President Sajie, Distinguished Guests, Ladies and Gentlemen,

It is my very great pleasure to talk at Clare Hall again today. In November last year I had the privilege to give a talk to the distinguished audience at this college, but compared with that occasion I have three challenges to overcome today. Firstly, with the warmer weather and the longer days the lure of a cool beer outside may be rather greater than that of the lecture theatre. Therefore, I may have a little more difficulty in keeping your attention today, than on a dark November evening. Secondly, I have a hard act to follow after Professor Onuma ' s talk yesterday. I understand that Professor Onuma gave an excellent Ashby Lecture on �ߡ�A Transcivilisational Perspective on Global Issues: A Way To Overcome West-Centric Discourse on World Affairs in the Twenty-First Century�ߡ� I doubt whether my talk today will be as academic or intellectual as his. Thirdly, I have to confess that last November I gave a lecture under the same title as today ' s : ��׫apan's Role in the International Community�ߡ� Therefore I will try to differentiate today's lecture from my previous one, but to be honest, the title is a very convenient one for an Ambassador - as the surrounding situation changes, I can choose whichever topics that relate directly to my job.

During the six months since my last talk, the world has undergone a great many changes. From the viewpoint of the Japanese Ambassador in London, three major changes have taken place over this period. Firstly, the Japanese economy is undergoing a steady recovery. And the tone of f oreign media coverage , including British, has altered noticeably . This is obviously a topic right at the heart of Japan ' s role in the international community. Secondly, there have been a number of significant developments in Iraq. On November 29th, soon after my last lecture, Ambassador Oku who was a member of our Embassy and had been sent to Iraq on a temporary basis to work for Japanese efforts for reconstruction of Iraq, tragically sacrificed his life in Iraq. It was very difficult time for me, for our embassy and for the Japanese government. And in December the Japanese G overnment made the formal decision to dispatch the Self Defense Forces to Iraq for humanitarian assistance and reconstruction purposes. And Iraq continues to dominate the news. Thirdly, on May 1st this year further enlargement of the EU became a reality . How to deal with Europe has been a major focus for British foreign policy debate over the last year.


It has naturally raised the issue of how each country should utili s e the opportunity for economic integration, and how best to cope with the emerging trend of regionalism and how to construct better relationship with neighboring countries . For Japan, countries of the East Asian region have commanded our attention . Fresh in the mind is Prime Minister Koizumi �ߡ�s second visit to North Korea , which took place only last weekend. Clearly, o ur relationship with China , the two Koreas and other East Asian countries will remain the important subjects of Japanese foreign policy in the foreseeable future.

Based on these observations today I would like to focus mainly on the two most prominent items on Japan's foreign policy agenda, East Asia and Iraq, and also touch upon the Japanese economy, all under the convenient title of ��׫apan ' s Role in the International Community�ߡ� Towards the end of my remarks , I will touch upon the importance of Japan-UK collaboration.

Firstly, I would like to talk about the Japanese economy. H appily my first message to you today is that, the Japanese economy seems to be in the best shape after some years, although there remain problems to be addressed. Japan ' s influence on the world is by no means limited to the economy. Politically and culturally too, Japan contributes a great deal, but it is very difficult to think of Japan ' s role on the world stage without naturally thinking about the Japanese economy.

In the UK alone, there are over 1000 Japanese companies, including those in the automobile and consumer electronics industries. There are 191 countries in the world, and in terms of the economy, Japan is second in size behind the United States accounting for 15% of total global GDP. This is about 3 times that of the UK and 4 times that of China. Considering its impact on the world economy, maintaining a healthy Japanese economy might be one of the most important contributions Japan can make for the whole world.

For about ten years Japan ' s image has been one of a n economy whose bubble has burst and which is ensnared in a state of continuing slump . But now the Japanese economy is making a steady comeback. C orporate profits have risen for s ix quarters in a row, e xports are on the increase, real GDP growth advanced at an annual rate of 6.9% in the fourth quarter of 2003, and 5.6% in the first quarter of 2004. R eal growth for the fiscal year 2003 was 3.2 % and the economy showed the positive growth in nominal terms as well. Stock prices in April 2004 have gone up by almost 50% compared with April 2003.

The recovery of the Japanese economy has been powered by various factors. Domestic demand, especially private consumption, inventory investment, and capital investment are all stronger than expected. Exports are rising due to overseas economic revival. After undergoing difficult restructuring process based upon the cost-cutting and technological development efforts , Japanese companies have now made a dramatic recovery.

T he demand for LCD televisions, which rose from 1.34 million units in fiscal 2002 to 3 million in fiscal 2003, and is expected to reach around 7.5 million in the current fiscal year. These sectors, in which Japan enjoys technological pre-eminence, should benefit from continuous buoyant demand in the foreseeable future. Meanwhile, s tructural issues that affected the Japanese economy after the burst of the bubble have also been addressed. For example, the steady progress has been made regarding the disposal of non-performing loans in the banking sector has progressed steadily. The ratio of such loans at the major banks has decreased from 8.4% in March 2002 to 6.5% in September 2003, indicating the banks are firmly on track to meet the government ' s target of 4% by March 2005. The problem of deflation has also been alleviated. Though the inflation rate has been negative since 1999, this rate has moved upwards since last year and has recently almost reached zero.

There exist a number of structural issues common to many advanced nations , such as pension fund reform adjusting the aging society. As some of you might know, in the current Diet session, pensions have been the main issue of debate in Japan and have caused great political turmoil. There are some concerns as well about the strength of the yen and the persistence of deflation. But it is fair to say that the Japanese economy is set on a course of steady recovery.

This recovery is clearly something that will be welcomed throughout the rest of the world. It is hard to believe that some analysts worried about the possibility of a global recession triggered by Japan some 6, 7 years ago. Moreover a robust Japanese economy has great significance for the development of industrialising nations. Through further opening -up of its market, provisions of official development aid, global financial transactions and other mea ns , the Japanese economy can add considerable impetus to the growth of the global economy .

Next, I would like to talk about the issues of Japan ' s diplomatic relations with East Asia.

The aim of the Japanese diplomacy is the maintenance of peace and security of the region and the achievements of its prosperity. And Japan values such basic values as democracy, freedom, human rights, the rule of law.

Continuing economic development in East Asia is creating an enormous market. If you look at the economic relationship between Japan and China as an example , s ince the normalisation of Sino-Japanese diplomatic relations in 1972 , trade between the two countries has increased one hundred times , last year surpassing $130 billion. At present China is Japan ' s second largest trade partner after the US, while for China, Japan represents the largest. In 2002 imports from China to Japan exceeded those from the US, and some have argued that China is exporting deflation to Japan. However, Japanese exports to China have also increased at a rapid rate too. As far as the history of Japanese trade goes, 2003 should be remembered for years to come. Total Japanese exports to China, Hong Kong and Taiwan have exceeded exports to the US. The image of the Japanese economy being largely dependent on the US market prevails, but Greater China is also becoming more and more important. From the investment side too, the connection between China and Japan is becoming stronger.


Japanese investment in China is on a scale second only to Hong Kong and the US at a working base of $36.6 billion. I have been recently told about Japanese business activities in S hanghai . Japanese enterprises have been setting up offices in the Shanghai area at a rate of two per day. If we include offices in the surrounding provinces, there are already close to 10,000 established Japanese companies, while the number of young students attending Japanese schools in Shanghai has increased from 700 students two years ago to 1600 today. And Japan ' s trade with 10 ASEAN countries in South East Asia is equivalent to that with the EU. If you add Korea , Greater China and ASEAN nations , over 40% of Japa n ' s trade involves the East Asia region. And this region is brimming with great potential that has yet to be realised.

Within this region what is the best course for Japan to take? I would like to raise the following four points: the maintenance of the US presence, maintaining healthy relations with the region's major powers, strengthening regional solidarity and the appropriate management of regional conflict.

Firstly, the question of US presence in East Asia. The solid Japan-US security relations based upon the security treaty is the main pillar of the peace and security of East Asia and wider . Under the security alliance, Japan and US share basic values of democracy and market-oriented economy. The US presence in this area is a stable, important factor of peace, security and prosperity of the region. US presence in the region is indispensable to the management of regional conflict s . On the other hand a stable and prosperous East Asia presents great incentives for America to become intimately involved in the region. Also, should the US genuinely require assistance, Japan would be there to give it. That is critically important and the continuing preservation of the US-Japan alliance holds a very significant meaning in terms of the provision of peace in East Asia.

Secondly, the relations with the major powers of the region, particularly the relationship with China. Japan-China relations are one of the most important bilateral relationships. As neighbours, problems may arise from time to time, but it is essential to manage problems and build a sound relationship looking toward the future. There are some in Japan who regard the rapidly developing economy of China is as a threat to workers and the economy of Japan. There may be challenges to overcome, but we should regard the expanding Chinese economy as opportunities to Japan. What we should think about is not a zero sum game, but a plus sum game. As figures which I quoted before clearly show, both Japan and China are benefiting from each other. We are pleased that China became a member of WTO (World Trade organization) about 3 years ago and China has made huge efforts to make their economic system and rules much more harmonious to the international standard.

Issues of histor y continue to be raised by the Chinese side from time to time . More than half a century ago, Japan caused tremendous damages and sufferings and damages in the Asia Pacific area. A series of Japanese prime ministers and other leaders expressed the feelings of deep remorse and apology over what happened. We should not forget our past. We should convey to younger generations what happened so that we never repeat the errors in history. At the same time, it should be noted that, since the end of the second war, Japan has made huge efforts for the peace of the world and has never ever caused a war. In Japan, where such an open democracy is firmly established, there is no possibility of going back to militarism.

There may exist other problems within the relationship between Japan and China . Whilst dealing with these problems practically, Japan ' s basic position is to engage China in a constructive partnership with international community. We note very positively that from the Chinese side too there is a strengthening of commitment to the international community. The re is a big room for Japan and China to cooperate on various matters of the region.

Thirdly, it is necessary to strengthen regional ties of East Asia . There is currently no soil in East Asia like that which enabled Europe an Union to be established. There are divided countries such as North and South Korea and China and Taiwan, comprising the remnants of the cold war structure. In Asia, the political, economic and social systems differ greatly from country to country. However, with these realities in mind, we should pursue unremittingly the strengthening of regional partnerships. From this viewpoint, I would like to discuss two points: Free Trade Agreement and cultural linkage.

One, from an economic view, is the importance of Free Trade Agreements(FTA) or Economic Partnership Agreements (EPA ) . In order to strengthen the world trading system, the most ideal way may be multilateralism. It is vital that we maintain and develop the governing rules of the World Trade Organization (WTO) . Japanese Government has been making tremendous efforts to push the WTO Round negotiation s forward. However, despite the time and energy required in WTO negotiations, it is a structure that does not produce results with ease.


Progress is not easy when there are approximately 140 countries at totally different stages of development, and conflicting interests. This becomes even more difficult when an attempt is made to agree on various issues such as commodities trade, service industries and investment all at the same time. This is where bilateral FTAs come in. Establishing an FTA will lower custom duties or otherwise reduce restrictions on economic interchanges and, if the market place becomes more integrated , will expand import , export markets and the scope of economic interchanges . If agreements can be made between a small number of participating countries, then it may be possible to help create rules in fields that currently still remain uncontrolled by the WTO. If two countries become economically entwined , industries will have to be competitive and become more efficient . And they will come to enjoy an efficient economic structure. Outside the economic sphere, the existence of FTAs means that partnerships can be chosen, thus allowing flexible strategies. FTAs can be made with appropriate countries, strengthening political cooperation for both countries.

Who would Japan choose to negotiate FTAs with? The priority would no doubt be with East Asian nations. With the USA and Europe, custom dut ies or other barriers on economic activities is already very low. East Asian countries are on the whole Newly Industrialized Countries (NICs) and FTAs with these countries could potentially lead to larger economic profit. Indeed, the momentum towards the establishment of FTAs among East Asia nations is increasing. One reason for this is to take advantage of expanding business opportunities and economic vitalization. On top of this, the expansion and deepening of the economic integration of EU and movement towards FTA in America are also leading to a growing East Asian interest in FTAs.

C oncluding of an FTA with another country is not an easy task. At present, the only country that Japan has an FTA with is Singapore.

Recently, an agreement was made with Mexico. Talks have also been conducted with the Philippines, Thailand and Malaysia as well as South Korea, with whom an agreement is to be targeted in 2005, but there are still a great many obstacles to overcome before the s e can be concluded. In any FTA negotiations, industries with a comparative disadvantage tend to resist the liberalization. There are also situations where attempts to strengthen collaboration meet with political and social resistance . However, establishing close-knit economic relations within East Asia would also benefit Japan in its overall security. This will in turn lead to the promotion of structural change in the Japanese economy.

In terms of regional partnerships, it is also important to focus on the role of cultural links. Popular culture such as film, drama, pop music, animation and comic books show strong following in East Asia and there even appear to exist what could be described as an East Asia pop culture sphere. Cultural links promote human exchanges. If you look at the relationship between Japan and South Korea and take the number of visitors as an example: Last year, there were more visitors to Japan from Korea than from any other country, totaling 910 thousand, up 20% from the previous year. This topped the number of Taiwanese visitors who had been the largest group for 15 years. The Korean Government has gradually liberalized its control over Japanese culture imports since 1998, and in January of this year officially lifted its ban on selling Japanese music CDs. In Japan also, there is currently a boom of Korean dramas , with programmes such as ��׸inter Sonata�ߡ�becoming phenomenally popular. Naturally, the football World Cup of 2002 jointly hosted by Japan and Korea took on great importance. During the initial stages in the process which led to the decision to make it a joint event , there remained many political issues between the two countries , and Japanese culture was still banned from Korea. Th ere has been steady progress since then, and it is an amazing achievement to have successfully staged the World Cup, bringing a turning - point that will go down in history. Through this process, the Japanese and Korean people have learned a great deal about each other's countries. In a Japanese public opinion poll on views on Korea, 60% of those asked responded by saying, ����t is a very approachable country�ߡ�or ����t is a very friendly country�ߡ�

Exchange between Japan and China is also progressing. 2002 marked the 30 th anniversary for the normalization of relations between the two countries. To celebrate this, Japan and China held a ��׫apan year�ߡ�and a ��פhina year�ߡ�respectively, staging various events to introduce the culture of the other country. There may be considerably more Japanese traveling to China than the other way around, but the total number of passenger movements between the two countries now a mounts to about 4 million annually . As with other East Asian nations, China is also a big market for Japanese dramas, animation and music. I heard that there are many Japanese-style public baths in places such as Shanghai , and it is often heard that Japanese lifestyle is becoming increasingly popular in China . The author Murakami Haruki, who is popular in the UK, is also well known in China Over 700 thousand copies of his work ��ׯorwegian Wood�ߡ�ha ve been sold there.

There nevertheless exist many issues to be tackled effectively . Fostering m utual understanding between Japan and China is a great political challenge. Following the spread of the Internet, there is the possibility that emotional misunderstandings and mutual distrust may become more of a problem. I t is na ï ve to believe that mutual understanding will grow simply because of generation al change and increase d interaction . There are problems based upon different h istorical perceptions . We have to continue to make steady special efforts by increasing exchange in various fields, increasing cooperation in areas of mutual interest and engaging in further research to help both sides understand differences of perceptions of history .

The last point for Japan's policy toward East Asia is the management of disputes that threaten to destabilize the region. Developments in the economy and personnel exchange can only be made when stability and security are present. Military and political disputes may easily disrupt the economy and personnel exchange .

The biggest security issue now in East Asia centres on North Korea. Japan's basic policy concerning North Korea is to encourage the abandonment of nuclear weapons of North Korea and to pursue the resolution of humanitarian issues such as abductions problems , whilst balancing deterrent with dialogue. To achieve this, it is necessary to collaborate closely with neighbouring countries, particularly South Korea and the United States. Just 100km south of the North/South Korean border is Seoul, with a population of more than 10 million. It would not even take an advanced missile to attack Seoul from this distance should North Korea decide to do this. South Korea is currently home to some 36,000 American troops. In the past, a North Korean missile has been fired right over Japanese soil and into the Pacific Ocean.


Considering these facts, it is clearly a necessary measure for Japan, the US and South Korea to guide North Korea in the appropriate direction so that it abandons its tendency to indulge in periodic outbursts of brinkmanship. It is also essential from a North Korean perspective to improve relations with Japan. During Prime Minister Koizumi's visit to Pyongyang in September 2002, the Pyongyang declaration suggested clearly in writing that Japan would offer assistance to North Korea after the n ormalisation of the relations between the two countries . For North Korea to support itself adequately, it absolutely must rebuild its economy, and Japan is the country able to provide the funds necessary to do this. While being aware of this situation, we must proceed in comprehensively resolving the outstanding issues such as abductions and weapons of mass destruction before we can move to normalising relations. Normalisation cannot be achieved by tackling only one of the issues but requires an overall approach.

The recent visit by Prime Minister Koizumi to Pyongyang on May 22nd was an important step in moving towards a viable relationship with North Korea. Mr . Koizumi brought back with him five members of the families of Japanese abductees who returned to Japan following his previous visit. Chairman Kim Jong-il promised to conduct a n immediate and full-fledged rein vestigation into the fates of 10 other missing abductees . On the question of the nuclear programme, the Prime Minister made it crystal clear that the complete, verifiable, irreversible dismantlement is the only way forward. For his part, Chairman Kim reconfirmed the moratorium of missile firing as long as the Pyonyang declaration is in place. I t would not have been realistic to expect all pending issues to be solved in one visit. Negotiating with North Korea is inevitably a frustrating process. The important thing is to make sure that progress is made towards a resolution of the principal issues in question, and I think we can view Mr. Koizumi ' s visit as having had a positive impact in this regard.

To this end, t he six-party talks established in summer last year to talk about nuclear issues among North and South Koreas, China, Russia, US and Japan have been working as an effective organisational forum. There may be some debate as to the extent of their achievements, but in managing the relationship between the major powers and enhancing a sense of solidarity in the region, the talks have definitely played a significant role. Not only from the standpoint of the urgent need to solve the very real present threat, but also with a view to facilitating the development of long-term stability in and around the Korean Peninsula, we need some forum of this kind .

Another important issue in the region is over the Taiwan Strait. Presidential elections were held in Taiwan on 20 th March and they attracted intense interest from observers everywhere. This year, Beijing has shown a restrained attitude regarding the exercise or the threat of force; Beijing also used the influence of the US , Japan and other countries to restrain Taiwan from overly provocative behaviour although, according to Beijing's stance, the Taiwan issue is China's domestic problem. As a result of the election, it seems that Taiwan's society is moving in the opposite direction to that favoured by Beijing. The Taiwan issue has a major bearing on peace and stability in the region because it directly involves the two principal powers with a direct interest in it --- China and the US. Moreover, it has a direct influence on the sea-lanes of communication for Japan. The issue has to be solved peacefully through dialogue between both parties over the Strait. It is fundamentally important that stability over the Taiwan situation be maintained. No unilateral action to force the situation can be countenanced. I am confident that, ultimately, the matter will be handled in a rational and responsible way by both China and Taiwan, but this is an issue that has to be dealt with very cautiously in view of its implications for the balance of power in the region in the long term.

Apart from East Asia, it is the Middle East, and particularly the issue of Iraq, which really challenges Japanese diplomacy. Now, the international community is discussing keen ly on the issue of the reconstruction and constitutional process of Iraq and the need for a new Security Council resolution. At the G8 summit in the US from June 6 th to 8 th , the Middle East will surely dominate the deliberations.

As we approach the transfer of sovereignty scheduled for June 30 th , the Iraqi people place great hopes on the achievement of political stability and on reconstruction, and it is up to the international community to respond appropriately. With the makeup of the Interim Government to be decided this month, the time for decisive action is at hand. The activities of Special Envoy Brahimi deserve our strong support. And a new Security Council resolution is important in order to show the unanimity of the international community.

For Japan, the issue of Iraq is not something that only concerns other people a long way away. Economic globalisation is proceeding apace. The international community faces common threats, not least those of terrorism and weapons of mass destruction. Accordingly, the security and prosperity of the world should be considered inseparable from each other.

It is extremely important, not just for the Middle East region but for the whole world, that Iraq make s a smooth transition to a democratic set-up and that the Iraqi people become able to live lives free of fear and worry. It is the view of the Japanese Government that Japan, which is the world's second largest economy and relies on the Middle East for almost 90% of its oil supplies, is duty-bound to go the extra mile for Iraq, and Japan's policies are predicated on this position.

Japanese Self Defense Forces personnel are currently based in Samawah in southern Iraq, where they are providing humanitarian and reconstruction assistance for the Iraqi people. The deployment of forces to Iraq was a difficult decision for Prime Minister Koizumi, who faced stiff domestic opposition over the issue. Nonetheless, Japan considers that the international community should help the Iraqi people to build for themselves a peaceful, stable and democratic nation. Such an Iraq will contribute to the stability of the Middle East, which is a matter of concern to the whole world.

At present, the situation in Iraq is very difficult. The most important thing is to give the Iraqi people visible signs of hope for their future. What is required is a sense throughout Iraq not of ����he occupation forces against the Iraqi people�ߡ�but of ����he international community offering a helping hand to the Iraqi people in their own efforts to rebuild a stable, peaceful, prosperous and democratic Iraq�ߡ� Japan is playing its role in assisting Iraq in every way possible. In this context, the role of the United Nations is very important, and Japan welcomes the shift in US policy towards favouring a more active UN role. A more central involvement for the UN is something which Japan has been advocating all along. Although Japan is not a member of the UN Security Council, it has been making its views known to the members of the Security Council on a consistent basis. It is also essential for us to accept that solving the problems of Iraq will not be a short-term process. I therefore believe that it has become increasingly important for the UK and Japan, as the leading European and Asian allies of the United States, to co-operate actively on this issue.

What Japan is doing in Iraq is primarily to offer humanitarian support to the Iraqi people and to engage in reconstruction assistance. The remit of the Self Defense Forces personnel there is not to engage in military combat operations. Indeed, troops from the Ground Self Defense Forces are helping to restore damaged schools and hospitals, providing medical services and undertaking work on water supplies, while the Air Self Defense Forces personnel are mainly engaged in distributing humanitarian supplies.

Japan is also providing Iraq with various other forms of reconstruction assistance. At the reconstruction conference in Madrid last October, up to $5 billion was committed by Japan, and there are various projects under way, including the provision of police vehicles and medical instruments for the hospitals in Samawah. Moreover, Japan has been working closely with the British Government in implementing its aid programmes. For instance, we conferred with the British when helping to finance the dredging of Iraq's only deep-water port, Umm Qasr.

Finally, I would like to touch briefly on Japan-UK relations. Whether it be East Asia or the Middle East, the world is beset with daunting challenges. Against this backdrop, I value very highly the partnership between Japan and the United Kingdom, two countries which share common values and numerous common interests as well as a sense of the importance of acting to further global security. In particular, if we assume the conduct of the US to be the single most important factor in setting the course of world events, it is clearly vital that Japan and the UK, America's principal allies in Asia and Europe respectively, exchange views and co-operate at various levels.

Our co-operation is not restricted to Tokyo and London, but manifests itself through a number of means, including contacts between our military personnel in Iraq and links between the relevant people from both countries engaged in the provision of Official Development Aid to a number of developing nations. Furthermore, ideas are exchanged not just between government personnel of our two countries, but in a wide range of fields. It is already 20 years since a format was set up ? now called the UK-Japan 21 st Century Group ? to provide for annual meetings of key intellectuals in politics, business and academia from both countries to discuss a host of crucial issues. Frequent exchanges also take place between members of the two parliaments. Naturally, links between university academics are flourishing as well.

This is clear from the large number of Japanese researchers I can see here at Clare Hall today. Yesterday's lecture by Professor Onuma, which gave an idea of the thinking of Japanese scholars of international law, was most significant in this regard.

All in all, Japan Week has made a valuable contribution to exchanges between our two countries, and I will end my remarks by expressing the hope that Cambridge will see many more events like this in the years ahead.

Thank you very much.