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Despite mixed results and being overshadowed by the US-China trade war, last month’s G-20 meeting in Osaka is an important event that characterizes Japan’s understated but significant role in shaping regional and global geopolitical forces. The photograph of PM Abe Shinzo sitting between Trump and Xi symbolized Japan’s determination to somehow mediate between the two competing powers whose ongoing trade disputes shake the global economy in their wake. Despite the absence of plain language in the G20 statement repudiating trade protectionism, there were modest gains in the reaffirmation of the commitment to fair and free trade principles, launch of the “Osaka Track framework for cross-border data flow, and endorsement of the G20 Principles for Quality Infrastructure Investment. From a longer view, these lay the groundwork for much more substantial and strategic gains over the long term.
Amid US and China economic friction, it is important for the rest of the world to stand firm on maintaining open markets with a “free, fair, nondiscriminatory, transparent, predictable and stable trade and investment environment.” Although observers expressed disappointment over the absence of specific renunciation of protectionism in the G20 statement, it should be remembered that even if such were included in the document it would not magically dispel existing protectionist measures and their adverse impacts. Statements without commitment and action thereon will not go beyond the paper they are written on without more concrete and comprehensive policy environments that take much longer than a two-day conference to build. The commitment to principles other than protectionism but directed toward the same goal are just as valuable for aspiration.
The complement Japan’s advocacy for a free and open Indo-Pacific, which was one step ahead of the others when it was announced in 2014, has since become a rallying point for other Middle Powers to take on the task of defending the rules-based international order in this part of the world. As other nations grapple with formulating a clear and coherent Indo-Pacific strategy, Japan’s foreign policy engagement indicate a simpler pathway marked by very basic principles: open and transparent markets, unhindered connectivity in trade, and sound governance under the Rule of Law. The economic order of the future needs to be underpinned by these principles in order to ensure equitable and independent opportunities for growth and development for all.
The Osaka Track correctly anticipates future economic frontiers and likewise demonstrates Japan’s forward-looking economic strategy. Cyberspace and digital domains open vast economic opportunities in the 21st century. Communications and finance technologies are the key to linking far-flung consumers and producers, and eventually they will restructure and transform traditional economic concepts and systems like money, retail trade, and factories into decentralized transnational networks of digital credits, online trading platforms, and logistics supply chains. The Osaka Track will no doubt have a leading influence in shaping and directing this transformation despite the refusal of three countries to immediately sign on to the declaration. The “data free flow with trust” concept will likely have the same subtle influence on e-commerce as the “free and open Indo-Pacific” had on geopolitics: it will crystalize discourses and be the starting point for adjustments in national policies. If successful, the Osaka Track could establish the digitally-augmented economies of the future.
And finally, the G20 Principles for Quality Infrastructure Investment spearheaded by Japan provides more concrete policy guidance to guard against the perceived problems of the Belt and Road Initiative, especially in the Asian hemisphere. The fact that Japan’s overseas infrastructure investments maintain a lead over China’s well-funded programs shows that offering quality instead of quantity matters even between States. Japan’s long experience in development assistance and hard-won good governance principles still make a difference; Tokyo is proving that even lots of money cannot always buy geopolitical advantage.
These three modest gains are emblematic of Japan’s emerging role of quiet regional leadership among States that share a common interest in maintaining the current rules-based international order. It is, after all, an order that they have all benefitted over-all, despite the sometimes painful process of trial-and-error that informed international community-building since the end of the Second World War. In this respect, Japan’s foreign policy engagements and directions above have been quiet and modest, but sublime and strategic. Although the region’s economic powerhouse China has offered attractive packages of infrastructure through the Belt and Road Initiative, Japan offers credible alternatives with a proven track record of projects characterized by good governance, effective implementation, and concrete benefits.
The ascension of Crown Prince Naruhito to the Chrysanthemum Throne and inauguration of the Reiwa Era is thus a symbolic milestone in a time of increasing uncertainty due to the trajectories of the US and China. Japan’s foreign policy and international engagements fully flesh out its aspirations for maintaining and defending the stability of an international rules-based order against the currently uncertain directions of both its architect (US) and its challenger (China). Though its recent gains may be modest, the future impacts may still be great. Japan is demonstrating that despite the rise and existence of great powers that tend to compete for influence, it is still possible for smaller States to exercise influential leadership among peers within the community of nations on the basis of common aspirations and mutually-accepted principles.