Managing economic and social change toward a sustainable future
What's inside
Japan Seminar
Series 2018
INTRODUCTION
In Tokyo, White & Case gathers leading thinkers on international business and trade policy from around the globe to explore what evolving economic and social change mean for Pacific nations—and to propose effective responses.
Imposing an "America First" trade philosophy on a globalized economy—a campaign promise US President Trump is in the process of delivering—is affecting trade and investment relationships worldwide. Inevitably, there is a knock-on impact on other areas of Washington’s relationships with allies and rivals alike, from security concerns to energy, climate change, demographics, technological advances, geopolitical considerations and others.
The specific policy proposals flowing from this initiative are revamping existing alliances and institutions in ways that call into question the existing world order, and are forcing many countries—close US allies as well as competitors—to reconsider how they work with the US.
America First is rearranging international politics as well. With China rising, rapidly changing developments on the Korean Peninsula, and Japan focused on economic rejuvenation, how will defense relationships be realigned? Is America losing influence in the Asia-Pacific region, or just recalibrating its terms of engagement?
These and other issues were explored recently at a White & Case seminar series in Tokyo. The series, "Managing economic and social change toward a sustainable future?" featured lectures and discussions on energy policy, patents and trademarks, shareholder activism and global responses to America’s recent disruptions in longstanding trade relationships.
Keynote—What New World Order is emerging?
In Tokyo, White & Case gathers leading thinkers on international business and trade policy from around the globe to explore what evolving US policy means for other nations—and to propose effective responses.
US energy—Searching for opportunity amid uncertainty
The oil & gas (O&G) sector is no stranger to volatility, but it is even more at risk of instability at a time of unpredictable political situations, changing economic structures and broader global vulnerabilities
How has President Trump’s "America First" philosophy affected US patent policy? White & Case partners discussed what an evolving US patent policy will mean for other nations, and to propose effective responses.
In Tokyo, White & Case gathers leading thinkers on international business and trade policy from around the globe to explore what evolving US policy means for other nations—and to propose effective responses
The beneficiaries of a "confused American diplomacy" are Chinese leader Xi Jinping and Russia's Vladimir Putin.
In a day marked by observations of vexing international concerns, the two keynote speakers—Robert Feldman, a professor at Tokyo University of Science and a senior advisor to Morgan Stanley MUFG Securities, and Yukio Okamoto, a diplomatic commentator—contributed an upbeat note by proposing some potential solutions.
Feldman began by describing a new vision for what the US-Japan relationship should look like and how it should contribute to the world.
Money that is presently being allocated to healthcare and pensions for the elderly would be better spent on educating younger generations, Feldman said. Energy consumption is growing exponentially, and concerns abound over where future resources are going to be found. Crumbling infrastructure and a rapidly urbanizing world require investment. At the same time, there is a need to protect living standards, best achieved through capital intensity and increasing the efficiency of capital.
In both the US and Japan, the diffusion of technology is important to the overall well-being of an economy, but regulation is serving to limit the movement of capital and labor between sectors, according to Feldman. Legal and corporate reforms, along with changes in corporate governance, can help to solve that problem, just as they did in the 1970s in the US airline sector. Technology is also vulnerable to the protectionism that is sweeping the world, and Feldman emphasizes that halting technology transfers means that the "flow of ideas stops, and when ideas stop flowing, new combinations stop being made and productivity slows."
As a potential cure, Feldman put forward two possible solutions. The first would be a trade alliance that he called The North Pacific Partnership, which would permit the US and Japan to set a new standard for global trade agreements that other nations could apply to join. The second is for a technology hyper-alliance that would bring together scientists, engineers and entrepreneurs from both countries, an alliance that would serve to accelerate the adoption of new technology.
Introduced by Aiko Doden, the moderator of the session and a special affairs commentator for national broadcaster NHK, keynote speaker Okamoto identified the key issues that are of prime concern to the Japanese government. Starting with security regarding North Korea, Okamoto said North Korean leader Kim Jong-un won "a big victory" in his summit The beneficiaries of a "confused American diplomacy" are Chinese leader Xi Jinping and Russia's Vladimir Putin. with President Donald Trump in Singapore, reinforcing Okamoto's belief that Kim never intended to give up his nuclear weapons. The North Korean leader would also have been encouraged by Trump's suggestion that US troops be withdrawn from the Korean Peninsula, a matter of deep concern for Japan, as the US is the only security guarantee in Northeast Asia.
The beneficiaries of a "confused American diplomacy" are Chinese leader Xi Jinping and Russia's Vladimir Putin, both of whom have expansionist ambitions, Okamoto said. Just as worrying was Trump's call at the UN Security Council for other nations to follow his lead and put their own narrow national interests first, which can only serve to harm universal values such as freedom, democracy, free trade, humanitarian thinking, protection of the environment and the rule of law.
Japanese Prime Minister Shinzo Abe has been very proactive in his diplomacy, although his biggest task may well be handling Trump— particularly if the US president makes demands in the areas of trade or defense spending.
Okamoto closed his presentation by pointing to the adverse impacts of technology on modern society, such as the fragmentation of personal relationships, and social media being used to link like-minded people and reinforce their shared views.
Asked by Doden about the possibility of the US-China trade war worsening, Feldman compared the situation to game theory, in which players can cooperate or decide not to, with failure to cooperate having a negative payoff. Early US exchanges with North Korea on its nuclear capabilities indicated there would be military consequences in the event of a failure to cooperate. When it comes to US-China trade, the two sides are locked in a tit-for-tat cycle of tariffs and countermeasures with no sense of a potential positive payoff for different behavior.
Japan has previously been able to convince US administrations that the US-Japan security treaty benefits both nations equally and that trade discussions must be kept separate from security discussions, although Okamoto points out that Trump may not be willing to play by the same rules. There is therefore a need to remain "vigilant" in upcoming trade discussions, he added.
Feldman reiterated the need to find common ground in trade talks, and for Japan to underline the mutually beneficial outcomes that can be achieved, although Okamoto pointed to the president's track record of bilateral demands— possibly, in Japan's case, with the threat of altering the security arrangement for failure to capitulate. And Japan is in no position to entirely shoulder its own security needs, Okamoto added, at a time when Asia appears to be increasingly diverging into a group of countries being drawn into China's orbit and the other states of "maritime Asia."
Feldman said there is a need to get back to "truth and humility" in trade talks. He said if the US and Japan could reach agreement on issues that are of concern to both governments, a very positive moral example would be set that others could follow in similar discussions. Feldman also warned that there is a risk of recession, as the US president's protectionist policies are reducing demand as well as investment.
Conclusion
In every facet of the international economy, diplomatic relations, security and countless other connections have bound much of the global community for decades. Now the status quo is being challenged.
Often, any positive achieved winds up being a negative elsewhere. And nowhere is that more evident than in the state of international trade and the closely connected issue of security. Panelists expressed alarm about the direction that the US administration is taking on global trade and the use of confrontational tactics toward traditional allies in the give-and-take of trade negotiations.
Panelists laid out the pros and cons of the emerging New World Order and were able to single out a number of positives. A number of speakers proposed solutions that would be relatively straightforward to implement and would be quick to make a positive impact, bringing the international community back onto a more even keel.
