Japan’s path forward, in five steps

On the surface, Barack Obama’s recent Japan visit struck all the right chords for Tokyo. For the first time ever, an American president stated that the U.S.-Japan security treaty extends to the Senkaku/Diaoyu islands dispute, the most combustible geopolitical conflict between Japan and China. And Obama and Japanese Prime Minister Shinzo Abe announced a “key milestone” for negotiations on the Trans-Pacific Partnership (TPP), the trade deal that encompasses 12 countries and more than 40 percent of the world’s economic output.

But there was less to the visit than meets the eye. Obama’s Senkaku pledge was a restatement of existing U.S. policy. The “key milestone” on TPP was never identified; in fact, it seems that the 40 hours of bilateral discussions between the U.S. and Japan led to no breakthrough at all. And while the trip was a big win for Obama — he managed to placate Tokyo without provoking Beijing — it didn’t offer any solutions for how Japan should deal with a rising China.

With the United States disengaging on foreign policy and China rapidly expanding its influence, Japan is caught in a dire geopolitical position. But Tokyo still has options. Here are five foreign policy priorities for Japan.

1. Stay the course on Abenomics.

Japan’s first priority must be to follow through on the prime minister’s economic plan. Despite Tokyo’s recent fixation on security issues, it has maintained economic momentum — and must continue to do so.

Improving its long-term economic trajectory is the single most important initiative for Japan. It makes Tokyo more attractive as a partner, and gives Japan opportunities to influence regional outcomes with its wallet. Tokyo cannot take its eyes off the ball to deal with geopolitical concerns. Pressing ahead with Abenomics is the most valuable use of Abe’s political capital.

2. Reject China’s U.S.- Japan “wedge.”

islands in the sea Driving a wedge between American and Japanese policy is a key strategy for China. We’ve seen this approach on full display since November 2013, when Beijing announced its Air Defense Identification Zone (ADIZ), a region that extends into contested territory where all aircraft must follow instructions issued by Chinese authorities. After that announcement, we saw some differences between the American and Japanese positions; for example, while both countries rejected China’s air zone claim, only Japan demanded that China rescind it. To emphasize the daylight between the U.S. and Japan, China excoriated Tokyo’s ADIZ response while treading lightly with Washington’s.

Going forward, when it comes to the East China Sea and Asian security, Japan needs to coordinate with the United States. If the Obama administration won’t move closer to Japan’s position, then Abe should adopt more of the United States’ language wherever it is politically feasible to do so. The countries must broadcast a unified message to Beijing.

3. Protect gains in Russia and work with Europe.

For Japan, staying in lockstep with the Americans on the East China Sea is important. When it comes to Russia, however, it’s highly problematic. Abe has put considerable effort into repairing ties with Russia; since taking office in December 2012, he’s met with President Vladimir Putin five times. He’s made significant advances in mending territorial spats and normalizing their bilateral relationship. But when Tokyo unveiled new sanctions against Russia in April, Abe puts these gains at risk.

Of course, it’s hard for Japan to say no to the Americans directly — and it needn’t do so. Instead, Japan should work closely with European allies to push Obama to ease the pace and extent of new sanctions. The fallout between the West and Russia will make Russia look east economically, with China set to benefit most. Japan has a real opportunity with an eastward-facing Russia and needs to maintain it.

There is another avenue for Japan-EU coordination: wrapping up a broad trade agreement that would encompass roughly one-third of the global economy. On Monday, Japan and the EU agreed to complete the agreement by 2015.

4. Expand the India opportunity.

japan-indiaAs India wraps up the largest democratic election in world history, Narendra Modi’s likely victory will offer Japan a new opportunity. Modi will have a mandate to use partnerships with advanced industrial democracies to build support for internal market reform. To Japan, India is a sound choice for a partner because the South Asian giant is sufficiently ruffled by China’s rise, and too big to get sucked into China’s orbit.

Over the last five years, trade between Japan and India increased 80 percent. But it still stands at a meager $18 billion — compared with China-India’s $67 billion and China-Japan’s $334 billion in 2012 — allowing a lot of room for expansion.

5. Pursue U.S.- tied multilateral strategies.

Tokyo must push forward with the Trans-Pacific Partnership deal, even if sectors like agriculture will fight to protect themselves from tariff cuts on imports. Passage would lead to hundreds of billions of dollars of economic gains for the 12 participating countries, through liberalizing tariff and non-tariff barriers.

A successful TPP deal could lead to better Chinese trade behavior over time: rather than shutting the door to China, TPP members could encourage Beijing to adopt certain rules and norms — like heightened rule of law to protect foreign corporations’ interests or intellectual property in China — in order to gain entry.

Japan should also go one step further, and start laying the groundwork for a deal with the U.S. and its Asian neighbors that revolves around security instead of trade. A multilateral security agreement could set rules of the road for maritime conflicts and territorial spats in the East and South China Seas; it would put regional players’ mutual anxiety with a rising China to good use.

But it’s critical that Japan, the U.S., and their Asian allies leave the door open for China to join if it changes its tune. Why would China ever join a security pact organized in response to its rise? Over time, China will have more exposure to turmoil in the Middle East. That’s because the Chinese are becoming more reliant on Middle Eastern energy, even as America weans off of it. We could see a “security swap” take place: in return for playing a security role in the Gulf, the United States would beseech China to adhere to ground rules for more stable behavior in Asia Pacific. That would help Tokyo — and the global economy more broadly

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