Yasuo Tanabe - "Ideally, the Market Should Be Flat and There Should Be No Borders"

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May 15, 2014
by Alex Jackson
Yasuo Tanabe - "Ideally, the Market Should Be Flat and There Should Be No Borders"

Hitachi Vice President and Executive Office, Yasuo Tanabe, talks about the changes in the Asian markets, alternatives to the WTO and the need for energy security.

Yasuo Tanabe participates in a session panel during "New Dynamics in Global Trade Architecture"

Yasuo Tanabe has come to Salzburg Global Seminar for the session New Dynamics in Global Trade Architecture: WTO, G20 and Regional Agreements, representing the technology giant, Hitachi. Out of the Asian boom of the past five decades, a number of prolific names have come out of the Far East market; Samsung, Toyota, Sony to name but a few. Hitachi, as an engineering and electronics conglomerate, has diversified into a number of areas, from televisions to train manufacturing.  For companies such as Hitachi, the Asia region has transformed from a booming economic haven to a major zone of business fracas as leading competitors continually fight for space in the market.

Tanabe is all too aware of the need for change, even for a company as eclectically competitive as Hitachi. “Japanese trade policy changed maybe 10 years ago so we have shifted towards FTA, free trade agreements, bilateral agreements, and that is in addition to continuing to work with WTO and global systems,” he says.

“This move ensures that Japan falls into line with and learns from the US and EU approach. Indeed, this is the culmination of changes over the last say 10 to 15 years; Japan has stretched out to bilateral and some regional FTAs and I was actually involved in that process at the government. But at the same time as Japan’s growth, Korea has been active in FTAs and Korea has actually made an agreement with the US and EU, two big global trade players. This surprised Japan and caught us off-guard, so Japan has been impacted by this Korean approach and especially from the business sector, there have been strong voices to suggest that the Japanese products would be disadvantaged in the US or EU markets.

“Without successful FTAs in the case of the EU markets, Japanese TVs are levied on 14% of tariff, automobiles are levied 10%, while eventually after a certain period, Korean products will be duty free. This will cause a very big impact in the market competition.”

Having worked for the Japanese government’s trade ministry for 32 years, Tanabe is more qualified than most to comment on the trends and changes in the Asian market. As China is set to become the largest economy in the world before the year’s end, Japan and Korea, Asia’s second and third largest economies respectively, are jostling for trade development. It is a particular sting to Japan, whose boom in industry preceded China’s, and is marking a call for further industrial activity.

“That is why the Japanese businesses are asking the government to be more active in the FTAs like Korea. That is the situation in Japan so the Japanese government has decided to join the TPP negotiation,” says Tanabe.

Japanese trade policy of late has certainly been influenced by Korean advancements. In response, Japan has become aggressive in its targeting of FTAs to try and restore some balance. Many feel that competition would be in danger if Japan feels too far behind Korea’s developments, so Japan is developing a strategic and political model of mega-regional trade negotiations, an avenue best pursued outside of existing trade mechanisms.

“One of the reasons for slower growth is that we have been seeing a stalemate in the global negotiations at the WTO. We have been in the Doha Round negotiation for 13 years now but come out with little product. This little product was only achieved last December in the case of Bali. Basically trade facilitation, which is not a difficult subject, took 13 years.”

The Doha Round has become a symbol of slowness and ineptitude as far as international trade negotiations are concerned. This tardy approach is inevitable because with 160 members, ranging across the spectrum of developed and developing countries, interests very much differ from country to country. “It is very difficult, so there may be a problem in the decision making process in the WTO and the WTO is just not capable of dealing with the resolution.”

For Tanabe, Japan needs larger trade agreements, like TPP, or a Japan-EU agreement, or a Regional Comprehensive Economic Partnership Agreement. It would only be in creating these large mega regional FTAs that there could be mutual economic action and continued trade growth.

“Ideally, the market should be flat and there should be no borders,” says Tanabe.

“But that is extreme and we know there are sovereignties and there are legitimate national policies. But thinking of business, we hope there should be certain business friendly policies or regulation in which, for instance, one regulation in one country may differ from regulation in the other country, but they acknowledge each other. That is called Mutual Economic Agreement. That kind of approach should be taken in much more areas. That is the realistic approach, I think.”

Of course, another element of the FTAs would not only be the creation of much more sustainable trade links, but in the promotion of sustainable energy sourcing across the region. Having previously represented Japan for the International Energy Agency, Tanabe sees close links between the development and potential for trade and the reliability of energy resources. China has fast become the largest consumer of energy in the world, and neighbors aren’t too far behind either, creating situations which not only threaten future energy security, but prevent some developing countries in the region from providing trade competition.

“I am of the view that Asia on the whole should cooperate together for energy purposes. Energy security, security of supply affects the economy and environment and sustainability. So for those energy policy purposes, Asian countries have faced common challenges which can be solved by common or collective actions. Japan is a leading country in this field, so it should lead by example. Energy is very much rooted in trade and investment matters. I don’t know if the WTO is the right mechanism or tool by which to approach it. But certain disciplines should prevail for the trade and investment of energy. There is the Energy Charter Treaty and that was the one attempt which some of the countries including the EU and Japan have pursued. We should have proper legal and policy framework.”

Alongside issues of sustainable and green growth, Hitachi, a major hub of electronic information, would like to see an evolution in the use and free flow of data across borders and trading partners. If efforts to share data appropriately were aligned, it is Tanabe’s belief that this would provide enough data to analyze to boost worldwide trade.

“This is a big issue and challenge. Not many businesses, including Hitachi, are very much active in promoting the big data and analytics model. For instance, healthcare or medical services can be improved very much through data analytics. For data analytics to function there should be big data; a lot of data should be transferred freely without any blocks across borders. That is the basic condition for data analytics. Of course, it needs certain discipline, like of course we have to protect individuals’ privacies. That is definite. But there should be certain way to protect privacy while transferring data without identifying individual personnel. In such a way data should be flown freely across borders that would make the world much wealthier and more convenient.”

In a complex web of interweaving factors, there is no doubt that Hitachi has successfully managed to find its place as a mammoth of several industries. Through their innovative practice across different trading spheres, the company continues to see great investment returns, but knows all too well the problems of slow paced development. Trade, energy, economy, technology all affect the business directly, and Tanabe advocates a proper forum of discussion to tackle these manmade issues head on.

“There should be places for the interaction of ideas and wisdoms. We need certain wisdom, collective wisdom, regardless of nationality or gender or generations.”  


Yasuo Tanabe was a session speaker at the Salzburg Global Seminar session New Dynamics in Global Trade Architecture: WTO, G20 and Regional Agreements, which was sponsored by KDI School of Public Policy and Management, the Korea Foundation and The Nippon Foundation. You can read interviews with a number of the other speakers and participants of the session on the webpage: <font color="#0066cc"><a href="/news/latest-news">www.salzburgglobal.org/go/533</a></font>