During\nthe G20 Osaka summit, world leaders successfully produced a number of\nsubstantial outcomes on trade issues due to strong initiatives by the Japanese\ngovernment. As the foundation of global trade order, the WTO\u2019s multilateral\ntrading system has helped curb protectionism and has worked to contribute to\nglobal economic development and the reduction of poverty. However, due to the\nescalating trade tensions between the US and China, there are concerns about\nhow the conflict may negatively impact the global economy. <\/p>\n\n\n\n
The\nreasons behind the US-China trade friction stem from the increase in\nmarket-distorting measures caused by State-Owned Enterprises and industrial\nsubsidies, as well as trade restrictive practices, such as data localization\nrequirements and forced technology transfer. Since the current WTO system is\nineffective in resolving these issues, there is a strong need to call for\nreform to the WTO\u2019s mechanisms. <\/p>\n\n\n\n
From\nthese perspectives, I focus on how Japan has worked to resolve these issues\nduring its time as the host country of the 2019 G20 summit. While the Japanese\ngovernment has put great emphasis on coping with third world countries\u2019\ndistorting measurements through collaboration with like-minded countries, such\nas the US and the EU, it has also tried to pursue a rules-based, free and open\ninternational economic order by means of mega-FTAs. <\/p>\n\n\n\n
Firstly,\nsince 2017, Japan has held a trilateral ministerial meeting between the US and\nthe EU. This meeting was initially created as a result of strong initiatives proposed\nby the Japanese Minister of Trade and Industries, Mr. Hiroshige Seko. The\npurpose of this meeting is to discuss non-market-oriented policies and\npractices of third world countries that lead to severe overcapacity, which creates\nunfair competitive working conditions for their employees and businesses,\nhindering the development and utilisation of innovative technologies, and\nundermining the proper functioning of international trade. <\/p>\n\n\n\n
The\nmeeting made progress in certain areas of discussion such as, industrial\nsubsidies and the call to reform the WTO. In terms of the industrial subsidies\nissue, the ministers strived to increase transparency and aimed at identifying\nharmful subsidies that strengthen industrial subsidy rules to address market\ndistortions. Furthermore, in terms of reform of the WTO, in April 2019, the\nthree partners submitted a revised transparency and notification proposal to\nthe Council for Trade in Goods, while agreeing to intensify engagement with\nother trading partners to advance this proposal. The agendas discussed at the\ntrilateral ministerial meeting contributed to the agenda setting of the G20\nsummit in Japan that same year.<\/p>\n\n\n\n
Along\nwith the trilateral ministerial meeting, the Japanese government revised the foreign exchange law\nthat imposes tougher controls on foreign investment in companies\noperating in strategically sensitive industries. Both the US and the EU have\ntightened regulations intended to prevent the transfer of sensitive advanced\ntechnologies to competitor countries by way of foreign investments. <\/p>\n\n\n\n
This\nmove prompted the Japanese government to move quickly to avoid Japan being seen\nas the only loophole in a comprehensive transfer-regulation regime. As a result, the Japanese\ngovernment decided that inward direct investment regulations would require\nforeign investors to submit prior notification in cases where they plan on\nacquiring 10% or more shares of a company as listed on the stock exchange, when\nsaid company is a member of a particular industry.<\/p>\n\n\n\n
Last but\nnot least, amid concerns about the expansion of protectionist and\ntrade-restricting measures, Japan has placed great importance on a rules-based,\nfree and open international economic order by pursuing the mega-FTAs, namely\nthe TPP11, the TAG, the RCEP and the Japan-EU EPA, resulting in high levels of\nliberalisation and progressive rules. In particular, Japan took a strong\ninitiative to advance the TPP. <\/p>\n\n\n\n
Though\nthe TPP participating countries were faced with the challenge of the US\nwithdrawal from the original agreement soon after President Trump\u2019s\ninauguration, 11 countries were able to reach agreement without the US in 2018.\nUnder its new name, the TPP 11 officially opened its doors to new members with\nthe aim of extending the rules of TPP11 to include as many countries and\nregions as possible. Japan has been particularly keen on positioning itself as a\nlinchpin of free trade since it geared up to host the G-20 summit in Osaka.<\/p>\n\n\n\n
While the global trade environment has been facing\ndifficulties with the escalating trade friction between the US\nand China, Japan has strived to cope with the problems during its term in the\nG20 presidency. While the Japanese government has tried to cope with the third\ncountries\u2019 distorting measurements for enhancement of the rules on industrial subsidies\nby collaboration with the like-minded countries such as the US and the EU, the Japanese\ngovernment has also tried to pursue a rules-based, free and open international\neconomic order by means of mega-FTAs. <\/p>\n\n\n\n
Amid the global economy dealing with the consequences of US-China trade friction, the Japanese government has been able to show certain levels of leadership during its time in the G20 presidency. However, there is still a strong necessity to call for a rules-based, free and open international economic order under a multilateral framework.<\/p>\n\n\n\n