Japan, the United States, and the Asia-Pacific in the 21st Century
Remarks by U.S. Trade Representative Michael Froman
Japan National Press Club
August 19, 2013
USTR Michael Froman: Good afternoon and arigato gozaimasu.
Thank you for that kind introduction. And thank you for hosting me here at the Press Club.
I've been to Japan many times as a student, as a government official, and as a businessman - including living here for a summer back in 1989, but it's a particular pleasure to be back here in Tokyo as the first stop on my first trip to Asia as the U.S. Trade Representative.
I still recall with deep appreciation the many things I learned during my time here and the hospitality that the Japanese people showed me - much like the hospitality you've shown me here today.
Four years ago, the first foreign leader President Obama hosted at the White House was the Prime Minister of Japan. The first country Hillary Clinton traveled to during her tenure as Secretary of State was Japan. And the first stop the President made on his first trip to Asia was Japan.
That was not accidental. It was intentional.
The Obama Administration understands the central role that Japan plays in the Asia-Pacific region, and the critical nature of the U.S.-Japan relationship in building a better future in this region and around the world.
Fifty-three years ago, President Eisenhower signed the U.S.-Japan Cooperation and Mutual Security Treaty. He called it the start of an "indestructible partnership" based on "equality and mutual understanding."
Our commitment to cooperation and to economic security must be just as durable.
Japan blazed the trail in the last century for the unprecedented prosperity we've seen emerge in the Asia-Pacific - and in doing so, it showed that individual freedom, democracy, and human rights go hand-in-hand with economic growth.
Though each country has its unique challenges, we share certain concerns about the future, including the long-term sources of strong, balanced, and sustainable growth and the need to provide opportunity for all of our citizens.
Our long experience as partners reminds us of this important fact: We must work together to meet those challenges. When we rely on the bonds of friendship that have helped us deal with so many issues in the past, we are positioned to overcome the challenges we now face. A strong partnership helps make us strong individually as well.
It's in that spirit that I want to share with you some observations today about both the role of the U.S.-Japan economic partnership in the 21st century and some of the major issues we will be discussing bilaterally and with our TPP partners.
Let me begin with President Obama's rebalancing strategy towards the Asia-Pacific.
Our interests in the Asia-Pacific are to build a stable, secure, prosperous, and peaceful region, one in which free, open, and transparent market democracies can flourish.
Working with Japan to build the architecture that supports that vision is essential to the success of the rebalancing strategy.
The United States, of course, is not a newcomer to this region. We are a Pacific power and the ties that bind us to the Asia region are strong. We are the largest export market for APEC economies, and APEC economies buy more than 60 percent of our goods exports. We want to strengthen those ties as this region grows.
But growth brings change. Emerging powers are seeking a greater role in the international system, and understandably so. Regional institutions are evolving. And the regional economic "rules of the road" for the region are still being written.
This moment offers a major opportunity for the United States and Japan to build on the bedrock of our alliance and our other alliances and partnerships in the region; to maximize regional cooperation through fora like APEC and the East Asia Summit; to step up our engagement with the 600 million citizens of the 10 ASEAN countries; and to develop an economic and security architecture built on international rules and norms.
Those rules and norms must be more than lofty ideals or appealing catchwords if they are to increase peace and prosperity. They must be embedded in the actions of nations.
That is why the Trans-Pacific Partnership is so critical. TPP will reinforce the shared determination of Japan, the United States, and other TPP countries to create a high-standard, comprehensive, job-supporting agreement that addresses 21st century trade issues and introduces new disciplines into the global trading system. It will result in an open and transparent regional economic order that can serve as a roadmap for free, open, and transparent markets across the Asia-Pacific.
As we work together to write the rules of the road, it is entirely appropriate that Japan has a seat at the table and can play a leadership role.
Two months from now, our leaders will attend the first APEC Leaders Meeting hosted by Indonesia since 1994. At that last Leaders Meeting in Indonesia, nearly two decades ago, APEC leaders committed themselves to achieving free and open trade and investment in the Asia-Pacific by 2020.
The Bogor Goals were underpinned by the belief that promoting the free flow of goods, services, and investment is vital to achieving growth and prosperity in the region.
These are the right objectives and we have taken important steps in that direction.
TPP is a game-changing step toward these goals because it brings together advanced and emerging economies that make up a third of global trade and 40 percent of global GDP; it promises widespread benefits for our workers, families, and communities; it promotes regional integration by establishing a common set of trade and investment commitments and by taking a regional approach to issues like rules of origin and supply chain; it adds significant value, even for existing free trade partners; it addresses new and emerging issues, like state-owned enterprises and digital commerce, and helps small and medium-sized businesses gain increased access to export opportunities; it creates an open platform, providing for the addition of new members from both sides of the Pacific that are ready to meet TPP's high standards and high levels of ambition; and it strengthens the multilateral trading system.
President Obama has made it clear he is doing everything he can to bring home the benefits of TPP. This includes creating jobs, promoting growth and strengthening the middle class in America.
But he has also emphasized that TPP must be a win/win proposition.
We are pursuing an agreement on the understanding that it must be beneficial to all - for our consumers, our producers, innovators, and investors; not just for global companies, but for the working citizens and the middle class in all of our countries.
Concluding a strong TPP agreement this year is a top priority for President Obama.
All TPP Leaders have agreed to that goal.
And that goal is now within reach.
To build on the momentum of the last negotiating round in Malaysia and to lay the groundwork necessary to complete negotiations in the coming months, I will meet with other TPP Ministers in Brunei later this week to discuss key outstanding issues in the negotiations. Together, we will chart a path forward.
While here in Tokyo, I've met with several of my counterparts in Prime Minister Abe's Government. I was very pleased to hear their strong commitment to completing a high-standard TPP that is good for Japan and good for the region this year.
Japan has an important role to play in these negotiations as a leader in the region and as a partner to the United States.
Like other TPP members, Japan made its decision to join based on its own assessment of its strategic and economic benefits.
We were encouraged when Prime Minister Abe said that he is pursuing a Japan that is "open to the entire world."
Less than a month ago, we reached a significant milestone, when Japanese negotiators joined American and other TPP negotiators in Malaysia for the 18th negotiating round.
After lengthy consultations, we welcomed Japan's decision to join the negotiations based on its commitment to seek the same, high level of ambition the TPP partners have been working toward in this important, ground-breaking initiative.
We share deep common interest in many areas, such as IPR, investment, state-owned enterprises, and services - including the digital economy.
We understand that Japan has some sensitivities, and it is not alone in that regard.
TPP countries are addressing their sensitivities in the context of negotiations toward a comprehensive, high standard agreement where all goods are subject to negotiation.
We believe we can work together - respectfully and pragmatically - even in areas of the negotiations where our two countries don't see eye-to-eye, to find solutions that work for both of us, just as we were doing with the other TPP partners.
Agreements that leave the biggest opportunities and challenges untouched are certainly easier to negotiate. But they fall short of what our citizens deserve and what the global trading system needs.
The agreement we seek is bolder.
As many leading Japanese figures in politics, business, and academia have noted, the TPP has great potential to contribute to Japan's economic revitalization.
We believe that TPP can play an important role in that effort. By increasing the openness of Japan's economy, TPP will not only create opportunities for Japanese exports, but also encourage Japanese firms to be more productive and efficient.
More broadly, we support Prime Minister Abe's stated intention to pursue a growth strategy that includes structural reform.
In the United States, the Obama Administration has pursued its own structural reform agenda. We overhauled our financial regulatory system; we restructured our automotive sector; and we adopted comprehensive health care reform.
We understand the challenges associated with these kinds of changes, and we stand behind you as you pursue your growth strategy. There appear to be significant and promising shifts underway in public policy, public expectations, and public confidence. A robust "third arrow" is critical if Prime Minister Abe's economic reform program is to set Japan on a new trajectory of increased trend growth and productivity.
It is important to the United States and to the global economy that Japan succeeds in its economic program to grow through increased domestic demand, consistent with its G-7 and G-20 commitments.
As the G-20 Leaders agreed in Los Cabos last year, "strong, sustainable, and balanced growth remains the top priority." All G-20 members have put forward commitments to strengthen and sustain global demand, foster job creation, contribute to global rebalancing, and increase growth potential. Japan has a key role to play in this effort.
Parallel to the TPP negotiations, the United States and Japan are engaged in a series of important bilateral negotiations.
The success of these parallel negotiations is a critical element in our ability to conclude TPP with Japan. That is why we've agreed to closely link the timing of our parallel negotiations to the timing of TPP.
We have an unprecedented opportunity to move beyond past trade conflicts and to enter a new phase in trade cooperation.
I lived in Japan during one of the more difficult periods in our relationship. Tokyo was booming during the summer I worked here as a young law student in 1989. There was great admiration in the United States for what Japan had accomplished - and a lot of discussion about whether to try to emulate its success.
But there was also a pervasive sense of inequity - that Japan's competitiveness was in part due to export opportunities available in the rest of the world that Japan did not provide in its home market, that Japan's success came at the expense of others.
That sense of unfairness had a corrosive effect on our bilateral relationship.
Over time the focus shifted elsewhere. Japan's economy slowed and new dynamics emerged in international trade.
But barriers to Japan's market persist.
Barriers to access to Japan's automotive and insurance markets and non-tariff measures in other sectoral and cross-cutting areas, hold back growth and innovation. They undermine competitiveness, and they hurt workers, business, and consumers in both our countries.
As Japan seeks to launch a period of renewal, we must seize this opportunity to resolve the serious issues that have come between us for too long.
We are looking to Japan to work with us in a constructive manner to address the barriers that have impeded our access in key areas.
Our negotiators met in Tokyo just over a week ago on these issues, and are off to a good start.
Let us take this moment of economic revitalization to put the U.S.-Japan trade relationship on sound footing.
I'd like to conclude by turning to the image of the three arrows.
The idea, I understand, comes from an old Japanese story. A father teaches his son that one arrow can easily be snapped, but that if you tie three arrows together, mutually reinforcing each other, they are much more difficult to break.
The logic of this wisdom extends beyond Japan's economic debate.
Great nations accomplish more when they partner with each other.
In the 53 years since President Eisenhower spoke of our "indestructible partnership," so much in our world has changed. But the need for a vibrant alliance has not. We know how much more we can achieve in overcoming our common challenges when we work together. And our partnership has endured.
President Obama has been a great admirer of Japan since he visited here as a young child, and on his most recent visit, he quoted a Japanese poet who wrote, "Individually, we are one drop. Together, we are an ocean."
Our hopes for a brighter future for Japan, the United States, and Asia are well established. Now, we must take the steps necessary to make those aspirations a reality.
We can and should do that together.
Thank you very much.