with it.
Question number 1 is, “What kind of a world do we live in?” what do the socalled facts and alternative facts imply? To grasp the structure of the risk andgive it an interpretation, is an intellectual martial art.
In August 1990, John Mearsheimer pointed out that as we revert back to
Hobbes’s war of all against all, we will begin to miss the order of the Cold War

era. After having observed the various religious, ethnic and geo-political conflicts
that have occurred in the 30 years since then, we seem to be revisiting a newrivalry against emerging powers. At the front of the Cold War, back in the days,
was national security. This time, many areas such as economics, technology andcyber space, and relevant players are involved. The business world cannot justconsider this as somebody else’s business, and must realize that not only are theycollateral damage but that they are also becoming the central figure. As we think
about high-tech, cyber and finance, these weapons for battle are things thatgovernment or military do not monopolize, and belong to the private sector,
moreover, to the numerous players in the private sector.
This emerging rivalry will create a world of “cooperation and competition” byinvolving businesses that take actions in market economies. In order for theworld to continue its sustainable economic growth, the world needs to prepare
for a space where capital, which tends to be careful and fearful, is able to conduct
optimal investment. In other words, order and rule needs to be prepared and put
in place. Conflicts cannot be avoided, but in order to manage and containconflicts, rules on how to conflict is necessary. On the perspective of restricting
private economic activities, the primary regulation was limited to COCOM
during the Cold War since the Soviet Union was economically a small country
back then. The dichotomy that conflict professionals such as military intelligenceand the private amateurs live in two separate worlds and do not interfere with
one another, may have become something of the past.
Question number 2 is “What ‘better globalization’ do we want to achieve, andwhat new international economic order and global governance do we aim tocreate?”On the back of this question is the serious division of society and instability ofdomestic politics brought on by the rise of populism and anti-globalization
stemming from the accelerated expansion in income disparities, which is also
affected by the impact on employment from progressive Fourth Industrial
Revolution and digital revolution. As a result of populism and anti-globalization
being closely tied together, domestic political decision-making and stableinternational relations have become difficult to come together. This has resulted
in weakening of global governance in the US and in Europe. On the one handmarket economy countries lost their attractiveness as a success model, which had
been highly hailed previously. Accordingly, in those countries leaders who were
democratically elected have weakened their political power. But, on the other
hand China, state capital country, gained the power to challenge the number one
position in the world while pursuing its “Chinese Dream”.
All of you who have gathered here today are working to understand thelanguages of both economics and security, have watched domestic and global
issues with a bird’s-eye view, and have communicated to society with holistic
approaches. In the past limited number of establishments influenced decisionmaking process through both domestic and global communications, but now therise of SNS and populism trend have broadened actors in this process. Against
this background, the question now is how can we, graduate schools, such as
SAIS, and think tanks make difference in producing the better world.
With awareness in these issues and challenges, I look forward to the discussions
with you all. I end my opening remarks by wishing that all of the participants cancontribute to such a process, and hope that the discussions will be very
meaningful.
end