Since taking office in October 2021, Prime Minister Fumio Kishida’s economic priority has been to revisit capitalism and restore public confidence in democracy. Updating capitalism in a post-COVID world, Japan seeks to strengthen its relationship with the United States to address some of the world’s most pressing economic issues, including supply chain resilience and sustainable growth. .
This discussion focused on the new economic program of the Kishida administration and the prospects for bilateral cooperation between Japan and the United States and across the Indo-Pacific.
“Murakami talked about issues related to climate and energy, and this could be the area where a very active collaboration between the United States and Japan could emerge. We want to ensure sustainable economic growth with energy security in the Asian region. And Prime Minister Kishida is trying to establish an Asian zero-emission community that will take the lead in decarbonizing the carbonization technology standard and the development of international quality infrastructure with other Asian countries. If we do not meet the challenges faced by the megacities of Asia or India, we will not be able to meet the challenges of climate change.
We are therefore going to engage in an initiative called the Asia Energy Transition Initiative. There are new Asian CCUS (Carbon Capture Utilization Stories) networks to support ASEAN countries and we will make best use of the Joint Credit Mechanism (JCM) to transfer the experience of Noha and national cities in building low-carbon cities to developing countries in Asia. .
Of course, this implies the need for quality infrastructure, and it is in this area that there will be a joint venture between the United States and Japanese companies. We have no intention – as governments – of intervening excessively in the activities of the private sector. The goal is simply to create environments for more investment, including US investment for Japan. And there is already a program called JUCEP (Japan-US Clean Energy Partnership) and if we could roll out these activities to the rest of the Indo-Pacific region, that would be great.
And let me give two examples, there’s an organization called PICHTR (Pacific International Center for High Technology Research) in Hawaii and OIST (Okinawa Institute of Science and Technology) in Japan have committed to each other for the deployment of clean technologies, clean energy technologies, including to South Pacific island countries. So this is one example, and another example is under the Kishida administration, there is more interest in American small modular reactor (SMR) technology and nuclear fusion. And the Japanese company IHI has invested in the new power of scale in Oregon and there is potential for Japanese-American collaboration in this regard and finally we have already seen the initiatives of a carbon neutral port in Los Angeles—Long Beach Port. And that’s again, efforts to introduce hydrogen trucks, with an American company called Kenworth and we’re seeing a collaboration emerging. And this type of solutions could also be used in other regions of the Indo-Pacific.
Watch the extract
“The first thing I can say is that the United States is present and represented in the world and in the Indo-Pacific economically. We engage with Japan in every way, and we fully understand what it means when China asks for CBTPP. We have heard from Japan and other countries how important it is to maintain the rules-based economic order in the Indo-Pacific and around the world. And we fully understand that. We are committed in every possible way to do everything we have been talking about all day: to ensure a free and open Indo-Pacific, to counter harmful influences in the region and those who would change the status quo in the region.
More specifically, for example on the development of quality infrastructure, we work very closely with Japan on transparency rules and lending practices. This is very important, and Japan has championed ensuring that China and other countries do not sign deals with developing countries that are not transparent and put them in debt or have debts. other side effects for the world.
We are now engaged, as I mentioned, in the Indo-Pacific economic framework and our new epic. They are platforms where we can talk about all the issues. There will be a lot of Commerce and USTR engagement in the IPAF and Commerce is also co-leading the epic. This is an opportunity for all of you to step up and help us use the tools we have and recognize what we currently don’t have with the TPPP. But thinking about what else we can do on the digital front, of course on the climate front with climate and energy and we’re engaging, we have JUCEP, many other US-Japan forums and other international forums. We’re about to chair APEC (Asia-Pacific Economic Cooperation), so there are things we can do there.”
Watch the extract
“There are several areas where I can certainly see very clear benefits if the United States and Japan work closely together. The first one that is very clear to me, in terms of what we can do between those two countries, it’s certainly zero carbon or climate change, and specifically in the context of rule-making, whether it’s ESG investment standards, which is something I’m very involved in in terms of ESG investing in Japan. This means accounting and disclosure discussions, which have been driven mainly by the EU so far. Or maybe funding issues for developing countries regarding climate adaptation, which is a very controversial issue. But if young people in Japan can strategically collaborate on these issues, I think we can potentially expect very positive results. meaningful and impactful in these negotiations.
As I mentioned, the EU has played a crucial role in shaping these rules and treaties, and this is certainly not a competition, as climate change is a global agenda. But because this is such an important global agenda, I think the collaboration between Japan and the United States will be important to move this agenda forward globally, especially in the Asian region. We can do this by basically sharing the driver’s seat and driving the bus, and then making rules, treaties, and regulations. In the context of ESG rulemaking, I think timing is very important right now because it’s happening as we speak. I think at this point it’s extremely important that the United States and Japan can really share our, you know, compare notes and really understand how we can have more impact or influence in terms of defining of these roles.
And that brings us to the second area of collaboration. Technology is definitely the key to finding innovative solutions to climate change and also public health as we emerge from the pandemic crisis, hopefully we still have quite a few cases in Japan. Thus, we are still facing the pandemic on a daily basis in Japan as in many other Asian countries. And both the United States and Japan have very advanced technologies in these areas, which can be potentially complementary and applied to meet some of the most pressing needs of the global economy or global society, and the young people in Japan have a very long history in both the public and private sectors to collaborate in the areas of research and development.
For my part, I can say that I spent quite a lot of time in American universities after doing my first studies, and vice versa, we also have quite a lot of American researchers and students in Japan, in the private sector , as I said, there are a number of collaborative research projects. So that’s great, but I would say at this point it makes perfect sense for both countries to focus on the areas of climate and health.
Watch the extract
“First, on the issue of new capitalism, I think from the American private sector and the Japanese private sector, there’s a lot of questions about what it really means and the efforts to look at capitalism and say, well, there’s has certain market failures with respect to issues of environment, diversity and inclusion, and issues of equity, income inequality, etc. And to the extent that new capitalism is designed to address to these market failures, I think the big question for us is to what extent does the government want to step in and provide direction in a way that restricts private sector activity. all of these discussions, whether about building back better or a new capitalism, ultimately require the private sector to drive economic growth.
So it’s important, I think, that when we seek to address some of these market failures, we remember that the first rule should be: don’t unnecessarily impede growth in the name of fairness. And I think Murakami brought up China and its different approaches, I’m a bit afraid that because of China’s successes, the United States and Japan, and other democratic market-oriented countries are learning the wrong lessons from China and are in fact rather than consolidating our existing economies. And to narrowly address the challenges that we face, surgically the idea is actually to copy China and have more state capitalism, which you know would be, I think, a huge mistake .
You know if you look at the individual market failures that the new capitalism is trying to address, again you know the environmental issues, the issues of inclusivity and income inequality, a lot of those issues ultimately boil down to the fact that the market fails to assess the costs, in the case of environmental degradation, in the case of inclusiveness, the failure to integrate into our workforce the greatest pool of talent possible. And, in the case of income inequality, not making sure that you’re compensating people across society in a way that not only gives people the living wage they need, but also gives them confidence in the system, and that it is not designed to disadvantage individuals.
So I think all of these things can be priced efficiently, Murakami talked about ESG, it’s very important, you know we actually figure out how to price the costs of environmental degradation effectively, or support, and I think that’s a very important element of development. So, you know, I think the private sector is excited to work with the U.S. and Japanese governments on these initiatives, but we have this one advocacy that…remember that ultimately governments expect we do a lot of the implementation. “
Watch the extract