Summary report for the third eu asia top economist round table tokyo 2013 by Asia Matters

! ! ! ! ! ! ! ! Summary Report of! !

The Asia Matters! Third EU Asia Top Economist Round, Tokyo, Japan! The New Japanese Economic Environment –! Implications for EU Asia Trade!

7 September 2013

In cooperation with Keizai Doyukai, the European Business Council in Japan (EBC), the EU Studies Institute in Tokyo (EUSI) and the EU Japan Centre for Industrial Cooperation.!

Kindly supported by Sumitomo Mitsui Banking Corporation, IDA Ireland and KLM Royal Dutch Airlines!

Only weeks after Tokyo was announced as having been selected to host the 2020 Olympic Games, the Asia Matters Third EU Asia Top Economist Round Table (TERT) on 27 September 2013 continued the sense of confidence and optimism that is sweeping the Japanese economy at present.!

The ‘Fourth EU Asia Top Economist Round Table’ (TERT) took place on 6 June 2014, during Asia Business Week Dublin - an initiative of Dublin City Council and Asia Matters with Dublin Institute of Technology (DIT) as academic partner. The Fifth and Sixth TERTs will take place on 14 & 17 November 2014 in Tokyo and Beijing, respectively.

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About The EU Asia Top Economist Round Table !

The ‘EU Asia Top Economist Round Table (TERT)’ is a flagship event series organised by Asia Matters in cities across Asia and Europe. The event brings together top economists, business leaders and policy makers from Asia and Europe to engage with one another on the latest developments in EU Asia economic and trade relations.!

With the EU on the path to recovery and Asian economies continuing to experience growth, the TERT conference series brings key stakeholders together at a pivotal point in EU Asia relations. Multiple trade, investment and partnership negotiations are underway between the EU and its partners across Asia, TERT aims to analyse the business implications of these agreements. !

The fourth edition of the one-day C-summit style conference followed the success of previous TERTs in Dublin and Tokyo and featured top speakers from the OECD, Mitsubishi, Infosys, as well as the Irish Foreign Minister and Vietnamese Deputy Foreign Minister. The fifth and sixth TERT conferences will be held in Tokyo and Beijing in November 2014.!

! ! ! ! About Asia Matters ! !

Asia Matters is an economic institute based in Dublin dedicated to developing Ireland Asia and EU Asia business relations.! It is an independent, not for profit organisation with a strong educational remit delivered through business briefings, conferences, policy research and publications.! Within Ireland, Asia Matters provides thought leadership and business connectivity through events such as the annual Asia Business Week Dublin summit and publications including the annual Ireland Asia Business Yearbook, the book of reference for bilateral trade relations.! Within Asia, Asia Matters host the EU Asia Top Economist Round Table (TERT) series in association with key stakeholders on the ground. In 2014, the TERT series takes place in Tokyo and Beijing. ! Asia Matters works in close partnership with government, business and academic stakeholders in Ireland, the EU and across Asia. The Chairman of Asia Matters is Alan Dukes, the former Irish Minister for Finance.! !

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Opening Session

Mr. Martin Murray, Executive Director, Asia Matters, stressed the awareness in Europe that the new Japanese government is making things happen and that the growth strategy of Abenomics is actively invigorating the economy with a clear seven year plan.

stock market index had risen by 40pc and the Yen had depreciated by 20pc against the US dollar.

Almost 200 participants joined the event in the Sendagaya Campus at Tsuda College, which is one of three university members of the EU Studies Institute (EUSI) in Tokyo, along with Keio and Hitotsubashi universities.

“Almost every month the economic recovery is evident, with the Government recently revising GDP growth upwards to 3.8pc for the period April to June of this year. Capital and public expenditure are also going up. It is safe to say that the Japanese economy is turning for the better.”

Figure 1: The Three Arrows of Abenomics!

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The President of Tsuda College Ms. Mari Kunieda noted in her speech that Umeko Tsuda founded the college in 1900 as one of the first private institutions of higher education for women in Japan.

President Kunieda’s telling of the story of the college’s history provided food for thought on how openness to trade and more outward thinking can foster growth. Approximately 30,000 women have graduated from Tsuda College to date.

! Expectations for Abenomics !

Mr. Nobuyuki Koga, Chairman of the Board of Directors of Nomura Holdings Inc. and Nomura Securities Co. Ltd. made the first keynote address focusing on expectations for Abenomics – the economic policies advocated by Shinzo Abe, Prime Minister of Japan.

Abenomics aims to revive the sluggish economy with ‘three arrows’: a massive fiscal stimulus, more aggressive monetary easing by the Bank of Japan, and structural reforms to boost Japan's competitiveness. Mr. Koga noted that since Abe’s cabinet was formed last December the TOPIX 3

Expansionary Fiscal Policy: Goal: Provide a short term boost to economy. Step: A ¥13 trillion ($135 billion) special budget. Growth Strategy: Goal: Creat conditions for ! long-term growth, improve corporate competitiveness. Steps: Trans-pacific partnerships, trade agreements, employment reform, clean energy, medical care, agricultural exports. Aggressive Monetary Policy: Goal: End deflation. Steps: Press to BOJ to ease policy, raise inflation target to 2%, appoint deflation fighter as Bank of Japan chief.

Source: The Prime Minister’s Oﬃce, Japan

Focusing on the EU Asia relationship, Mr. Koga highlighted the Asian Development Bank forecast that Asia will account for more than 50pc of global GDP by 2050.

“Strengthening the relationship with the EU is essential for robust growth of Asia and moreover for global economic expansion. Cross regional trade volume is smaller than the trade within both regions

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- exports from Asia to the EU totalled around US$750 billion in 2012, while exports from the EU to Asia totalled US$500 billion. This has to be revitalised.”

The Strategic Perspective - A Partnership For Growth

Kicking off the first panel discussion of the day, which focused on the strategic perspective, the second keynote address was given by H.E. Mr. Hans Dietmar Schweisgut, EU Ambassador to Japan, who described this TERT as “most timely”.

!“Recent years have seen the rise of Asia as the predominant economic centre of the 21 st Century. It is therefore only natural for the EU to step up its engagement with Asia and develop a political and economic agenda, with trade policy at the centre of it.”

“ASEAN countries have become a new priority, in addition to our traditional major trading partners (Japan, the Republic of Korea) and China, which is now our second largest trading partner after the US.”

Ambassador Schweisgut said that the EU is looking with interest at Abenomics as it faces similar longterm structural problems to those experienced in Japan.

“Prime Minister Abe has outlined an ambitious agenda under the ‘third arrow’, including tax reform. This is crucially important as it could have an impact on the trade negotiations (between Japan and the EU) currently underway.”

In the context of TERT’s theme, the Ambassador felt economic renewal was critical in the EU if it was to realise its ambition of a partnership 4

for growth with Japan and he highlighted how much progress has been made in this regard.

He noted that the result of all of these efforts has been a significant decline in bond yields as investor confidence has started to return and that GDP results for the second quarter show a modest, but encouraging, growth rate of 0.3pc.

The remainder of the Ambassador’s speech focused on the EU Japan trade relationship and the EU’s ambitions for the 21st Century. In March of this year, the EU and Japan embarked upon two ambitious and interlinked negotiations: an Economic Partnership Agreement (EPA), dealing with every aspect of their trade relationship; and a Strategic Partnership Agreement (SPA), covering a broad range of issues for closer cooperation such as innovation and education.

With this in mind, the Ambassador said the EU Japan trade relationship could, and should, be much stronger.

“The EU and Japan are the largest and fourth-largest economies in the world, respectively, and the combined value of both markets accounts for more than a third of global economic activity.”

However, Japan was the EU’s third most important export destination in 2003, while today, it ranks only seventh.

“Only 3pc of global European foreign direct investment (FDI) stock is in Japan with €1.7bn being invested in 2012 – this is well below levels of investment in other OECD countries.”

So far there have been two rounds of talks in the EU-Japan Free Trade Agreement (FTA) negotiations, with the third round taking place in October this year in Brussels.

The rest of the first panel session involved presentations from EU country ambassadors and the Ambassador of Vietnam followed by representatives from the German embassy and the Ministry of Foreign Affairs of Japan.

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H . E . M r. E g i d i j u s M e i l ū n a s , Ambassador of the Republic of Lithuania outlined the EU’s agenda under his country’s presidency, which started on 1 July.

“As the EU moves towards recovery, it is essential for us to enhance its ability to provide adequate responses to economic, financial, social and energy challenges. This is why the motto of Lithuania’s Presidency is ‘Focus Europe’, with the three goals of building ‘a credible, a growing and an open Europe”

Regarding the FTA negotiations between the EU and Japan, he highlighted the potential for Lithuania: “Japan’s trade volumes for today are not very high with Lithuania, just around €60m last year, but the growth tendency is obvious. Last year Lithuanian exports to Japan grew up by almost 44pc and in the first half of this year, they grew by almost 37pc.”

H.E. Mr. John Neary, Ambassador of Ireland cited that negotiations for The EU-Japan FTAs started during Ireland’s presidency of the EU in the first half of 2013.

Ambassador Neary spoke about how Ireland is continuing to strive to build links with Japan:

“Prime Minister Abe’s visit to Dublin after the G8 summit last June gave a significant boost to bilateral relations and, apart from this visit, there has been a marked increase in the number of high-level political exchanges in both directions in recent years”

“The share of Asian trade is still quite low in Ireland – less than 10pc of our total trade – but it has grown by more 5

than 250pc in the period since the Government implemented the Asia Strategy 15 years ago. Within Asia, our largest trading partners by a considerable margin are China and Japan, which between them account for more than 50pc of our total trade with Asian countries.” Ambassador Neary concluded that, as Japan seeks to increase inward investment, Ireland would be happy to share experiences from its own FDI expertise, an essential foundation of Ireland’s economic development.

H.E. Mr. Doan Xuan Hung, Ambassador of the Socialist Republic of Vietnam: Vietnam considers Japan and the EU as its largest and most important economic partners, with trade with Japan reaching around US$26 billion and trade with the EU reaching about €39 billion in 2012, according to Ambassador Dong Xuan Hung.

He noted that relations between Vietnam and the EU have developed rapidly – the partnership and cooperation agreement between the two is awaiting ratification and the two sides have officially launched negotiations for an EU Vietnam FTA. High level visits are on the rise - Prime Minister Nguyen Tan Dung concluded an official visit to France on 26 September. 2013 represents the 40th anniversary of bilateral diplomatic ties between Vietnam and Japan. “Vietnam’s industrialisation strategy within the VietnamJapan cooperation framework to 2020 focusing on six industries is expected to create a new impulse for industrial growth,” the ambassador noted.

Dr. Lutz H Görgens, Minister and Economy and Technology Department Head, Embassy of the Federal Republic of Germany believes that Japan’s reform projects related to demography are the most essential part of the ‘three arrows’ of Abenomics.

“It could turn the challenges of an ageing society into opportunities (such as Smart Cities, mobility infrastructure investment and medical innovation) and promote societal change by rewarding families and single parents with children, creating more kindergartens and

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getting more women into the workforce,” he said.

“We face similar challenges in Germany and aim to target these exact areas – higher female workforce participation, more productive senior citizens and more immigration of skilled labour.”

He believes that Japan, in the Meiji period, in the Showa period and potentially again today, has been a shining example of competitive and innovative spirit.

“Following this example has been good for the Asian tigers. It has been good for Germany too when we overcame the slump at the beginning of this century. “

“In the first 12 months of my tenure in Tokyo, the success of competitive cooperation between German and Japanese companies and research organisations has impressed me most.”

Mr. Koichi Hasegawa, Deputy Director General, European Affairs Bureau, Ministry of Foreign Affairs of Japan focused on the significance of the SPA and EPA and the TransAtlantic Trade Partnership (TTP).

“Japan aims for the volume of traded goods to increase from the current 19pc up to 70pc in 2018 through various negotiations on the Japan-EU SPA/EPA, the TPP, the JapanK o r e a - C h i n a F TA a n d t h e Regional Comprehensive Economic Partnership”

“We expect these various negotiations will stimulate and revitalise each other and therefore mutually reinforce dynamism among them.” 6

He emphasised that the economic relationship between Japan and Europe is already closely interconnected:

“Trade volume between Japan and the EU amounted to around 13 trillion yen in 2012. There are around 2,400 Japanese firms operating in the EU, creating more than 430,000 jobs. The GDPs of Japan and the EU are 30pc of the world GDP and they represent 40pc of world trade between them.”

Japan’s New Challenge Under The Growth Strategy

The third keynote address was made by Mr. N a o s h i H i r o s e, D i r e c t o r - G e n e r a l f o r Economic and Social Policy at the Ministry of Economy, Trade and Industry in Japan.

He highlighted the need in Japan to shake away “the shrinking mindset” and instead “unleash talents, technology, ideas and money, which have stagnantly been hidden in industry and society”.

Outlining the objectives of the three arrows of Abenomics, Mr. Hirose examined them from five perspectives: renewal of plant and equipment, industries and businesses; deregulation; e ff e c t i v e h u m a n r e s o u r c e s u t i l i s a t i o n ; breakthrough compartmentalisation and globalisation.

Figure 2: Current female workforce numbers in Japan

Potential: 3 million additional female workforce

Source: Ministry of International Aﬀairs and Communications’ FY12 Labour Force Survey,

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He pointed out that business start-up rates are low in Japan – less than half the rate in the US and UK at around 10pc of all businesses (see figure 3) and that the money flow to venture capital firms dramatically shrank following the Lehman Brothers shock.

Figure 3: Business start-up and termination rate in US, UK, Japan!

Focusing on the human resources issue, Mr Hirose talked about the need to enhance flexibility of the labour market. There has been a policy shift from maintaining jobs in companies to supporting labour mobility and the Government is promoting diversified ways of working.

It is also striving to encourage women’s participation in the labour market through measures such as expanding childcare capacity and recruitment of women for civil service jobs. “There is the potential for 3 million additional women in the workforce,” said Mr Hirose (see figure 2 above).

Japan

Source: METI

! The Economic Perspective !

The second panel discussion featured perspectives from economic experts.

Mr. Kazusama Iwata, President, Japan Center for Economic Research outlined three possible scenarios in 2050 from research undertaken by JCER.

Figure 4: World Economics 2010-2050 (base scenario)

Note: Costant GDP in 2050 (market exchange rate), is relative to the size of the circles

Source: MIC (CIP), US Labor Department, Eurostat, UK ONS, Barclays Research 7 © Asia Matters 2014

The first involves the US remaining as an economic hegemon, with China falling into the ‘middle income trap’   (see figure 4 above). In the second, Japan will come back to the extent where its per capita gross national income will be doubled to US$88,000. The third scenario features risks of fiscal bankruptcy. “The consumption tax rate needs to be raised to 25pc if we want to stabilise the government debt/nominal GDP ratio at 200pc in 2050,” said Mr. Iwata.

Chief economist at the Nomura Research Institute, Mr. Richard Koo, discussed comparative lessons learned from crises in Japan, Asia and the Eurozone.

He made the point that countries in Europe experienced house price bubbles in recent years, despite this happening in Japan 16 years earlier.

The big challenge with Abenomics is getting businesses to borrow money

(see figure 5). “Private sector savings as a percentage of GDP is 8.17pc in 2013. A similar situation was evident in Germany where businesses and households stopped borrowing after the dotcom bubble. The European Central Bank’s drastic interest rate cuts to 2pc in 2003 failed to revive the German economy. Germany recovered from post-dotcom balance sheet recession by exporting to other eurozone countries.

“Meanwhile, Spanish and Irish households increased borrowings after the dotcom bubble and now they are in severe financial distress.”

Mr. Kyohei Morita, chief economist at Barclays Securities Japan, explored the notion of Japan as the “world’s economic laboratory”. He suggested that ‘ABE’ could prove to stand for either ‘asset bubble economy’ without growth or ‘absolutely bullish economy’ with growth.

The Bank of Japan (BoJ) introduced a price stability target of 2pc in January of this year, which Mr Morita feels is ambitious and he said

Figure 5: Challenge of Abenomics: Getting businesses to borrow money

Financial Surplus or Deficit by Sector (as a ratio to nominal GDP, %) 15

(Financial Surplus) 12

Households

9 6

Private Sector Savings: 8.17% of GDP

Rest of the World

3 0 -3

1991-2003 shift = 22% of GDP

-6 -9

Corporate Sector -12 -15

(Non-Financial Sector + Financial Sector)

General Government

Balance Sheet Recession

Global Financial Crisis

(Financial Deficit) -18

81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 Note: All entries are f our-quarter moving averages. For the latest f igures, f our-quarter averages ending with 2Q/'13 are used. Sources: Bank of Japan, Flow of Funds Accounts, and Government of Japan, Cabinet Of f ice, National Accounts

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Figure 6: Japan fell into deflation but managed to avoid a surge in jobless rates

(% #y/ y) 6# 5#

C PI'(overall) UK Euro#area US Japan Inflation#target#(2% )

!1#

!2#

!3#

“By 2050 average per-capita income in Asia will be similar overall to those of European citizens today with the middle class and urbanisation as major drivers. But Asia needs to manage a number of emerging challenges in the areas of technological development, inclusive growth, environmental sustainability, quality of institutions and regional cooperation and integration”

Unlike other markets, he noted, Japan fell into deflation but managed to avoid a surge in jobless rates – at just under 4pc, its unemployment rate is well below the EU rate of 12pc (see figure 6).

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natural disasters and the Tokyo Olympics in 2020 justify a huge investment in social infrastructure?” he asked.

Dr. Masahiro Kawai, Dean, Asian Development Bank Institute asked the question ‘will this be an Asian century?’ in his presentation. 9

Japan

00 01 02 03 04 05 06 07 08 09 10 11 12 13 (C Y)

the BoJ’s balance sheet was going to be “huge” as we head towards 2014.

“Regarding the population, it is hard to make the replacement investment needed and there are questions raised about immigration. With infrastructure, it is easier to make the replacement investments but you have to look at budget constraints – do the strategy of reducing/preventing

00 01 02 03 04 05 06 07 08 09 10 11 12 13 (C Y)

10" 9"

Mr. Morita talked about two types of aging problems that Japan faces – aging of the population and of infrastructure.

Euro"area

11"

Unemployment.rate

(% ) 12"

! !Figure 7: ProjectedAsian Century GDP of AsiaScenario and Asia’s world share of GDP in 2050

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Rest of World, 2%

Middle East & North Africa, 3%

Sub Saharan Africa, 2%

Asia; 52%

Europe, 18%

Latin America & Caribbean; 10% North America; 13%

Source: Asian Development Bank Asia 50 (2011)

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“For its success, Asia must maintain peace and security in the region and work with the West. The West needs to adjust to the rise of Asia, by allowing Asia a greater voice and responsibility in global economic and geopolitical management.”

! A Bridge Between the EU and Asia !

Mr. Hiroyuki Ishige, Chairman and CEO of the Japan External Trade Organisation (JETRO) in Tokyo delivered the fourth keynote address, which looked at Japan’s growth strategy and role as a bridge between the EU and Asia.

He said JETRO is to play a vital role in the implementation of Japan’s revitalisation strategy – most notably, it is designated as the core organisation for promoting inward foreign direct investment (FDI). To this end, JETRO plans to double its workforce in charge of direct investment and enhance the framework for attracting such investment. It is also bolstering onestop support services for foreign companies and enhancing closer collaboration with foreign trade and investment promotion organisations such as Ubifrance, Mr. Ishige said increased FDI in Japan was expected to lead to EU Japan cooperation in the emerging Asian market as well.

“Japan offers three windows of opportunity for European companies (see figure 8) – first it is ranked Number 1 in the world regarding its capacity for innovation, according to the World Economic Forum and is Number 1 among G8 countries in terms of expenditure on research and development.

“Secondly, Japan is a business platform in Asia with advanced ICT systems and basic infrastructure and 10

Figure 8: The three windows Japan offers for European companies

Japan is ranked number 1 in the world regarding its capacity for innovation

Japan is a business platform in Asia with advanced ICT systems and basic infrastructure Japan is a trendsetter in Asia- good test !

3 market before entering other Asia markets thirdly, Japan is a trendsetter in Asia – it can act as a test market before entering other Asian markets.” He cited the example of Nike which is now utilising its promotional strategy for Japan globally in the face of fierce competition. “Some companies may feel that entering the Japanese market would not be profitable due to intense competition. However, in contrast to an average profit ratio of 3pc for domestic companies, foreign firms in Japan enjoy a profit ratio of 5pc. Japan is a country where there is money to be made.” Is this the third window of opportunity?

! The Trade and Investment Perspective !

The final panel of the day focused on EU Asia trade relations.

Sir John Boyd, KCMG, Chairman, Asia House, described the relationship between Britain and Japan as “old and treasured”.

Having been the British Ambassador to Japan from 1992 to 1996, he said he saw the issue of Japan’s structural reform with “double vision”: “On one side this is essential to Japan’s economic and political interest, on the other it clearly risks sacrifice of a central essence in an unchanging tradition. This I fear will always be true of agricultural reform.

“But I have always valued Japan’s ability to confront a critical moment, retain her balance and set an example. In my view, Japan succeeds best when looking outward, pursuing

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open policies and pitching to global betterment.”

committees involved, representing more than 2,000 European companies in Japan,” he said.

“ Asia’s economy is inextricably linked with that of the EU and this will not change, despite the structural issues that have to be resolved. “We count on Japan to set a positive tone. FTAs are not merely negotiations. ”

“The four priorities of the EPA negotiations are: complete tariff elimination on agricultural and industrial products; service and investment; opening up of the Japanese public procurement market and non tariff barriers being lifted (such as in the areas of cars, food, pharma and medical devices).”

Handled with vision, they set a tone and strengthen an approach that benefits not just the immediate players,” he said.

He presented two insightful tables showing the current figures of bilateral trade between Japan and The EU, which revealed Japan as the EU’s sixth biggest export partner (see figures 9 & 10)

Examining the effect of Abenomics on financial markets, Mr Tim Tynan, Managing Director and Executive Officer, Transaction Services, Citibank Japan Ltd said optimism was real in Japan although impactful results had yet to be realised ( see figure 11 overleaf)

Mr. Michel Theoval, Country Director, GHT Japan and senior Vice Chairman of the European Business Council (EBC) in Japan went into depth on the EU-Japan EPA in his presentation. “From the start of the process until now, EBC has been very active, either by supplying to the EU side annual White Papers, or by countless meetings with Japanese Ministers and bureaucrats and by sector activities of the 29 specialised  Figure 9: 10 Major EU Import Partners (2011)

He highlighted the increase of money supply as one of the effects of Abenomics relevant to Citibank clients. “This is lowering interest rates, which is narrowing the output gap between real and potential GDP with the goal of escaping deflation,” he said. Mr. Tynan believes Citibank has a role to play in enabling growth between the EU and Japan trade corridor.

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Figure 10: 10 Major EU Export Partners (2011)

“Trade flows are increasing between Japan and the EU and Japanese corporations will increase investment and development globally. Banks, the public sector and development organisations will continue to contribute to expansion and growth”.

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Mr. Danny Risberg, President and CEO of Philips Electronics Japan, focused on the topic of Japan’s ageing population in his presentation as an area of both opportunity and challenge. Established in 1953, Philips Electronics Japan has 80 offices and employs 1,700 people in total. Noting that Japan is the second largest healthcare market in the world, Mr. Risberg outlined that Philips is involved in delivering medical devices and services to hospitals, such as patient monitoring, as well as home healthcare including ventilation solutions and medical alert services.

Figure 11: Expected Results from Abenomics Policy

JPY Depreciation

Export Expansion

Investment in Private Sector! -Tax Reduction

Fixed Investments(↑)

Investments in Public Sector

Infrastructure Business (↑)

Quantative Easing:! - Range of JGB purchasing expanded! - BOJ’s holdings of JGB & ETF and monterary base doubled in 2 years 12

Source: Citi Research

Overcome Deflation

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Japan’s ‘hyper ageing’ is the start for what we will see in many areas of the world, according to Mr. Risberg. “China and Korea are positioned to age faster than Japan. The challenges in aging countries include increases in the incidences of chronic diseases as well as rising healthcare costs, a shortage of care providers and a desire for more choice in life and care. A solution to the cost, care and livelihood puzzle is needed to allow the aged to participate and for social sustainability and quality of life.” Figure 12: Phillips’ Aging Well Approach

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He presented Philips’ approach to the issue – the ‘Ageing Well’ model being adopted at its centre for health and well-being (see figure 12). It aims to replace false perceptions of ageing to recognise it as a time of new possibilities as well as shift the focus of healthcare from treating illness to promoting health and wellbeing.

It also aims to create policies that support inclusion of the elderly by changing health and pension systems and to find solutions to help people respond with resilience as they face transitions affected by age, such as the ability to perform daily life activities.

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In his closing remarks, Professor To s h i r o Ta n a k a , P r o f e s s o r Emeritus, Keio University/ Governor, EUSI/ Jean Monnet Chair ad personam, said that the EU had been underestimated in Japan over the years.

“The EU has been underestimated in Japan. we are told that China has taken over Japan in second place in terms of GDP in 2010. But this is a misleading statement. For me, the EU should be on the top of the table as the largest economic area, followed by the US, China and then Japan in fourth place.”

“Most of the statistics published by government agencies in Japan are nation-based, which tell us about the member states of the EU, but don’t give us a full picture of it.” He noted that relations between the

EU and Japan during his 40 years lecturing on EU politics have developed from bitter trade frictions to global cooperation.

“I am expecting that the current negotiations on EPA and SPA will be concluded soon. But the coverage of the EU-Japan negotiations by the Japanese press has been very little compared with the TPP negotiations. Here again we see the shadow of the US. However I am convinced that the EU-Japan EPA and SPA will be as important for Japan as the TPP.”

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“I am convinced that the EU-Japan EPA and SPA will be as important for Japan as the TPP.”

Like some other speakers, Professor Tanaka cited the quote from Prime Minister Abe that “Japan is back”. “I sincerely hope this will become a common recognition in other parts of the world, especially in Europe and Asia. I also hope that ‘Europe will be back’. The world economy including Asia will not be back to normal without the full economic recovery of Europe,” he said.

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Conclusions! Third EU Asia Top Economist Round Table!

General Manager of the EU-Japan Centre for Industrial Cooperation, Mr. Hiroshi Tsukamoto concluded the conference, describing the discussion as “quite stimulating and informative”.

Regarding Abenomics, he said the main point to draw from the event was the importance of its implementation. It emerged from the Round Table that Europe has a deep, practical interest in the workings of Abenomics.

“EU Ambassador Schweisgut quoted Winston Churchill who said ‘However beautiful the strategy, you should occasionally look at the results’. We need to work hard for the results.”

He took three further key messages from the conference:

“The EU-Japan EPA/FTA needs to be concluded as early as possible and mega FTAs also need to be promoted.“ The importance of achieving progress within the first year was stressed.

“Secondly, Asia is a centre for growth. The EU has increased its focus on seeking out business opportunities in Asia and Mr Ishige of JETRO urged that Japan could be a good gateway to Asia for the EU.” The key role of Japan within the broader EU Asia trade relationship was highlighted.

“Finally, Dr. Kawai of the Asian Development Bank talked about the concept of an Asian Union. This is a dream for the future at the moment. Unfortunately, Japan has current tensions with China and Korea, which are in need of resolution.

“ We need to look into an Asian Union. To improve the relationship with neighbouring countries is very important. Europe has shown us good wisdom in this regard. Japan needs to learn this kind of wisdom in order to realise an Asian Union. ”

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Asia Matters Contacts!

Martin Murray! Executive Director,! Asia Matters! E: martin.murray@asiamatters.biz! T: +353 87 268 8805!

Rónán Lenihan ! Director of Operations and Development,! Asia Matters! E: ronan.lenihan@asiamatters.biz! T +353 87 799 2913!

Stephanie FitzGerald-Smith! Deputy Director of Marketing and Communications, ! Asia Matters,! E: stephanie@asiamatters.biz! T: +353 87 771 4317!

This document is a summary of the discussions from the “Third EU Asia Top Economist Round Table”. The insights shared by speakers at the event are summarised in this report in good faith and accurately reflect the key topics, quotes, facts, figures and charts presented during the conference. This is not investment advice or an offer or solicitation to sell or purchase any financial instruments shares or products. The author and partners to this publication expressly disclaim all liability to any person or corporation in respect of any losses or other claims, whether direct, indirect, incidental, and consequential or otherwise arising in relation to the use of this report as the basis for any investment or other decision or in connection with any advice given to third parties.!

Special thanks to ! Alan Dukes, Chairman, Asia Matters! Tom Hardiman, Chairman, Chester Beatty Library! SMBC, IDA Ireland and KLM Dutch Airlines!

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