Gillard to Tokyo: pushing on a string?

Julia Gillard will visit Japan from April 20 including a summit with Kan Naoto. It is unlikely however that Australia’s efforts will result in any major deals being brokered at this meeting as Japan’s ruling party continuing to fragment and as Japan’s limited political dynamism is hit further.

The major issue which both Australia and Japan would like to be able to resolve is the Free Trade Agreement negotiations. These negotiations have been tortured, with liberalization of agricultural goods being the chief problem. The negotiations, which began in 2007, were most recently this February and marked a return to the table after nearly ten months hiatus. Yet the official negotiators from Japan and Australia were still unable to make a break through, prompting Trade Minister Kaieda Banri to call for the negotiations to be resolved at the political level. This is an appropriate response, as the Agreement was initially proposed by Prime Minister Abe Shinzo as part of a political calculus of the benefits of such an agreement to both countries. It is in this context that Gillard is making her four day long visit to Japan, a visit aimed to resolve at the political level the issues still outstanding in the FTA.

But while success would be quite a coup for either leader, there are good reasons to doubt that visit may be in vain.

The DJP is imploding over the issue of trade liberalization. Kan Naoto has been leading with a concept of “re-opening Japan”, the flagship of which has been the joining Trans-Pacific Partnership. It is important to understand that Japan-Australia FTA is perceived as a litmus test for the viability of including Japan in the TPP process. Thus Japan’s membership in the TPP will come only when others are convinced that Japan is serious about comprehensive liberalization of trade – including the political sensitive agricultural sector.

But already the Party has split on the TPP issue. The former Minister of Agriculture, Forestry and Fishery Yamada Masahiko is leading a group of parliamentarians bitterly opposed to the TPP. The group, which is called the “Serious Consideration of the TPP”, is nearly 180 Diet-men strong and announced its establishment on the 24 February. Moreover, the Group has organized a series of public hearings on the dangers of the TPP led by a prominent economist Uzawa Hirofumi which directly undercuts the Kan administration’s public information session in the rural regions which address the benefits of agricultural reform. The opposition to the TPP is also a stalking horse for opposition to an Australia-Japan FTA which includes agriculture. Indeed, Yamada Masahiko (Ozawa faction) is strongly opposed to such an FTA and has written publicly about the costs of signing onto an FTA with Australia.

Kan’s leadership of the DPJ is also in question. While there is no obvious challenger to leadership of the Party, the most recent public polling showed low support for the Kan administration (21%). The fact that Kan Naoto might well lead the Party to defeat in the next election has made it difficult for Kan to prevent individual parliamentarians from taking up local issues at the cost of national strategy. While the announcement of an FTA with Australia, as a prelude to joining and eventually acceding to the TPP, might help Kan somewhat recover political momentum, it is unlikely to make a major difference and as such Kan is likely to focus his efforts and what remains of political capital elsewhere. Moreover, although the current administration wishes to reverse the current situation of rural votes (which overwhelming, even passionately oppose FTAs) holding a disproportionate influence (a rural vote can be worth an ‘unconstitutional’ 2.5 urban votes), were an election to be called it is likely that the DJP would lose its majority and hence government.

In conclusion, it is unlikely that Kan Naoto and the leading DPJ have the political will (or coherence) to be able to meet the expectations of Julia Gillard and the ALP on the degree and type of liberalization within the FTA. Rather, the summit is likely to produce an agreement on Japanese investment into Australian rare earth and some other bureaucratic matters (replacing Mclean).

Japan and Australia FTA resumed

After the China-Australia FTA negotiations were restarted last year, the Japan-Australia FTA has also resumed. Maybe a break was for the best, certainly demonstrated that Australia can wait.

More interesting, after Kevin Rudd trip to Japan last year and the positive sounding he got on the FTA, there is evidence that Japan is trying serious to get the negotiations up.

Maehara Seiji in his recent speech to Diet on Foreign Policy (here) called for early conclusion to negotiations with Australia. Maybe by the end of this year we will have the framework agreement in place.

Australia: not worth it

Japan's Cabinet Office which runs the Foreign Policy Opinion Polling has had its budget slashed.

One of the unfortunate results is that polling on Japan's popular sentiment towards Australia will not be conducted this year - or subsequent years.

Currently only five countries are identified for specific treatment; America, China, Korea, Russia and India. Australia and New Zealand are not specified, instead being called 'pacific countries'.

This comes as a blow for those interested in Japan-Australia relations, and alternatives will have to be found.

Tachi Agare Australia!

In response to the ALP's "going forward" rhetoric the Liberal Part have come up with "standing up Australia."

May I be the first to welcome "Tachi Agare Australia."

Stern Hu: Limits of the evolution

Coming back to Australia I see how big the Stern Hu corruption charge is, and while no new information is presented here, I will chip in my three cents on China’s Law, Australian identity and the interaction between these two.

Chinese leadership subscribes to the rule by law, rather than the rule of law. The concept of individual rights versus the state is not well established and the basis of western law, that justice be done and be seen to be done is also a principle that has not yet penetrated China. Hence not allowing Australian representatives sit in on hearing as guaranteed under the Consular agreement of 1999.

More than this, China does not distinguish between the state and market in quite the same clear cut (if somewhat artificial manner) of the West. While at the same time, there exists an underlying fear that outsiders, and their even more contemptible Chinese proxies like Hu, will steal Chinese wealth. The first expression of these feelings in modern China might be traced back to the “Three Anti” and “Five Anti” movements of the early 1950s, which targeted westerns and made a ‘sin’ out of “stealing state economic information”.

These ‘old’ ideas seem to have survived in Chinese law. I suspect that the reason for this is the evolutionary nature of change, which allows atavistic traits to survive by dint off their highly infrequent lack of expression – a fact brought on by lack of challenges. For an evolutionary approach to improving Chinese law to work more and more intense interaction with the outside world is necessary – and this is coming. But at the same time, the Chinese side must be willing to let die those laws which do not pass the justice test. Without justice being done, and being seen to be done, it will hard for China and Australia to build a trusting relationship, a relationship pretty valuable to both sides and for the region more widely.

Lowy Linkage

Lowy Institute's Malcolm Cook and I had an exchange on the state of Japan-Australia relationship. Linkage here,

http://www.lowyinterpreter.org/post/2010/03/17/Japan-Australia-relations-Signs-of-damage.aspx

http://www.lowyinterpreter.org/post/2010/03/23/Japan-Australia-relations-just-fine.aspx

http://www.lowyinterpreter.org/post/2010/03/24/Australia-Japan-relations-are-not-fine.aspx

A good exchange of ideas, and informative for all and sundry. Hurrah.

ERIA: Centrality, Odd men out, and quest for regional “research” leadership.

Previously, Malcolm Cook at the Lowy Interpreter and I briefly exchanged notes on the Economic Research Institute for ASEAN and East Asia (ERIA) and its meaning in the broader East Asian context. I should like to continue those thoughts here, arguing that the story of ERIA neatly encapsulates the story of East Asian regionalism. I will show that ERIA’s formation is not a sign of strength of East Asian regionalism but another yet manifestation of the contest for centrality in East Asia between China and Japan.

The order of the title is no accident. I tend to believe that without a clear central leader, it is impossible to define regional membership (let alone borderline cases like odd men in). Indeed, contestation over the borders of the region (such as in East Asia today) is a good indication that the position of central leader is itself contested (chiefly between China and Japan). Under these conditions, any field even the esoteric (almost irrelevantly so) field of semi-formal research into economic regionalism acquires a political connotation.

So, what is ERIA? From a technocratic point of view, the ERIA is a research body designed to help with policy development and coordination in East Asia. But politically, it represents a Japanese leadership bid in response to China’s growing influence in the field of regionalism research. Specifically, Japan’s concerns were raised by China bid to house the Network of East Asia Thinktanks (NEAT) – an idea based on the recommendation of the East Asian Study Group (the first annual conference of which was held in China in 2003).

In response, Japanese policy-makers started to propose alternative groups to carry out research. Japan first pushed for the Asian Development Bank to take on this role, but meeting US resistance (and no doubt limited, if any, Chinese support at the ADB’s Board of Executives), shifted its attention to the ASEAN+3 research groups where Japanese research institutes were doing well. However, neither provided the leadership dividends Japan was after – the only option then was to start up its own “independent” research institution. Enter ERIA stage right.

Building on then Economy, Trade and Industry Minister Nikai’s proposal for a 16 party FTA, Japan’s former PM Abe called for the creation of ERIA at the 2007 ASEAN+3. ERIA was to be a research clearing house and policy coordination facility – a sort of OECD for Asia, minus the Charter and all the western legalistic trapping. At the 3rd East Asian Summit in 2008, the ERIA idea was approved unanimously – and debate shifted on where to base the secretariat.

Not withstanding the fact that Japan was to provide the money (and most of the brains) for this enterprise, ASEAN insisted on deciding amongst itself where to base the ERIA. The intense diplomacy among ASEAN nations for the privilege of housing the ERIA only subsided when the decision was made to temporary house in the ASEAN secretariat in Jarkarta, Indonesia. Thus while officially the ERIA is only temporary in Jarkarta, the green light has gone ahead to build it its own building, something of a fait accompli for Indonesia although unlikely to garner the kind of trust ERIA will require to do its work.

I am inclined to believe that this outcome reflects not so much a weakness in ASEAN as in Northeast Asia. If ERIA was to be an OECD for Asia, then it ought to be based in a Paris-equivalent city in Asia (i.e. the capitals of either China or Japan), which Jakarta (despite being very nice) simply is not. If, on the other hand, the goal of the ERIA was to boost Japan’s presence in southeast, this outcome makes more sense (Japan would likely lose political points for insisting the ERIA be based in Tokyo, better to pawn it out to ASEAN).

In fact, Japan’s influence on ERIA was clear from the outset. Firstly, Japan offered to fund the organization through its first ten years to the tune of 10 billion yen over ten years. Secondly, ERIA was established with institutional links to the Japanese External Trade Research Organisation (JETRO). The Chairman of JETRO Watanabe Osamu has carefully played down any Japanese influence within ERIA, even as it negotiated with ASEAN members were to establish the secretariat.

Unsurprisingly, the ERIA came to support the METI’s and JETRO’s position on the merits of the 16 party Free Trade Area, (known in Japan as Comprehensive Economic Partnership East Asia, CEPEA). No surprise either that Australia, New Zealand and India have stepped forward to pitch additional monies and more importantly legitimacy to the organization – often visibly and vocally supporting ERIA as something of a hat tip to Japan. These countries would be the major beneficiary of such a trade area, and perhaps just as crucially, are keen to shed their status as “odd men” and gain acceptance as a true regional member – something Japan just might be able to provide.

P.S. One of the effects of ERIA foundation was to put pressure of the NEAT process. In fact, the NEAT itself was hardly a success. NEAT is not an international institution of the same level as the ERIA, it does not possess its own headquarters, research staff or budget and is more or less an alliance of academics with good political connections. Indeed, the 2007 report entitled “Future Direction of NEAT” prepared by Thailand notes, “NEAT activities do not governmental support and are now facing possible competition from other newly established mechanisms like Economic Research Institute for ASEAN and East Asia (ERIA).” Additionally, the Japanese CEAC seems to have taken over running the NEAT, and the whole agenda there is shifting. It seems likely therefore that ERIA will win out as the lead research body in East Asian regionalism.

Merging Japanese and Australian proposals for East Asian community-building; US participation.

At the fourth East Asian Summit, held on October 25^th in Thailand, the leaders of Japan and Australia had the opportunity to air their views about the future form and function of East Asian regionalism.

As Acharya has noted, these two visions may be in competition with each other. At this stage however little can be known for sure as both proposals share a level of deliberately in-built vagueness. Indeed, Hatoyama’s proposal is seemly contradictory – or at least unsure – on what role the US ought to play in the region.

While Hatoyama’s is still dissimulating about membership, Rudd’s Asia-Pacific community has signposted from the outset US participation. However, it is likely that Japan and Australia will adopt a common position in favor of US participation (i.e. Japan coming out and supporting the Australian position). Indeed, there are signs that the Japanese and Australian positions are already beginning to merge.

In many ways this is only to be expected. Japan and Australia have a record of diplomatic cooperation and joint leadership in the field of regional organization building. That does not necessarily imply that the two will coordinate this time, but there are some structural reasons which suggests that cooperation is more likely.

Specifically, Japan and Australia have common national interests in the management of China and the desire for a US presence in East Asia. Specifically, the logic of China’s rising power necessitates US involvement in Asia if Japan is to preserve its influence, a fact true also for Australia.

However, for the time being Japan has not endorsed US membership. What would bring that about?

Firstly, ASEAN. As Achrya has pointed out, ASEAN is the base on which regionalist projects will be constructed – and proposals from Australia and Japan will have to be mediated by ASEAN. Hatoyama’s rhetoric leading up to the trilateral summit suggests that Hatoyama seems to have believed that Japan could lead the formation of an East Asia community. However, due to the lack of progress at that summit, Hatoyama has likely realized the importance of ASEAN. As it becomes more likely that ASEAN will invite the US into the region, via the Treaty of Amity and Cooperation, Hatoyama may well decide to “go with the flow.”

However, one ASEAN official has noted that ASEAN’s support for US participation is split 50:50; with the archipelagic southeast states in favor and those bordering China more ambivalent. This split in ASEAN is due to China’s rising influence. Indeed, China has pushed forward its credentials as a leader – this year offering Southeast Asian states a 10 billion dollar China-ASEAN investment fund (chiefly for infrastructure building it seems). Under these circumstances, it is unlikely that ASEAN states would push the US issue.

Secondly, China. It is possible that China is backing away from a strong position on US participation. One newspaper reported China’s Ambassador to ASEAN Xue HanQin (薛捍勤) stating that the US could be a participant, although whether this reflects a real change in policy is still uncertain. Has China embraced Tow’s cynical strategy of sinking a proposal by endorsing it? Certainly Chinese foreign policy makers must be aware that a strong move to exclude the US by China might have exactly the opposite effect. This uncertainty on both sides has created a situation in which neither China or Japan is willing to discuss the role of the US in East Asia, for fear of harming their political relationship.

Lastly, Australia. With ASEAN still divided on the issue of US involvement, and China-Japan circling the issue, active Australian diplomacy is more likely to pay off. What it may take is some “double edged diplomacy”, convincing Japan that ASEAN really does support US involvement. Australia has been able to play this middle power role in the past, and is in a good position now to make a valued, and potentially strategically valuable, contribution.