JAPANESE APEC OFFICIALS: LOOKING BEYOND 2010

C O N F I D E N T I A L SECTION 01 OF 03 TOKYO 001708 SIPDIS DEPT FOR EAP/FO AMBASSADOR HASLACH DEPT ALSO FOR E, EAP/EP AND EAP/J PASS USTR FOR CUTLER/MEYERS E.O. 12958: DECL: 06/20/2013 TAGS: ETRD PREL APECO JA SUBJECT: JAPANESE APEC OFFICIALS: LOOKING BEYOND 2010 REF: 07 TOKYO 5608 Classified By: Ambassador J. Thomas Schieffer. Reason 1.4 (b)(d) ¶1. (C) Japan's commitment to APEC is unchanged and U.S. officials should not be concerned PM Fukuda failed to mention APEC in his recent speech outlining a GOJ vision for Asia's future, according to Japan's two APEC Senior Officials (SOM). Fukuda'a aim was to emphasize a solid U.S.-Japan relationship is a critical to a prosperous and secure Asia-Pacific region and not to weigh various options for regional economic integration. Looking to Japan's year hosting APEC and stressing the strong desire to work with Singapore, which hosts in 2009, and the U.S., which hosts in 2011, the SOMs noted Japan wants to mark the achievement of the first stage of APEC's "Bogor Goals" in 2010 by reaching agreement among APEC's developed economies on a bold new vision for the region. This vision should also inspire the organization's developing economies to accelerate their own integration efforts. Internal reform of APEC is inextricably linked to the issues of enlargement but, regardless of what decisions are made on APEC reform over the next two years, Japan's SOMs argue the organization needs to retain a flexible structure. The METI representative acknowledged concerns about Japan's having two APEC senior officials, but insisted METI makes a positive contribution to APEC deliberations and stressed a decision to change this structure is Japan's alone. End Summary. ¶2. (U) Tokyo EMIN met recently with both of Japan's APEC Senior Officials to hear their views of the organization's future in advance of the 2009-2011 period during which member economies are scheduled to take major decisions on APEC's future direction. Ministry of Economy, Trade, and Industry (METI) Deputy Director General Hideo Hato said it is important to set an ambitious and positive agenda once the first stage of the 1994 "Bogor Goals" of free and open trade and investment among APEC developed economies by 2010, is achieved. Ministry of Foreign Affairs Senior Official Masashi Mizukami separately echoed this level of ambition, while praising the U.S. proposal for a Free Trade Area of the Asia-Pacific (FTAAP) as a model for the sort of ambitious objectives APEC needs to set. Fukuda Speech Focus Cross-Pacific Ties, not APEC -------------- --- ¶3. (C) Clearly aware of U.S. concern over the failure of Prime Minister Yasuo Fukuda to mention APEC or Japan's scheduled chairmanship of the organization in his May 22 speech "Five Pledges to a Future Asia that 'Acts Together'", Hato said the speech's intent was to set out "a Pacific vision, not an Asian vision." For that reason, the Prime Minister several times stressed the importance of the U.S.-Japan partnership in ensuring stability and prosperity in the region. "I am not worried about the lack of mention of APEC in the speech," he concluded, since "there is no change in Japan's commitment to APEC." ¶4. (C) MOFA's Mizukami took a similar tack. He said the Prime Minister's aim was not to weigh various alternatives for Asian regional economic integrQion but rather, by using the metaphor of the Pacific Ocean as an "inland sea", to emphasize his conviction that a strong Asia-Pacific region is not possible without a solid U.S.-Japan relationship at its core. Ensuring the U.S. remains committed to Asia was more important to Japan than the specific form integration might take. Mizukami also noted the speech reflected, in part, Japan's concerns about U.S. long-term commitment to the Asia-Pacific region. Those concerns, he said, are amplified by continued uncertainty over the next U.S. administration's policies toward Asia. Japan, he concluded, "is not in a position to lead in the region, or in APEC, without the U.S. as a partner." ¶5. (C) Comment: Despite both Hato's and Mizukami's strenuous explanations, the lack of any mention of APEC in the Prime Minister's speech is glaring, particularly with Japan set to assume leadership of the organization in 18 months. The charitable explanation is simply a bureaucratic mix-up, with the speechwriters failing to clear the text adequately. The more likely explanation is that APEC continues to be seen within the GOJ as an subject for specialists, that may not attract the attention of the senior political leadership until much closer to 2010. End Comment. How to Configure the Bogor Goals -------------- TOKYO 00001708 002 OF 003 ¶6. (C) In response to a question about how APEC developed economies should record the 2010 achievement of the Bogor Goals, Hato said he has been giving a good deal of thought to how to follow 2010 with commitment to a broader vision of the future integration. The ideas he is currently considering revolve around twin policy pillars of "sustainable growth" and "safety and security for all." This broader vision, he insisted, needs to be formulated in a way to appeal to all APEC citizens to encourage the organization's developing economies to sign on to more long-term integration goals. ¶7. (C) The first pillar of Hato's vision, sustainable economic growth, potentially includes issues such as ensuring protection of certain rights, including intellectual property rights, recognition of the role of innovation in triggering economic growth, and specific projects designed to make systemic improvements in developing economies in areas such as logistics, infrastructure and most importantly, structural reform and "behind the border initiatives." Hato emphasized he believes a future vision of development needs to be defined as more than simple material improvement in people's lives, as important as that is. To be sustainable, development requires establishing and maintaining appropriate physical and regulatory systems that effectively deliver public goods. Such systems, Hato continued, ensure the benefits of development are distributed fairly. As an example, he suggested APEC developed economies agree on a "concrete development agenda" that combines technical assistance, ecotech, and public/private partnerships to establish pilot projects in APEC developing economies demonstrating the long-term bQfits of structural and other regulatory reforms. The second pillar -- ensuring the safety and security of all APEC citizens -- would encompass a wide range of issues beyond basic public safety. It might include provision of clean water, energy security, and protection of consumers from counterfeit or unsafe food and medicines. He plans to distribute a paper expanding on some of these ideas after the G8 Toyako summit. ¶8. (C) Mizukami was similarly forward-leaning on the post 2010 agenda. Instead of merely acknowledging what has been accomplished, the 2010 summit should establish a new set of priorities for 2015, and eventually 2020. The FTAAP is one of the important long-term goals, but APEC should think even more broadly, he insisted. Foreign Ministry APEC Division Director Mitsuko Shino added the 2010 Group, after declaring the Bogor Goals accomplished, should move quickly on laying out a new set of commitments that encompasses a shared vision of what APEC members want the region to be in 2020 and beyond. ¶9. (C) One question is which economies should be included in these new commitments. It is a positive sign, Shino noted, that some economies, for example, Chile, Korea and Mexico, have signaled a willingness to consider themselves part of the 2010 Group, at least in some areas. They may also be willing to sign on to a follow-on vision, even if they have not formally achieved the 2010 goals. This development would provide positive momentum going forward. ¶10. (C) Hato agreed with EMIN on the importance of close cooperation with Singapore and the U.S. on advancing the APEC agenda, not only because they are two of the six advanced APEC economies who are committed to the 2010 goals, but also because they will be the next three APEC chairs. Some broad discussion had already begun, but Hato hoped to expand that consultation at the next Senior Officials meeting to include the three other members of the "2010 group" -- Australia, Canada, and New Zealand. Internal APEC reform -------------- ¶11. (C) Internal reform of APEC continues to be a GOJ priority, both senior officials said. They also emphasized the issue of organizational reform is inextricably linked to the question of APEC enlargement, which will return to the APEC agenda in 2009-2010. Shino noted with its current 21 members, APEC's consensus model of decision making had reached the limit of its effectiveness. If APEC decides in the next several years to admit new meQers, it must reform its decision-making processes, at least for certain issues. Hato expressed similar views, envisioning a system of decision-making that varied depending on the particular issue. On some issues, he said, members could adopt a "pathfinder" approach that involved voluntary commitments. On other issues, majority voting might be used. However, on the most critical issues, Hato said, full consensus would be TOKYO 00001708 003 OF 003 required. ¶12. (C) Mizukami emphasized, however, that the present basic concept of APEC should be preserved, since APEC is "a unique forum" that provides benefits to members well beyond the annual APEC Leaders' meeting. For example, Japan and the U.S. have a variety of fora, both bilateral and multilateral, through which they engage on important issues. However, for many APEC members, including developed economy members such as Australia, APEC is one of the few multilateral organizations where they can exchange views with like-minded economies in the region. Mizukami also expressed admiration of the P-4 sub-group, which brings together four widely distant and different economies into one framework to advance mutual economic interests. The P-4 is a possible model for other APEC members wishing to create sub-groups to pursue specific mutual interests. For that reason, Mizukami said, APEC needs to retain some flexibility in its organizational structure. Japan's System of Two APEC Senior Officials -------------- ¶13. (C) Regarding the unique Japanese system of having two APEC Senior Officials, Hato acknowledged U.S. officials had commented on this issue in Arequipa, and admitted the GOJ had discussed it internally as well. However, APEC has been a METI responsibility since the organization's founding, and the ministry believes it contributes positively to APEC discussions. Any change in this structure should be Japan's sole decision, although he welcomed USG views at any time "if there is some inconvenience in the future." SCHIEFFER