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Wednesday, Nov. 24, 2010

Japan's declining prestige


LONDON — Japan's prestige abroad has continued to decline despite the change from the clapped out Liberal Democratic Party with its series of old hack prime ministers to a government led by the Democratic Party of Japan. Foreign observers thought that surely a DPJ government must represent a change for the better, but Prime Minister Yukio Hatoyama was indecisive and a disappointment.

Prime Minister Naoto Kan began with one great advantage. He was not the complete throwback to the old days of money politics, which the election of Ichiro Ozawa would have meant. But Kan's handling of foreign affairs has been disappointing at best.

Relations with the United States are crucial. At a recent meeting between Kan and U.S. President Barack Obama in Yokohama, Kan is reported to have assured Obama that the agreement on the relocation of the U.S. Marine Corps base on Okinawa would be carried out, but after all the shilly-shallying in the past, many fear that the Japanese government may once again be tempted to find excuses for further delay. Local Okinawan opposition is understandable but the Japanese government's reputation will be seriously damaged if the agreement is not fully implemented.

China now has a bigger economy than Japan and the Chinese economy is growing fast while Japan's economy stagnates. Chinese self-confidence combined with Chinese nationalism and China's lack of democracy has made the Chinese difficult to handle. The Senkaku island dispute is unlikely to be solved quickly but it requires careful diplomatic handling. This has been singularly lacking. The attempt to suppress the Japan Coast Guard video of the incident with the Chinese trawler added to the impression that the Japanese government had no proper crisis management procedure in place.

The visit to Kunashiri Island by Russian President Dmitry Medvedev after the G20 summit and following his meeting with Chinese leaders — with whom he is trying to create a common front — seemed a calculated smack in the face of Japan. It is hard to see how any settlement of the Northern Territories dispute with Russia that would be acceptable to Japanese public opinion can be achieved. Any attempt to use Japanese economic cooperation in Siberia as a lever would probably fail and could be counterproductive to Japanese interests.

Japan has for many years sought permanent membership on the Security Council. Japan's candidacy has been supported by the United States and Britain, and seemed at one stage to be high on the international agenda, but other candidate nations are now gaining more attention. Obama has pledged his support for India to become a permanent member. Brazil's rise in international importance in line with its economic success means that Brazil also has a strong claim. As a leading power in Europe, Germany has at least an equal claim. If a fair geographical balance is to be maintained, there should be a place for a leading African country. The chance of all parties reaching consensus on a package deal for early reform of the Security Council looks remote.

Japanese sometimes seem to regard South Korea as a copy-cat competitor, but Japan can no longer afford to take such a patronizing view. Major Korean companies are serious competitors of Japanese companies in many overseas markets in both automobiles and electronics. By hosting the recent G20 summit, the South Koreans showed that they are determined to be in the second rank of world powers alongside Japan.

Japan has another challenge. Will it show the necessary courage and initiative to take a leadership role in the Trans-Pacific Strategic Economic Partnership (TPP) and negotiate free-trade deals with the U.S. and with Europe? Japanese export industries fear that if the Japanese government hesitates they will lose out to South Korea and other exporters, and with an overvalued yen may find themselves excluded from valuable markets.

Kan was recently induced to declare that the Japanese government wished to enter direct negotiations with the European Union and is reported to have said that participation in the TPP was like Japan's emergence from its isolation in the 19th century. But has he really the courage to take on the vested interests in Japan's agriculture and domestic services that are protected by nontariff barriers? Japan cannot hope to conclude free-trade agreements without fundamental changes in its economic structure.

Japanese farmers have for far too long been allowed to hold Japanese consumers to ransom. This has forced up Japan's labor costs. Agriculture in Japan needs to be rationalized with bigger farms and better management. Much is made by Japan's farmers about the capacity of the country to provide food for its population, but this argument is often taken to exaggerated lengths. No sensible observer expects Japan to cease growing rice and vegetables and keeping livestock, but agriculture can be made more economic and farmers can be rewarded in other ways than by keeping the price of homegrown food astronomically high.

Agriculture is not the only obstacle to the conclusion of free-trade pacts. Many of Japan's nontariff barriers have been modified following overseas pressure over the last three decades, but there is still much to be done. Japanese manufacturing industry, which provides the bulk of Japanese exports, is generally very efficient, but the same cannot be said for Japanese service industries, which are subject to bureaucratic rules and anti-competitive practices.

Japan remains a much more closed society than European countries. Immigrants will be needed to cope with Japan's aging society, but it will require a major change in traditional attitudes before such opening up can be achieved.

If Japan is to maintain its position among the second rank of world powers it needs much more dynamic leadership than the DPJ has so far demonstrated. It also needs to do much more to get its message across abroad.

Hugh Cortazzi, a former British career diplomat, served as ambassador to Japan from 1980 to 1984.


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