ENGAGING JAPAN ON ECONOMIC AFFAIRS

UNCLAS TOKYO 002415 SIPDIS STATE FOR E, EEB, EAP/J AND EAP/EP E.O. 12958: N/A TAGS: ECON EFIN ETRD JA PREL SUBJECT: ENGAGING JAPAN ON ECONOMIC AFFAIRS REF: TOKYO 2302 MESSAGE FROM AMBASSADOR ROOS TO UNDERSECRETARY HORMATS Mission Japan congratulates you on your confirmation and assumption of duties as the new Undersecretary of State for Economic, Energy and Agricultural Affairs. I appreciate your recent message to economic officers in the field, which serves as a springboard for us to talk about our work here in Japan. I wish to share the highlights of our thinking with you. While the Democratic Party of Japan's (DPJ) historic August 30 Lower House election victory has changed Japan's political landscape, things remain more of the same ) for good and bad ) with respect to the economy. Japan is still the world's second largest economy, the United States' fourth largest trading partner ($750 million in goods and services trade a day),the fifth largest provider of ODA, and a significant source of FDI. However, Japan also remains mired in a long period of under-potential economic growth (estimated to be 1 percent in 2010). Unemployment and deflation are both at historic highs. Reftel lays out what I believe is a good strategy for engaging the new DPJ government in Japan on economic issues over the next nine months. I know you can help. The election of a new government here provides us with openings to further our collaboration in areas like climate change and energy security, rebalancing the global economy (in Japan this means promoting domestic demand),strengthening APEC, foreign assistance, and strengthening rules on terrorist financing/sanctions enforcement. A new initiative of great personal interest to me is our effort to promote innovation and entrepreneurship in Japan. I have asked an interagency team to find ways to assist the Japanese in unlocking some of the vast innovative potential here as our countries confront great economic challenges to promote sustainable growth. We are also highlighting these themes in our public outreach activities. As you develop your travel and meeting calendar for the months ahead, I strongly encourage you to visit Tokyo at an early date. The entire Mission team stands ready to assist you and we can organize a substantive and productive visit. Japan is also an important early stop for you because 2010 will be a pivotal year in our bilateral relationship. We will celebrate the 50th anniversary of our security alliance next year, and Japan will chair the Asia Pacific Economic Cooperation forum, including the leaders' meetings in Yokohama next November. These two events represent an opportunity for our governments to highlight all that we do bilaterally and globally. All of the members of Mission Japan and I look forward to organizing a visit and to welcoming you here. ROOS