ENGAGING JAPAN IN 2010

UNCLAS TOKYO 000041 SIPDIS STATE FOR E, EEB, EAP/J AND EAP/EP E.O. 12958: N/A TAGS: ECON EFIN ETRD PREL JA SUBJECT: ENGAGING JAPAN IN 2010 REF: A. 09 TOKYO 2302 ¶B. 09 TOKYO 2715 MESSAGE FROM AMBASSADOR ROOS TO ASSISTANT SECRETARY FERNANDEZ Mission Japan congratulates you on your confirmation and assumption of duties as the new Assistant Secretary of State for Economic, Energy and Business 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, 2009 Lower House election victory has changed Japan's political landscape, things remain more or less 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 Official Development Assistance, and a significant source of foreign direct investment. However, Japan also remains mired in a long period of under-potential economic growth (estimated to be 1 percent for the current year),with unemployment and deflation both at historic highs. I believe we have a good strategy for engaging the new DPJ government in Japan on economic issues over the next eight months by focusing on areas where our interests converge (Ref A). U/S Hormats began a dialogue with a wide range of Japanese officials during his visit in mid-November, and we are pursuing opportunities to further this agenda (Ref B). 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 (which, in Japan, means promoting domestic demand),strengthening APEC, foreign assistance, and tightening 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 this year, and Japan is chairing 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. Mission Japan and I look forward to organizing a visit and to welcoming you here. ROOS